Retirement savings - this is the start

[Shannow]

Been prattling on for a while that Oz' push for workers to be self sufficient in retirement (pushed on us by baby boomers who are getting paid via ponzi) will come to a crashing halt.

Oz last year reached the point where personal savings were at GDP level, and people are expecting a higher than growth/bank interest "return" on that which they aren't spending today.

http://www.bobistheoilguy.com/forums/ubbthreads.php?ubb=showflat&Number=2983367

My prediction was that around this time of the process, people would start eying off this "tied" up money as something that can be played with...and they certainly don't want to have to explain to people that when retirement savings are 5-7 times GDP, and GDP growth is 3-5%...that 2% less than inflation is all the growth that they are going to get out of their deferred income...

Today's news, conveniently couched in the other circus that's taking place downunder...

http://www.abc.net.au/news/2013-08-29/business-in-90-seconds/4920876?section=business

They are starting to look at what "should be" done with all of this money that is "locked up" in retirement savings, for infrastructure, and the betterment of the infrastructure of the country.

Debt based monetary system, having people save money is the worst thing that can happen.

Easy with baby boomers and their ponzi scheme, now they have to work out how to keep spending.

 

[RF Overlord]

Shannow, forgive me for being more dense than usual, but I'm confused.

Are you saying that personal retirement savings is a BAD thing?

I've contributed to my 401k since 1985 and it looks like that will be my sole retirement fund. I'm not even going to count on Social Security except possibly as gravy...that's if there's even any SS funding left by the time I reach retirement age (another 5 years).

 

[KrisZ]

Originally Posted By: RF Overlord
Shannow, forgive me for being more dense than usual, but I'm confused.

Are you saying that personal retirement savings is a BAD thing?

I've contributed to my 401k since 1985 and it looks like that will be my sole retirement fund. I'm not even going to count on Social Security except possibly as gravy...that's if there's even any SS funding left by the time I reach retirement age (another 5 years).


Your 401k is not savings as this money is actively being invested. If you happen to retire when the stock market is strong, you're ahead, but if it crashes shortly before that, you may find out that you don't have retirement "savings" anymore.

What Shannow is talking about is people actually saving money and keeping it in a bank account. The government wants to go after this money. At least that's what I remember from his last thread abou it.

 

[RF Overlord]

Ah...gotcha. What he said makes more sense now, thanks for the clarification.

 

[BISCUT]

Gubernment didn't expect as many people to start a little savings and pay down some of that consumer credit debt. New car sales took a huge hit 08 to even now; yes, they are rebounding but not with the uber expensive SUV's that turned such a huge profit. Average car is 11+ years old in the US now.

The cycle can be viscious.

 

[JHZR2]

So we all want growth, no inflation, and yet want to let money sit on the sidelines? Maybe its just me but something doesnt add up unfortunately.

You can get growth via cheap/free money, but that spurs inflation. You can get growth with minimal inflation, but that requires others to spend money that already exists but is on the sidelines.

Or you can have money pulled out, nobody buying, and be reliant upon the business of the outside world (not trivial for a mining and exports economy like Australia) to drive growth and income. Apparently that isnt enough, so the question is, "why not"?

 

[Donald]

A few countries have or are looking at forced retirement savings. A high percentage of US workers have no pension plan at their work and unless they setup a 401K, all they will have is social Security. Social Security is suppose to be a safety net, rather than your plan for retirement.

 

[dparm]

Originally Posted By: JHZR2
So we all want growth, no inflation, and yet want to let money sit on the sidelines? Maybe its just me but something doesnt add up unfortunately.



I'm with you.

Also, saving money DOES help with growth! By putting money into some sort of savings account (or 401k, or CD, or whatever else), you are in effect loaning the bank money that they can turn around and loan out.

So a $50,000 savings account balance is letting the bank loan out $50,000 for people to buy cars, buy houses, expand their business, etc.

 

[JHZR2]

Originally Posted By: Donald
A few countries have or are looking at forced retirement savings. A high percentage of US workers have no pension plan at their work and unless they setup a 401K, all they will have is social Security. Social Security is suppose to be a safety net, rather than your plan for retirement.



The irresponsibility in this country is disgusting. Add on top of it zero down mortgages, low doc/no doc loans, financing stuff to people who cant afford it, zero or negative savings rate, etc.

 

[badtlc]

People don't have to be self responsible in the USA. It is always someone else's fault for not looking out for them.

 

[hattaresguy]

They should do something with all of that dead money.

2-3 percent return is a waste of time, I don't even get out of bed in the morning for that. My bank offered me 5 year CD's for $100k that were I want to say around 2% forget the exact interest rate. I laughed at that.

 

[dparm]

Originally Posted By: hattaresguy

2-3 percent return is a waste of time, I don't even get out of bed in the morning for that. My bank offered me 5 year CD's for $100k that were I want to say around 2% forget the exact interest rate. I laughed at that.



Agree. I was actually laughing at some of the CDs my bank had...0.50%. I can get a high-yield savings account with a better APY.

 

[Drew99GT]

Originally Posted By: dparm
Originally Posted By: JHZR2
So we all want growth, no inflation, and yet want to let money sit on the sidelines? Maybe its just me but something doesnt add up unfortunately.



I'm with you.

Also, saving money DOES help with growth! By putting money into some sort of savings account (or 401k, or CD, or whatever else), you are in effect loaning the bank money that they can turn around and loan out.

So a $50,000 savings account balance is letting the bank loan out $50,000 for people to buy cars, buy houses, expand their business, etc.


Not really; banks do not lend reserves. Why would they? They can borrow from the Fed for nothing, and let the Fed pay them for holding reserves.

Savings does not equal lending in modern banking systems where loans actually create deposits. Saving money in a bank is truly putting it under a mattress. It does nothing for yourself or the economy.

http://pragcap.com/banks-are-not-mystical

 

[KrisZ]

Originally Posted By: Drew99GT
Not really; banks do not lend reserves. Why would they? They can borrow from the Fed for nothing, and let the Fed pay them for holding reserves.

Savings does not equal lending in modern banking systems where loans actually create deposits. Saving money in a bank is truly putting it under a mattress. It does nothing for yourself or the economy.

http://pragcap.com/banks-are-not-mystical


So why banks do it? Why does Apple sit on over $70 billion dollars, or any other big company with huge reserves? In fact big corporations started severe cut backs and reserve build up since the recession started and they are still stock piling the money because the future is too volatile.
And how come those are called reserves but private savings accounts are called dead money?

I agree that keeping money in a savings account is not smart, but that should be nobody's business. Perhaps people saw that having a nice reserve is a good thing. Maybe they saw what the big corporations are doing. What's wrong with that?
Government should have no business with this money unless they start with corporation and bank reserves first.

Edit:
I should've said that having everything in a saving account is not smart, having a reserve in a form of saving account is smart.

 

[Shannow]

Originally Posted By: JHZR2
So we all want growth, no inflation, and yet want to let money sit on the sidelines? Maybe its just me but something doesnt add up unfortunately.


As usual, you're strawmanning words that I'm not saying...

Baby boomers didn't save, and have their retirement paid out of current accounts.

Baby boomers write rules that say that we have to save for retirement...through the mechanism of superannuation accounts...which ARE invested in buildings, infrastructure, stockmarket etc. etc., rather than "sitting there"

That's great, however only a small number of years in, the savings are equivalent to the GDP, and within 30 will be 7 times the GDP...

How can an economy give a return on savings that are 7 times the size of the economy ?...that was predictable on day 1 of the new system.

My belief is that when the ability of the economy to provide the required returns is met, they will try another pea and shell trick to get the money back in to govt/state infrastructure, and start paying out retirements from current accounts again.

System A - pay more tax, have it spent on state infrastructure today, and get paid out of current accounts in the future (I know what people here think of GM retirees being on the books)

System B - "save", have it invested in state infrastructure, and paid out in the future through current accounts.

 

[65cuda]

For my part nobody has any business worrying about what I have in savings. I have my 401, pension and SS, but like having money available for emergencies or just to know it is there if I want it. My business not nobody elses. I understand though businesses are sitting on a pot of money for things like buying back stock or buying out somebody else. Instead of blaming the baby boomers for everything maybe they should look at the guys in office that made the rules that WE went by. If you want to risk everything on the market then power to you, but I've seen what has happened to guys that thought they were sitting pretty with their stocks and then the market taking a dump.

 

[BISCUT]

Originally Posted By: dparm
Originally Posted By: JHZR2
So we all want growth, no inflation, and yet want to let money sit on the sidelines? Maybe its just me but something doesnt add up unfortunately.



I'm with you.

Also, saving money DOES help with growth! By putting money into some sort of savings account (or 401k, or CD, or whatever else), you are in effect loaning the bank money that they can turn around and loan out.

So a $50,000 savings account balance is letting the bank loan out $50,000 for people to buy cars, buy houses, expand their business, etc.


You make a valid point; yet this is negated drastically by the manner in which our fed reserve printed out so many new dollars flooding the market with "Benjamin's."

 

[BISCUT]

Originally Posted By: 65cuda
For my part nobody has any business worrying about what I have in savings. I have my 401, pension and SS, but like having money available for emergencies or just to know it is there if I want it. My business not nobody elses. I understand though businesses are sitting on a pot of money for things like buying back stock or buying out somebody else. Instead of blaming the baby boomers for everything maybe they should look at the guys in office that made the rules that WE went by. If you want to risk everything on the market then power to you, but I've seen what has happened to guys that thought they were sitting pretty with their stocks and then the market taking a dump.


I'm sure with you on most of what you say. BUT the baby boomer gen is the one with the tissue box and who began the ME, ME, ME each generation thereafter has grown to embrace. Back in the day I wrote many multi ticket to your generation on car stops when my original intention was no ticket. Most of them were nasty, snotty, know it all women. When you are 52-57 in a 30MPH there is NO way you don't know you are speeding. All of em!!! Every [censored] one would say something like your equipment must be wrong as I was traveling exactly 30MPH!! Emphatically!!! and oh so nasty. And I'm a guy who could care less about writing a traffic tix. Vast majority of the time (sure not always) ghetto Cretans at least tried to show more manners.

That is my experience, maybe not your's and maybe not in your geographical area but sure is the case in Westchester NY.

 

[65cuda]

Maybe in your area, but now I see a lot of younger people speeding like no tomorrow with their ears stuck to the stupid phone. The ME generation? Sorry but I don't expect someone to pay for what wasn't promised to me in the first place. I see a lot of people sitting around wanting the gov to pay for some benefit with little or no cost. I see now where it seems like business doesn't know how to start up another business without going to the city or county for some tax break. But on the other hand I don't want to get into P contest either.

 

[BISCUT]

No [censored] match here either. Sure have to say my gen and the younger ones are addicted to the cell phones! Not a good thing at all. Has really made them social idiots.