I wonder how this is going over, in Duszniki...

jmski52

Warnings that private pension funds could be wiped out.............

Reuters - Poland reduces public debt through pension funds overhaul

It's showtime!

derryb

I suspect the first, if any, move by the US would be with the federal employee retirement fund, the Thrift Savings Plan. TSP currently allows employees to allocate current and/or future contributions into six different funds one of which is the G, or treasuries, fund. It makes perfect sense for the US to start with the TSP and require a certain amount be held in the G Fund. Keeping an eye on this will give private pension fund holders a heads up on what will soon affect them.

ricko

I do not like this at all....... Cheers, RickO

Baley

Perhaps we should do all of our financial planning with the assumption that we will never receive a dime of any pension, social security, medicare, 401k, insurance, or any other benefit or entitlement payment from "Them"? Then we'll be alright regardless, and any money They return to us later will be icing on the cake?

jmski52

Baley, it's clear that you have a decent job, good income and can make it without those entitlements. I'm probably not quite as fortunate, but maybe I could make it without them, too.

Most people certainly cannot.

One other factor to consider is that no matter how well you plan, things change.

And perhaps the last point is that working people have earned that money and it's been part of their planning since they first started contributing. Yes, it should be considered totally theirs.

BAJJERFAN

<< <i>Perhaps we should do all of our financial planning with the assumption that we will never receive a dime of any pension, social security, medicare, 401k, insurance, or any other benefit or entitlement payment from "Them"? Then we'll be alright regardless, and any money They return to us later will be icing on the cake? >>



I guess we shud all stash it as CASH!!

OPA

<< <i>Baley, it's clear that you have a decent job, good income and can make it without those entitlements. I'm probably not quite as fortunate, but maybe I could make it without them, too.

Most people certainly cannot.

One other factor to consider is that no matter how well you plan, things change.

And perhaps the last point is that working people have earned that money and it's been part of their planning since they first started contributing. Yes, it should be considered totally theirs. >>



Most people don't pay attention to overblown doomsday scenarios and don't loose any sleep over it.

cohodk

You have to understand the recent history of Poland before making judgments.

In the late 90's as Poland was integrating into the rest of the world, older workers, those in their 40s-50s , were told to retire and offered benefits to make room for younger workers. Of course this was/is an unsustainable practice.

This really is no different than American companies/unions/municipalities offering pensions and early retirement packages to workers here. Yes, this was/is stupid and unsustainable and many will lose, but is all very healthy and bodes well for future generations. Im excited to see these changes.

derryb

<< <i>There is no money in the TSPs - they're entries in "index" funds... The Gov't just borrows that much less than their salary - if someone is "contributing" 5% (and getting 3% "matching), the Gov't only borrowed 95% of their salary that year. The Gov't hasn't borrowed that 8% (and "earnings") yet, it's just an entry on the books to be borrowed at a later date. When I left Gov't employ in 1997, I rolled TSP into IRA ASAP!

In many ways, TSP is kind of like SS - just IOUs.... >>


Wrong. While what you say is true of the Civil Service Retirement System (basically SS for federal employess) TSP money is not held by or controlled by the government. It is held on behalf of the contributing employees in various funds managed by the current manager under contract with TSP, BlackRock Institutional Trust. The only TSP fund that can actually be touched by the US government is the G (bond) fund who in the past has temporarily borrowed from it to keep the government running while awaiting budget approval by congress. So far it has always been paid back. I participated in TSP since it's inception in 1986 and upon federal retirement converted all holdings into self managed ROTHs. TSP allowed me to build a nice tax deferred nest egg with which I was able to make a lot of gains using their interfund transfers.

TSP is nothing more than a 401K for federal employees. It is completely seperate from the Civil Service Retirement System.

derryb

<< <i>Well, then I stand corrected. My information was from memory of the documents when they originally came out with TSP in 1986, and that's how I "interpretted" the "verbiage" at that time.... >>


While a great retirement planning option for employees, TSP is no different than any other retirement fund in that "will the money be there when I retire?" It was for me, but that's no guarantee for future retirees. My advice to those retiring from federal service is to get your TSP funds into a self managed IRA or Roth IRA.

piecesofme

jmski52...real world

Baley...well, Baley world

Don't get me wrong, both points taken to heart, it's just that one I cannot relate to, perhaps due to my own lack of forward looking and being too short sighted in my financial planning. Kudos to those who have done so. I have, but admitedly not as much as I should have, or I should say, as soon as I should have.
Oh time...how it manages to just get away.

derryb

I personally don't see money saved long term being worth what it is worth now. To be worth more later the retirement account gains have to be greater than the loss of dollar purchasing power. The only advantages I see to retirement accounts are deferred taxes (which will most likely be at a higher rate later), employer matching of funds and having the ability to invest the money in things that should hold long term value. I do not see long term value in equities or bonds. Most employer sponsored retirement plans do not give what I consider to be good investment options.

One has to look at all the costs including future value of money which is really just a guess. FED has been giving some pretty good clues the last few years.

ksammut

Very sobering information in the below link. You can find hundreds of articles outlining how little Americans have saved for their retirement. If anything happens to social security, a very high percentage of Americans will be broke during their retirement.

Epic Crisis

OperationButter

<< <i>Very sobering information in the below link. You can find hundreds of articles outlining how little Americans have saved for their retirement. If anything happens to social security, a very high percentage of Americans will be broke during their retirement.

Epic Crisis >>



"Median retirement savings for those 25 to 34? Zero dollars."

Why save for retirement when I can put all extra capital into physical metals?

jmski52

Most people don't pay attention to overblown doomsday scenarios and don't loose any sleep over it.

I'm not sure what about any government confiscating 1/2 of your private retirement accounts would qualify as a "doomsday scenario".

I can tell you this, "you don't step on Superman's cape; you don't spit into the wind; you don't pull the mask off the old Lone Ranger, and you don't mess around with Jim."

Why would anyone who sees this sort of thing happening for real - not take action to avoid it happening to themselves?



This really is no different than American companies/unions/municipalities offering pensions and early retirement packages to workers here. Yes, this was/is stupid and unsustainable and many will lose, but is all very healthy and bodes well for future generations. Im excited to see these changes.

No, it's not the same thing. These are private retirement accounts and the money wasn't promised by anyone. It was earned and then put away for the future by the people who earned the money - NOT given to them by pandering politicians and promised on the backs of taxpayers. NOT THE SAME AT ALL.

cohodk, if you can't grasp the significance of this then there's no hope that you'll know what hit you when (or if) it does. And I can't help you understand that any more, although I can say that I have given it an honest effort.

Baley

If someone were to grasp the implications fully, what would or should they DO next, that they're not doing now about it? thanks.

derryb

<< <i>If someone were to grasp the implications fully, what would or should they DO next, that they're not doing now about it? thanks. >>


It all depends on what they are doing about it. Many grasp the implications but take no evasive action. Most people I know complain about the economy being ruined, yet fail to attempt to protect themselves.

Speaking as someone who has grasped the implications/possibilities fully, here's my money advice to loved ones:
-always consider "future value of money" in you financial decisions
-keep no more cash in a private bank than neccessary. dollars that must be held should be in a local credit union. keep some cash hidden at home.
-investments should be under the direct control of the investor. you don't want to have to call a middle man (broker) in a crisis, he won't answer the phone.
-avoid investments in bonds and certificates of deposits. avoid a reverse mortgage.
-don't be spending money to invest while you are spending money to pay interest on credit cards and loans (exception is a mortgage).
-investments should be closely monitored and not just left to grow.
-some savings/investment should be in physical precious metals.
-retirement accounts should be under direct control of account holder where possible. again, avoid a middle man.
-for retirement accounts required to be under the control of another party (many employer plans), know your investment options.
-when eligible to do so move employer controlled retirement accounts into self managed retirement plans. consider your option to convert rather than roll over.
-keep yourself educated on matters concerning your money.
-do not believe that your government will make the best decisions that affect YOUR money.
-have an end game plan (trust/will) before you die

jmski52

Here's the implication: We aren't in Kansas anymore. Since 2008, it's truly "anything goes", and I mean that in all sincerity.

What does anyone do about it? Good question, we discuss the options on this forum almost daily. What you do about it depends on your unique situation. That is true whether or not there's a problem with the financial system or not. Right?

Bailey, you know what is best for you, and for you that is a well-diversified portfolio of assets having low correlation coefficients between asset classes, and including precious metals. For someone else, it might be to focus on their employment security or company advancement.

For someone like me, it means minimizing exposure to the banking system. It means keeping the family afloat and trying not to drain savings while rescuing some from their own mistakes and helping where you can.

Baley

Those are great responses in a general sense, but specifically about the OP and pensions, what is a strategy for someone currently drawing from or earning a pension?
The news item suggests that the people's draw may be changed against their will? As has been said, I haven't earned a pension but my dad is a retired 35 year company man and gets a monthly check. Is there any action he can take to improve his probability of not being a victim of of such reduction in control or payout? thanks

jmski52

Unless there's a lump sum option, I haven't read about any such strategies for funds still vested in such a Plan. If I come across something, I will post it. I assume that each plan is custom-crafted for the company's needs at the time that it is created, so the best starting point is to read the retirement plan documents carefully and with scrutiny.

If he has other savings invested in other sources he should be wary of bank accounts, bank CDs, ETFs, Money Market Funds, and even Mutual Funds. It really depends on your level of apprehension about the system. Nobody knows when a problem can crop up, but the odds are significant that when a problem does crop up, there won't be any time to react to it. And THAT's the problem, in my opinion.

In 2008, it was Libor Rates that were telltale. It wasn't just the fact that Libor went up past 4%, it was the fact that the big banks didn't trust each other to the extent that nobody knew who could pay off what, if required. And that was the source of the overnight liquidity crunch that threatened to shut down the world's entire financial system. That problem hasn't gone away.

The root problems are 1) the fact that government debt is way beyond being unsustainable and 2) the derivatives problem can bite the whole system at practically any time.

You can check off derryb's list one item at a time until there is a reasonable sense that the bases are covered.

yellowkid

Like jmski mentions, I took a lump sum instead of a pension. If I go broke it will be my fault. If you are already drawing a pension there isn't much you can do.

Part of the intended manipulation in Poland reminds me of when the pols here started using SS funds to offset their deficits, until, imagine, it's all gone. Well, I guess now it's just some more money we owe that we can't pay.

The problem with trying to keep money out of the hands of the Feds is that you have to keep it somewhere that generally doesn't pay anything, except for appreciation. If I were to convert my IRA to, say gold, a five year bear market would kill me.

derryb

<< <i>Those are great responses in a general sense, but specifically about the OP and pensions, what is a strategy for someone currently drawing from or earning a pension?
The news item suggests that the people's draw may be changed against their will? As has been said, I haven't earned a pension but my dad is a retired 35 year company man and gets a monthly check. Is there any action he can take to improve his probability of not being a victim of of such reduction in control or payout? thanks >>


A pension, unlike an IRA or a 401K, is a retirement payment, based on years of service, that is normally funded by the employer or some employee organization such as a union. State retirees receive a state pension. Not much you can do with a pension but hope and pray the entity funding it does not go belly up (i.e. Detroit or some major manufacturer). One should also hope there is a built in cost of living adjusment but unfortuately such adjustments are based on government controlled CPI data and not the real prices on the grocery store shelf. Pension provisions are usually dictated by employment contracts and/or bargaining agreements with the employee having little to no control over the terms. Pensions normally end upon death of the retiree.

IRAs and 401Ks are fully or partially funded by the employee with the employe having control of what goes in and what comes out, and upon death any balance belongs to the heirs. The holder of the account owns the cash balance of the account. He/she should know all investment/contribution/and withdrawal options in order to maximize its potential.

difference between an IRA (or 401K) and a pension

Concerning a lump sum payment option upon retirement in lieu of a monthly pension for life with a built in cost of living annual raise, the longer one lives the bigger the mistake was in choosing the lump sum payment. Some employers offer a lump some retirement payment with a reduced annuity (pension payment), an option that has to be carefully weighed by the retiree. As usual, any decision involving future money has to take into consideration what one expects the value of that future money will be. Unfortunately, recent history shows the future value of money to be declining in a logarithmic trend (increasing rate of decline over time) rather than a linear (stead rate of decline) trend.

roadrunner

<< <i>Perhaps we should do all of our financial planning with the assumption that we will never receive a dime of any pension, social security, medicare, 401k, insurance, or any other benefit or entitlement payment from "Them"? Then we'll be alright regardless, and any money They return to us later will be icing on the cake? >>



Exactly. I've had this mindset since around 1987. Even back then it was sort of shaping up that the govt and private pension loads coming down the road would never be sustainable. Had I had the option of cashing out of SocSec back then I would have done it. My own former Fortune 500 company paid out all pension plan liabilities last year. I took the lump sum.

cohodk

These are private retirement accounts and the money wasn't promised by anyone. It was earned and then put away for the future by the people who earned the money - NOT given to them by pandering politicians and promised on the backs of taxpayers. NOT THE SAME AT ALL.

I beg to differ. Telling an employee to put $10,000 per year into an account and then promising him $70,000 per year until he dies is very much the same. Pension plans are ponzi schemes run largely by unions and their political backers.

The US economy was stellar from 1980 to 2007 because the boomers refused to save. The economy for all those years was better than it should have been because the boomers spent all their money rather than save. Now those same boomers complain the loudest that they have no savings.

cohodk

It means keeping the family afloat and trying not to drain savings while rescuing some from their own mistakes and helping where you can.


This is the way it used to be in the "good old days". Hopefully we return to this mentality.

tincup

Welcome to the machine.....

derryb

If some of us older guys think back to when we were kids, most of us had a stay at home mom. My dad was a lower end middle income worker with five kids and a wife that was taking care of the home front, keeping us off the street. We lived a comfortable lifestyle. As boomers entered early adulthood, family savings had to be tapped and mom's had to eventually enter the work force to bring in the additional income needed to maintain the current lifestyle. This continues to have a profound negative affect on the kids of working mom's, and a society that has to deal with them. The additional income from a working mom not only helped meet the financial needs of maintaing a lifestyle, it propelled many families up the middle class ladder when they in fact should have been saving the extra income. Once the addition of a working mom could no longer help keep up with the rising cost of maintaining the same or improved lifestyle, families turned to debt. Now that debt has been maxed out a record number of Americans have turned to the state, many for just their basic needs. Kids that grow up depending on the state know no other lifestyle and learn to expect and even demand support from the state. The social engineers (probably bankers and a complicent FED) have taken us down that path to where many are today: broke, maxed out in debt, unemployed or dependent on the state for basic survival. The social experiment of the last 40 years has failed us all - those that suffer from it and the lucky ones who only have to worry about funding it. Over the last 40 years most Americans quit earning interest from their banker and have been paying him interest. This was not an accident, it was by design of the banking industry controlled social engineers (normally residing in DC). Never forget that debt is the lifeline of banking.

The cause of this failure is not that lifestyles changed a whole lot, the cost of them did. Leading these costs were loss of savings, addition of debt and kids under the control of someone/something besides a loving parent. Our current state of affairs is a social as well as economic failure.

1jester

<< <i>You have to understand the recent history of Poland before making judgments.

In the late 90's as Poland was integrating into the rest of the world, older workers, those in their 40s-50s , were told to retire and offered benefits to make room for younger workers. Of course this was/is an unsustainable practice.

This really is no different than American companies/unions/municipalities offering pensions and early retirement packages to workers here. Yes, this was/is stupid and unsustainable and many will lose, but is all very healthy and bodes well for future generations. Im excited to see these changes. >>



I don't think you grasp the whole story, and what you mention about the early retirement packages is a non-sequitor and has absolutely nothing to do with the issue mentioned. The private pension funds that were just nationalized (like the good old days of Communism) were a welcomed step AWAY from the forced contributions into the national system. And furthermore, the private pension funds were guaranteed to always be private, not nationalized. I guess the powers / banksters that be did a good job fooling enough people into contributing into the private funds so they could simply steal them in the end. This is an outrageous theft. And surely it portends what's to come for you too, in America.

yellowkid

.

The US economy was stellar from 1980 to 2007 because the boomers refused to save. The economy for all those years was better than it should have been because the boomers spent all their money rather than save. Now those same boomers complain the loudest that they have no savings. >>



Not all the Boomers

derryb

rising cost of living dicates that one cannot save if one wishes to maintain lifestyle. Who wants to give up lifestyle they and their wife/kids are accustomed to? Saving money is the first thing to be sacrificed.

roadrunner

What we're told

I like this particular passage from the article.

We are told that a free market gold coin monetary system is a threat to our well-being, though not so mysteriously "the international gold standard from 1815 until the outbreak of World War I 1914 [was] the greatest period of economic growth in recorded history." Nevertheless, we're told gold money is a barbarous relic.

China and India importing over 70% of world gold production.

AcesCracked

"rising cost of living dicates that one cannot save if one wishes to maintain lifestyle. Who wants to give up lifestyle they and their wife/kids are accustomed to? Saving money is the first thing to be sacrificed. "

Isn't that the reason that we saved as we could so that we "could" maintain the lifestyle that we got used to? The problem is the kids see me reading my USA Today and drinking my Starbucks coffee and they want to follow suit and pay with there VISA....... They go and buy a 200K house with a 40K salary, get two new cars, and the bank lets em have the cash at 18%. The ones that had savings have been using it up to pay gas costs to get to and from work the last few years since gas went to 4.00

The bad deal all around is the kids....... Need free lunch programs so that kids don't starve and cant embarrass them so lets give all kids free meals in school. While we are at it lets not embarrass the folks using food stamps and give them an EBT card to shop with. Where does it end.

My dad raised 6 kids, paid for 3 weddings with silver and gold, and taught us all to save and don't depend on Government. We are all doing well because we all had to work for a living.....

Just my 2 cents.......

Tom

bronco2078

A little reading between the lines on this subject at this link. Control trumps ownership