FREE NEWSLETTER
Go to main Forum page »
I have become somewhat addicted to Threads. It is similar to X, but simpler and with generally shorter posts, but it is scary.
The misinformation and lack of understanding about taxes, wealth, Social Security, economics, and investing is staggering. If the posts reflect even a modest segment of our population, the financial challenges people face are easily understood.
Nothing is fair according to these folks. Here is a recent complaint. I just paid $4 for a Gatorade at 7-Eleven…Why is everything so expensive? – because you are willing to pay $4 for Gatorade at 7-Eleven.😎
Why should they pay school taxes if there are no children or when over 65? All the taxes they pay are wasted, where does the money go some ask? Medicare stinks because it didn’t cover 100% of services. We need a larger SS COLA. Billionaires have taken all the money. Make rent $500 again. Billionaires have a tax rate of just 3.4% – too bad they didn’t read about taxing unrealized appreciation used in that inflammatory percentage.
401k plans are a scam younger writers claim, just an excuse not to pay them directly.
I like these comments – My 401K has lost value a few times, sometimes a lot (2007). It sucks. — The stock market is legalized gambling. — I recently cashed out a Roth IRA that made no money…zero…over five years.
One final favorite brilliant comment that appears every day.
“The average life expectancy is 78 years, while the retirement age is 67. We work for 50 years to maybe enjoy 11. Start enjoying life now. No one is guaranteed tomorrow.”
Live for the present. Who says retirement age is 67? Besides life expectancy at 67 is about 83 (86 for women), not 78.
To say there is a detachment between fact, fiction and personal responsibility is an understatement.🥲
Let’s hope what we see on social media is not an accurate reflection of our broader society, but only a consolidation of the complainers and irresponsible.
Yeah, let’s hope 🥵
One needs only to look at human history to see that bias, prejudice, envy, selfishness, hatred, discrimination, irresponsibility, ignorance and many other negative beliefs and behaviors are nothing new. If online social media had existed for the past 100 years is there any reason to think that it would have been less problematic in the past than it is today?
What about whole communities in love with crypto? And think X and Threads are bad? Check out Reddit.
Also, consider that what you see on Threads and X is likely to serve you more bad stuff, converging on more disinformation, as you search for and read disinformation, especially if youu click the little red hearts.
Thete is an aweful lot of misinformation and misunderstanding. But I take issue with one of your examples.
The stock market is legalized gambling. It’s other misconceptions about the stock market which are problematic.
The stock market is legalized gambling, but this does not mean that there aren’t aspects we can use to our advantage. Such as index funds. We always do better than half of the gamblers.
Quite correct. I would also point to the plight of our public education system for not being able to correct subsequent generations.
I don’t follow social media but I do talk to many friends and former colleagues (I retired about a year ago) about some of these topics. To hear similar kinds of misinformation and lack of understanding about finances and financial planning from people you know is even scarier and more depressing. I always try to help by answering questions and giving advice (not always wanted) and I’m by no means an expert, but people just don’t know where to turn to get help or educated.
It’s easy to rant and complain but most people who do are frustrated and somewhat envious of those who have worked hard, planned and are content with their lives and financial situation. This is even more evident with the “friends” we have who are still working and hearing their comments to me and my wife like “well we don’t have 2 pensions like you”! (Thus the friends in quotes).
Good points. Envy seems to be an unspoken theme in much of what I read. The lack of history knowledge also comes through.
Charlle Munger once said, “It’s not greed that drives the world but envy.”
I’m not sure it’s fair to write it off as envy. There is a huge difference in financial wellness for those that were fortunate to land jobs/careers with DB pensions vs those who only had DC savings mechanisms. With the latter you have to be financially sophisticated enough to know how much risk to take and weather all the emotional negative outcomes that can come with market downturns.
Discussing recently with a friend who only had a couple of year’s DB pension in his first job as a graduate. He estimates he’d have had to have made 2.5-3 times the contribution and leave it all in a global index fund for 35 years to have the capital equivalent of what that “accidental” pension has given him.
Not after a couple of years in a pension plan. Probably not even vested.
Not in US. I have no reason to doubt him.
We will have to disagree on this one. If you can’t find a way to control your desire to spend money today you will never be financially well off. And most of that desire to spend is driven by envy. The classic need to keep up with the Jones.
One way to control your desire to spend money today is to take a job with a DB pension and accept the lower take home pay. It will be lower than the same work without a DB pension. There is no free lunch. That DB pension costs your employer a lot. In this case one is forced to save. The deduction in your compensation happens behind the curtain and is transparent to you. Yet you still must deal with envy. As an example, I have a son who currently has a job with an inflation-indexed DB pension. He could leave that job for one without a DB pension and get an immediate pay raise of 30% or more. With that higher pay he could have a newer car, a bigger house and more toys now.
Sure, you could argue that if one were to take the pay raise and invest the difference you may well be better off. But how many people have that discipline? Very few. They are going to get the bigger house, the newer and more tricked out car and all sorts of boats, jet skis, motorcycles, vacation homes and other material things to make them happy now. And then when the paycheck stops, they will look around at the mess they have made and wonder just how it happened. Next comes the narrative fallacy of just how “the man” or “the system” screwed them.
Sure. Everyone could seek put those jobs which still offer DB pensions , which increasingly means public sector. And the rest of the economy would crumble for lack of workers.
Meanwhile in the real world people are often just glad to break into their chosen careers and don’t at the age of 21 or whatever think
” oh maybe I’d better get a more boring job for the pension”. It really is a case if haves and have not with DB pensions and I suspect some of those sitting pretty on them calling “envy” would turn white at the % of earnings others have had to put into retirement savings to catch up. It’s why I comfortably scoff at Quinn’s 100% income replacement theory.
I doubt that the presence of jobs with DB will ever crumble the rest of the economy. Since the desire for instant gratification will push many/most people to the higher take home now pay jobs without a DB.
What most of those instant gratification seeking folks will fail to realize is that it is now totally dependent on THEM to plan for their retirement. Their employer isn’t doing it for them. Neither is the government.
You also seem to think that planning for one’s retirement is hugely expensive. I guess that depends on what you mean by expensive but if one were to save and prudently invest 15% of their paycheck starting at age 25 they’ll most ’ll likely accumulate enough savings to retire comfortably.
It ain’t rocket science.
Look. I don’t dispute that people do unwise things in their money in the US, including filling their backyards with expensive toys they never get to use. But the point is you can be unwise and still come out OK with a DB pension whereas you need to be financially savvy enough from an early age often to achieve the same with DC.
And the fact is DB pensioners are fast becoming dinosaurs
Financial Times
“Nearly half of large US employers still sponsor a DB plan, though only 21 per cent are open to new hires, according to consultancy Mercer.”
This Forbes article is also interesting.
https://www.forbes.com/sites/dandoonan/2023/12/18/will-2024-be-the-year-of-the-pension-comeback/
So yeah if someone parades that they are paragons of virtue just because they got lucky enough to be a 2 DB pension household while painting 80% of today’s workers as spendthrift envy mongers I will call BS all day long. Just like I would for those who don’t recognise that cashing in on multibanger stock options is a matter of luck not intrinsic virtue for many.
Absolutely you can be unwise and come out okay with a DB plan IF it is a good one (properly funded, indexed for inflation… got to wonder just how many people can accurately evaluate a DB plan). You can also be unwise and come out okay if someone else chooses what and how much you eat, where you live, what work you do, what you study in college if you even go, who you marry and so on. The point is just how much nanny state do you want? And wherever you draw that line, not all decisions that impact how your life turns out will be made for you. You have to own the ones you make.
You can take the job with the DB and outsource the need for financial discipline and planning. Or not. But if you don’t then YOU have to take care of your retirement planning.
I agree that DB’s are going away. No where have I said otherwise.
And, again, you don’t have to be all that “financially savvy,” whatever you think that means. Save 15% starting at age 25, put it in two-thirds in a total world stock index fund and one third in a total US bond index fund and rebalance once a year.
Now to address the rather nasty part of your last reply …
You seem to have some personal issue with someone who either wrote this article or responded in the comments. Leave that stuff at home. It has no place in these forums.
I don’t have a personal issue and don’t appreciate the scolding thanks. I’m simply riffing off the idea that expressing any thoughts on the “disadvantage” of DC v DB pensions is envy.
It might be that the OP’s ” friends” who they first mentioned are profligate and selfish fools regardless of the DB pension mentioned but it came across as punching down on people who had a relative disadvantage. This forum does have a certain air of smugness. Now that’s to be expected – it’s hardly the sort of peer environment where one would be brave enough to post that they’ve screwed up through life events and are looking at a relatively pecunious old age. Even your own post above:
“And, again, you don’t have to be all that “financially savvy,” whatever you think that means. Save 15% starting at age 25, put it in two-thirds in a total world stock index fund and one third in a total US bond index fund and rebalance once a year.”
What proportion of the US working population know and understand this at the age if 25? Where is the education coming from as to this “rule”? How do they save 15% gross when they are perhaps struggling to get on the housing ladder, starting families etc etc? It’s easy enough to look down on people with the hindsight of having made it. It’s less easy to have perfect decision making when you’re in the trenches of day to day existence.
Sadly I think the distance between haves and have-nots will extend even across the middle classes in upcoming generations. So anyone finding social media noise distasteful now hasn’t even seen the start of it.
There is nothing smug or new about saving 15% and putting in in two-thirds total world stock index fund and one third in a total US bond index fund and rebalance. John Bogle started that message some fifty years ago and the list of others who have amplified it is extensive. Bernstein (Peter and Bill) and Malkiel come to mind.
You have a great point about the state of financial education in the US. At this point if you don’t get a good one at home or have the drive to go get it yourself, you are out of luck.
How do you save 15%? If you haven’t listened to or read anything from Dave Ramsy, perhaps you should. He’s just one source of good ideas. Here’s a couple of other ideas. Get on the housing ladder at the right place, buy the car you need instead of the one you want, delay starting a family … you get the idea. The common thread you will see in all of them is that it requires self-discipline and owning your decisions.
Smugness on this form! Now that’s funny! While there may be some there is quite a bit of tough coming clean. Read the articles and posts about how contributors have screwed up. I’ve even post about my stupid moves … buying active funds with loads, whole life insurance and others.
Yup no smugness at all on a forum where people regularly boast about being 100% covered for all income needs and with significant investment pots (often implying 7 digit+) on the side for fun.
I don’t actually need to do the reading you suggest because I’ve just been trying to articulate for the many – those who will never post on a site like this because they don’t feel they have the knowledge, vocab or indeed the base level of wealth.
Please actually read my post. I did acknowledge that there is some smugness on these forums, but I pointed out that there is also much humility. We are a mix of people.
Well, if you already know how to save 15% then why did you ask?
See the bit about articulating for the great unwashed…
Anyway let’s not get into the whole tiresome business of telling others on the internet how to argue.
Suffice to say I think there are difficulties in ranting about the fecklessness of “the other” while repeatedly trying to enforce a message that the only way to have a successful retirement is absolutely secure income (and yes I’m synthesizing a number of discussions for hyberbolic effect). Even for those of us that have hopefully planned around that in other ways there will always be the possibility of the black swan(s) just as secure pension can disappear with a former employer default.
Richard,
Unfortunately, what we see on social media IS probably an accurate reflection of our broader society. Detachment between fact and fiction is the normal state.
Daniel Kahneman put it this way, “Our comforting conviction that the world makes sense rests on a secure foundation: Our almost unlimited ability to ignore our ignorance. Flawed stories of the past shape our views of the world and our expectations for the future. Narrative fallacies arise inevitably from our continuous attempt to make sense of the world. The explanatory stories that people find compelling are simple; are concrete rather than abstract; assign a larger role to talent, stupidity, and intentions than to luck; and focus on a few striking events that happened rather than on the countless events that failed to happen.” It is hard work to overcome these mental biases that we “story telling primates” have and most people are just too lazy to do that hard work.
Add to that the fact that the world really isn’t “fair” no matter how one may define that word. Morgan Housel put it this way, “There is plenty of uncontrollable luck that deeply impacts our lives: Where we are born, who we are born to, and the circumstances of our early childhood all have an outsized impact. Bad people win and good people lose—all the time… The world may never be truly fair, but it will always belong to those who make the most of what they have before them.” (my bold)
In one of your below comments you pointed out that it is attitude that matters, and you are right. If you can fill the unforgiving minute with sixty seconds’ worth of distance run-yours is the Earth and everything that’s in it, or not and just sit there and complain.
It is hard work to overcome these mental biases that we “story telling primates” have and most people are just too lazy to do that hard work.
Kahneman and Tversky empasized the unconsious nature of the biases and heuristics they identified. This raises the question of how you can use a quote from Kahneman to argue that people are too lazy to do the necessary work to overcome biases that they are unaware they have.
Excellent, thank you for commenting.
I don’t see the point of spending time reading the types of threads that you have become addicted to. I know my mental health would suffer if I spent time interacting with people who do nothing but complain about how unfair things are. I’m sure you know by now that you can’t reason with that mentality.
I do it trying to understand other points of view, the depressing thing is these folks can vote.
You have complained about these types of folks in your HD articles and posts for a long ttime but I’m hard pressed to recall you describing how your understanding of their points of view has grown.
They give me ideas on things to write, subjects to try and clarify, like SS and Medicare. I better understand how people fail to see the connection between actions and also fail to consider consequences.
My use of what they write is far stronger on my own blog rather than HD.
If you think personal finance is the only area where ignorance, prejudice and general hatred are stirred and amplified ( including by some of the most powerful if erratic business people on the planet as well as foreign state bad actors )you are really not deep into the cesspool of social media.
Election year – buckle up.
It’s interesting. I grew up ‘working poor’ and am familiar with the mentality that is behind some of these types of comments. It can be difficult to reconcile investing, inflation and your own autonomy with the reality surrounding you in a poor neighborhood. The attitude is you’ll never make it out, so why try? Honestly, I now think some people don’t want you to make it out because it says more about their personal choices and reinforces their negativity.
I knew education was important so my ticket out was the funding the state of NY provided to attend SUNY. I really only saw how cynical the area I grew up in had made me once I left and someone pointed it out to me. They were right and it made me reconsider where it had come from – that changed me going forward.
Both education and attitude are important. If I had to choose, I’d pick attitude first.
Agree. It starts at home, but anyone can be a positive influence on a young person’s life, just by telling them to keep trying and not to quit. I don’t think people realize how corrosive they can be with their negativity.
Very true
Consider blaming the American education system. I had step children in what was considered a very good school district, and their education was nothing like as good as mine in the UK.
Richard, this rant reminds me of a couple of my prior articles regarding things I heard while preparing taxes and my time spent in the beer business. On Facebook I have unfollowed dozens of people who post goofy things. Sadly these things represent a too large part of the population.