Boghies Account Talk

[Boghie]

The 'market' has been a powerful wealth earning machine...

Without any IFTs my allocation is as follows:

• G: 12%
• F: 12%
• C: 34%
• S: 30%
• I: 12%

Expected Annual Return: 9%
Expected Risk: 11%

My brain is thinking: "Bulls make money, bears make money and pigs get slaughtered." I might move to a normal allocation soon. However, the trend is your friend. A market moving like this means I can retire sooner or buffer future downturns better. To retire decently all I need is an average return of 5.5% over the next eight years. But, the other half of my brain has two thoughts: 1) Grab what you can while the market is good - who knows what will happen three years from now, and 2) a decent retirement does not include an oceanic boat captain or a Winnebago driver.

What am I to do?

 

[Bullitt]

Nearly identical to my allocation across all accounts. Excluding taxable accounts it's 70/30.

An expected annual return of 9% is very good and would nearly double your assumptions. It seems there are so many out there now saying to get rid of bonds in the portfolio. I've even heard Jeremy Siegel say it, but he's always had unrealistically long time frames of 30+ years. He now recommends a 20% allocation to bonds with yields so low, but doesn't take many factors into account, age being one.

Barry Ritholtz said recently he has moved his clients from a 60/40 to a new 70/30 due to such low bond yields. Both are engaging in a sort of market timing in the bond market which people have been trying to call a top for at least a decade.

What happens if bonds just go sideways or trade in a range for the next 10, 20, 30 years?

 

[Boghie]

Bulls make money, bears make money and pigs get slaughtered.

I figured out how to normalize my returns - the market will do so. The market does as the market wills.

The only way to have missed today's doozy would have been to make the trade by noon EST yesterday. That was not likely to happen today:laugh:

 

[Boghie]

Talking About Social Security!!!

Not for me though...

I ran across this Motley Fools article: 'Trump's Payroll Tax Holiday Reveals a Hard Truth About Social Security', The Motley Fool, Dan Caplinger

I was expecting some whining about how the Trumpster destroyed the Social Security Lock Box. However, it was not about that. It end with some bleating about voting and/or contacting this or that failed lawyer who happens to be a current politician, but the rest of the article is quite informative. Namely, these two bits:

From a different perspective, however, the payroll tax move doesn't really change anything. The hard truth is that there's never been any guarantee that anyone will receive future Social Security benefits. Despite the thousands of dollars in payroll taxes most American workers pay into the system every year, there's no vested property right in Social Security benefits. All it would take is getting a bill through Congress and a stroke of the pen in the White House, and Social Security would be history.

As the gamer kiddies say 'Wat!!!' - while presenting their shocked face -

How can that be, well apparently the Warren court (Supreme Court) in 1960 weighed in as follows:

The Supreme Court weighed in on this issue way back in the 1960s. Under a revision to the Social Security Act, one person had his Social Security benefits taken away from him because he had been deported for being a member of the Communist Party. The Supreme Court dismissed the argument that recipients had a vested property right in Social Security benefits, instead affirming Congressional authority to take away current and future benefits.

More shocked faces -

Now, how about reviewing the meager change to Social Security offered during the 2004 Presidential race. Namely, that 1/4 of your Social Security tax (I use that term directly) could be invested in TSP. Well, for me those numbers would look like this had I invested that 1/4 of my SS withholdings in the C Fund:

• Starting Year: 2004
• Starting Balance: 0
• Starting Annual Additions: $1,820
• Average Annual Return: 10.48%, Yup, that includes the 2008/9 crash
• Average Annual Inflation: 2.32%

Inflation adjust the additions

That true Lock Box (Because it would NOT be controlled by politicians) would have a balance of $88,456

At age 65 (for me) that part of Social Security would augment my retirement income by $12,198/year, or $1,016/month.

But, as the gamer kids say - We 'Noped' it. Other politicians scared us. And now we have the promise of past politicians being funded by current politicians.

GLHF

 

[Boghie]

Bulls Make Money, Bears Make Money, Pigs Get Slaughtered

October

Election Year​

Serious Conflict​

Yup, with all sides yammering about not respecting the outcome of an election
and, sitting in the middle of a 4th Turning
and, with my previous market timing actually being pretty good
and, regretting that I did not act on those internal feelz on the day I got those feelz
and finally, with a 10%+ current YTD return I am happy to camp October in relative safety:ban:

Current Allocation:

• G: 50% - This is as safe as I can get, but the Feds can 'borrow' from it - Ugh
• F: 10% - I don't know if I should have anything in bonds
• C: 20% - Gotta have some opportunity for growth. Get something if I'm wrong
• S: 13% - Gotta have some opportunity for growth. Get something if I'm wrong
• I: 7% - The EuroTrash has been trash. They are even messier that we are, but I could be wrong

Expected Annual Return: 6%
Expected Risk: 5%

I don't think anyone around here marks me as someone to follow around like a lost puppy, but if there is one "Don't Follow This". It is based purely on Feelz and the fact that I am well over what is needed at this point in my life to retire fairly well off. I don't have accept as much risk as a person with a more average retirement asset base. All I need is a 4% annual return to be decently well off in my golden years. Got 10%+ this YTD, got the feelz, and don't need anything out of this year's market. Time to vamamous.

Plus, October can be a VERY sucky month. If things go smoothly I can jump back into a risk allocation in time for Fat Santa:laugh:

Happy Hunting.

 

[DreamboatAnnie]

Re: Bulls Make Money, Bears Make Money, Pigs Get Slaughtered

Great points Boghie! Your definitely the man with a solid plan! Congrats on your earnings....continued Best wishes! :smile:

 

[Bullitt]

Re: Bulls Make Money, Bears Make Money, Pigs Get Slaughtered

the fact that I am well over what is needed at this point in my life to retire fairly well off.

That's it. You won.

 

[Boghie]

Re: Bulls Make Money, Bears Make Money, Pigs Get Slaughtered

Well, I believe we have a new President in 'Merica!!! Congratulations Mr. Biden.

Likely, the very first thing he will have to do is reinstate the Social Security tax. He has been selling Social Security as the greatest thing since sliced bread for fifty years. He has been 'investing' the contributions with wisdom and skill for for that same fifty years. Any new investment ideas or other reforms were just attempts to starve the grandparents. Social Security is safe and in a lock box. It should be easy to sell a 30 year old on the value of Social Security. You will have to sell them on it - I think they will notice a take home pay cut of $200+ every month. Just guessing. Everybody believes that the politicians have 'invested' the Social Security tax well and that they will get a great benefit in 30 years.

Should be an easy sell. :laugh:

Good Luck

 

[stingrayiii]

Re: Bulls Make Money, Bears Make Money, Pigs Get Slaughtered

Well, I believe we have a new President in 'Merica!!! Congratulations Mr. Biden.

Likely, the very first thing he will have to do is reinstate the Social Security tax. He has been selling Social Security as the greatest thing since sliced bread for fifty years. He has been 'investing' the contributions with wisdom and skill for for that same fifty years. Any new investment ideas or other reforms were just attempts to starve the grandparents. Social Security is safe and in a lock box. It should be easy to sell a 30 year old on the value of Social Security. You will have to sell them on it - I think they will notice a take home pay cut of $200+ every month. Just guessing. Everybody believes that the politicians have 'invested' the Social Security tax well and that they will get a great benefit in 30 years.

Should be an easy sell. :laugh:

Good Luck

Hahaha.......

 

[nnuut]

Re: Bulls Make Money, Bears Make Money, Pigs Get Slaughtered

Someone in DC has been smoking too much Wacko Tobacco!

 

[Boghie]

Social Security - And, the Numerically Illiterate...

Re(1): 'Big Changes Likely for Social Security, Medicare Under a Biden Presidency', Kiplinger, Catherine Siskos
Re(2): 'The Social Security 2100 Act', Representative John Larson

Ok, this is not intended to be a political screed. You all know where I stand. However, I have been seeing articles pop up regarding President Elect Biden's plan to save Social Security. I have an inherent distrust of failed lawyers who became smiling politicians that offer financial solutions to problems they created by poorly investing assets for over 50 years. So, I obviously read the Kiplinger article with a jaundiced eye.

To summarize,

1. President Elect Biden's plan would initiate the Social Security tax on every dollar made over $400K. Obviously, that would raise income.
2. However, he wants to dramatically increase the 'benefit' - that is, the cost - of Social Security as well.
3. You know the gig. Been there, done that...

Not exactly certain how that makes Social Security more solvent, but here is a doozy in the Kiplinger article:

Proposed legislation from Rep. John Larson, a Democrat, would secure the program’s funding for 75 years. In addition to the increase on those earning more than $400,000 that Biden has proposed, Larson’s bill calls for raising the payroll tax for everyone, with employees and employers each contributing an additional 1.2%, or roughly 50 cents more per week. The increase would be phased in gradually between now and 2043.

Remember, this is a Kiplinger article - supposedly a well informed source on finances.

Maybe I'm the ignit. If so, mea-culpa. Drop the hammer on me. But, I also read the <sarcasm>well informed Representative's</sarcasm> actual summary and bill. The summary does follow the bill in at least this discussion, so here it is:

50 cents per week to keep the system solvent – Gradually phase in an increase in the contribution rate beginning in 2020 so that by 2043, workers and employers would pay 7.4% instead of 6.2% today. For the average worker this would mean paying an additional 50 cents per week every year to keep the system solvent. [Sec. 203]

I guess the slug who wrote the Kiplinger article actually realized during a proof read that Biden's plan did not balance. Here is the key element of Biden's plan that does not balance if we consider Social Security a benefit:

• Rush Limbaugh currently earns north of $27 million/year.
• His Social Security contribution is on about $132K/year.
• His Social Security benefit is based on $132K/year

• Under the Biden plan, Rush Limbaugh will pay the Social Security contribution on $26.5 million/year
• His Social Security benefit will be based on paying $26.5 million/year
• Thus, absolutely NO financial improvement to Social Security
• His plan unbalances rapidly for the nouveau riche

Or, are we talking about selling Social Security purely as a tax and not an old-age pension program? Just asking. At that point it would no longer be protected spending - so, be careful what you ask for... Also, making it a tax will require massive change to the legislature behind it. This will require much more than a simple payment plan change...

Ok, obviously Ms. Siskos needed to find a way to financially balance President Elect Biden's promises with a revenue stream. Heck, this brilliant 'Social Security 2100 Act' fits the bill. All it takes is a small contribution increase from everybody and bingo, everything is in balance. Just increase the contribution by 0.50/week on everybody and everybody goes on spending and taking for the next 75 years!!! Does that stupidity raise any red flag? Sure does. I pay Social Security/Medicare. My contribution is 6.2%. If 6.2% is hundreds of dollars a month how is 1.2% two dollars a month? Just asking. But, maybe. Let us do the math. Maybe the secret is in the "average worker salary"? Maybe I'm a 1%er.

$0.50/week is $26/year. So $26/year is 1.2% of Average Joe's salary.
Now, back in the day when I was in calculus figuring out Average Joe's salary was easy. Here Goes

1. (0.012) * X = $26/year
2. X = $26/0.012
3. X= 2,166
4. Thus, Ms. Siskos and our brilliant politician think that the average salary in 'Merica is $2,600/year?

I guess she has a reading comprehension issue. Maybe she thinks the plan increases the Social Security contribution by 1.2%. That is, from 6.2% to 6.2744%. Read the bill. It increases the withholding from 6.2% to 7.4%. Reading hard.

Don't listen to politicians. At best they are ignorant louts. At worst, let us not go there.
Don't listen to the media. The media doesn't have to be corrupt to be wrong - they can just be stoopid.

 

[rangerray]

“Read my lips...”


Sent from my iPhone using TSP Talk Forums

 

[nasa1974]

Everyone that works or earns X amount of money (CEO's, etc.) should pay into social security. But as an example: after you retire and your retirement income is $300K a year why should you get Social Security?

 

[Boghie]

Everyone that works or earns X amount of money (CEO's, etc.) should pay into social security. But as an example: after you retire and your retirement income is $300K a year why should you get Social Security?

For the following reasons:

1. It was sold as an insurance policy - an old age pension.
2. It is written into law as a benefit, not a tax.
3. That is why it is mandatory spending.
4. Do you want to change that?

Why have the cutoff at $300K? Why not $50K - which is significantly higher than the median income of Americans?

 

[Bullitt]

Nobody in DC cares about this because it's not a problem this election cycle - or the next, but SS can't be allowed to go bankrupt for the reasons you said. It's the only savings some people will ever have.

It's a mystery to me why this money isn't somehow invested in a massive sovereign wealth fund. It would be a lot of work, but don't politicians like building empires?

 

[Cactus]

They liked using it to offset the Deficit better.

 

[Boghie]

Social Security - And, the Numerically Illiterate...

Re(1): 'With Biden in Office, Prepare for a Smaller Paycheck in Early 2021', The Motley Fool, Maurie Backman

Well folks, some are figuring out what is about to happen with our paychecks in 2021. I differ from the author by a few points:

• I don't believe Trump will reinstate the Social Security contribution during his remaining time.
• I do believe that President Biden will reinstate the contribution requirement.
• I also believe that the claw back will occur in 2021
• However, it will be over a longer timeframe.

Why?

• President Trump has no reason to accept the pain and anger that will happen when the personal contribution to Social Security is reestablished. The cut was by executive fiat. Executive fiat is executive fiat - otherwise known as bread and circuses. He will let President Biden deal with that bit of leadership.
• President Biden will have to reinstate the contribution. He actually wants to expand Social Security. He needs the revenue stream.
• Social Security was only about $10 Billion in surplus for FY2020. It needs everything it can get just to ensure hand-to-mouth financing RIGHT NOW.
• I don't think there is any timeframe requirement for the claw back. Why does the author think we have to basically double the contribution over a short timeframe.

And, now for the financial advice from a Motley Fool author:

Adjust your budget accordingly
From the beginning, Trump's payroll tax deferral was only temporary, and while he said he'd try to get those taxes forgiven, that was never a guarantee. Now that we know Trump hasn't been reelected, you can start taking a look at your expenses and figuring out how you'll cope with a lower paycheck in early 2021. You may need to plan to cut back on certain bills once your earnings go down, but the good news is that you have a heads-up about it, so it shouldn't come as a surprise. Furthermore, while your paychecks may go down as you pay back your deferred taxes, if you snag a high enough raise at your job, you may find that things even out, or that you even come out ahead paycheck-wise, so don't assume you're in for a difficult start to 2021.

Oh dear god, I hope this advice is in jest. If you have been spending that 6.2% take home pay increase for necessities than things are going to be rough if the claw back is actually 12.4% of take home pay. That is a lot of coffee.

Plus, anything that cuts TAKE HOME PAY by even 6.2% will have to be EXPLAINED and SOLD to the wage earner. This is NOT a $0.50/week increase in some payroll deduction hidden partially by a 2% increase in pay (see above topic and note that math is hard for Kiplinger journalists and US Representatives). This is a cut of $150+ a month in TAKE HOME PAY - double that if there is a short duration claw back.

Finally, everybody knows/believes that Social Security is 'going broke' and that only the Baby Boomers will get their mullah. I think Trump was going to use his 'Financial Genius (note quotes)' reputation and his post election Political Capital to sell us on repaying into the system concurrently with the system being sensibly reformed. Social Security is going to have to be SOLD to everybody who is not a Baby Boomer (or, perhaps a late GenXer) - say anyone under the age of 50. This is going to be a very difficult sell when presented by a chap that has be spending the 'trust fund' for five decades. A very difficult sell.

We live in interesting times.:smile:

 

[Bullitt]

Re: Social Security - And, the Numerically Illiterate...

The age group of Millenial and younger blame all their financial woes on the baby boomers. "The reason I can't buy a house is I have to pay social security. I'm mad as hell and I'm not going to take it anymore!" Reality is when they turn 60, they are going to hope it's there for them too.

Funny how some generations that pride themselves nowadays on claiming they care for everyone but can quickly become hostile when it comes to paying social security. I thought they were all about taking care of their fellow man?

-

The past two weeks have seen an unprecedented level of sales by insiders. They know taxes are going up in a big way so best to take those capital gains at the lower bracket while they can. Lifestyles of the rich and famous.

-

Get ready for this headline in a city near you as remote working becomes more widespread. Where one lives in retirement could be the difference between doing what you want to do or being miserable. As a New Yorker, I have some difficult decisions to contend with in the future.

Richest New Yorkers Will Devastate City If They Leave With $133 Billion

An elite group of 38,700 people paid 42.5% of the city’s income tax collections, and the top 5% of residents earned more than the bottom 95%.

https://www.bloomberg.com/news/arti...133-billion-will-devastate-city-if-they-leave

 

[Boghie]

TSP Allocation

Tis the season and the market is recovering from the Black Plague. This is listed as my 'Normal' Allocation, but I actually consider it fairly conservative.

• G: 10%
• F: 30%
• C: 27%
• S: 23%
• I: 10%

Expected Annual Return: 8%
Expected Risk: 8%

I left a lot of gains on the table during the Obama years. I never had confidence in him 'managing' the market. I really don't have confidence in Biden either, however I should not allow politics to interfere with my TSP allocations. Moving from a very conservative allocation to a conservative/normalish allocation.

 

[ALRetiree]

Re: TSP Allocation

Tis the season and the market is recovering from the Black Plague. This is listed as my 'Normal' Allocation, but I actually consider it fairly conservative.

• G: 10%
• F: 30%
• C: 27%
• S: 23%
• I: 10%

Expected Annual Return: 8%
Expected Risk: 8%

.

Your allocation is almost identical to what I just set mine to after hearing the presidential transition news. I’ve been waiting in a more conservative one until we got past the election stuff and I think this was the news I needed. Good luck to us all!