Living the dream

Yesterday, I was sitting in the shallow end of the apartment pool and visiting with a former professional baseball player who now owns an insurance agency.  He is in a good financial situation, but he said his situation is nothing compared to his father.  His father has a three-office agency in Houston that he stumbled into and now he does hardly any work while the money flows in like clockwork.  Most of his days are spent on a houseboat.

I responded like I typically do when hearing about situations that are like the proverbial bird’s nest on the ground.  I said that I try not to be envious of people in situations where it does not appear that they earn their money.  Before I could elaborate on my free-market, capitalistic philosophy, however, the former ballplayer stopped me short and said that I had no business being envious because I was already “living the dream.”

Apparently, during a conversation a few weeks ago I had used that phrase in describing my life.  (Aside from “being comfortable in your own skin,” it is probably my favorite catchphrase.)  And the ballplayer was perfectly appropriate in stopping me from pontificating about restraining my envy when actually I had little to be envious of.

Sure, if I had his dad’s insurance-agent money, I could live on a houseboat or have a condo down at Port A.  And I could give my kid’s more financial assistance as they pursue their careers.  But having more money would not fundamentally change the life I am already living. I read, write, and workout, and I would continue doing those things even if I won the lottery.  My personal life is getting better, and I strongly believe that having more money would not lead to better friends. 

So, perhaps I should quit patting myself on the back and instead just thank my lucky stars.     

 

 

Retirement – three years later

Three years ago today, at the age of 55, I took early retirement from USAA after almost 22 years of devoted service.  In return for those years of service, USAA provided me with a pension and, almost as importantly, lifetime health insurance.  Without USAA-provided health insurance, retirement probably would not have been financially feasible for me. 

So what do I think about retirement, three years later?  Even without financial stresses (the stock market has almost doubled since March of 2009), the problems of life do not disappear.  (That reminds me of Lonesome Dove’s Gus McCrae telling Miss Lorena that life in her imaginary San Francisco is still just life.)  In fact, I sometimes think that the obligations of work keep a person distracted and preoccupied from personal-relationship issues, and those personal relationships are what make the world go round.  As Barbara Bush famously said in a 1990 commencement speech at Wellesley College:

• And as you set off from Wellesley, I hope that many of you will consider making three very special choices.
• • The first is to believe in something larger than yourself, to get involved in some of the big ideas of our time. I chose literacy because I honestly believe that if more people could read, write, and comprehend, we would be that much closer to solving so many of the problems that plague our nation and our society.
  • And early on I made another choice, which I hope you’ll make as well. Whether you are talking about education, career, or service, you’re talking about life — and life really must have joy. It’s supposed to be fun.
  • The third choice that must not be missed is to cherish your human connections: your relationships with family and friends. For several years, you’ve had impressed upon you the importance to your career of dedication and hard work. And, of course, that’s true. But as important as your obligations as a doctor, a lawyer, a business leader will be, you are a human being first. And those human connections — with spouses, with children, with friends — are the most important investments you will ever make.  At the end of your life, you will never regret not having passed one more test, winning one more verdict, or not closing one more deal. You will regret time not spent with a husband, a child, a friend, or a parent.”

All three of Bush’s choices are sterling solid separately, and when combined they form the basis of an excellent life.  And most importantly, they continue to operate throughout life.  They remain just as valid for someone retiring from a career as they do to someone graduating from college.

Recently, I have been thinking about the third choice – human connections – and I blogged about that as some of my New Year’s resolutions.  Emotional intelligence and personal relations have never been a forte of mine.  After high school, I focused on academics and then got married shortly after law school.  In 2007 I got divorced, and since then I have struggled to develop and maintain satisfying relationships.  Let’s hope that understanding the problem is the biggest step toward solving it.  

A final thought on the timing of retirement – NY Time columnist David Brooks recently wrote about a survey of retirees.  One of their biggest regrets was staying in their principal career too long.  From my perspective, that is exactly correct.  You only live once, so why spend so many years doing the same thing.  Although I enjoyed me time in the insurance industry and at USAA, I’m glad that I left as soon as I could afford it.  A life is enriched by variety.

A perfect storm

The past few days I think my life has run into a perfect storm.

Just a few weeks ago, everything was hunky-dory.  I was working out every day with an hour bike ride in the hill country and another hour practicing yoga with friends.  My knee was acting up, so I decided to have knee-replacement surgery in early November.  Enjoyable blogging and reading consumed much of my day.  My college son graduated and moved out of my apartment to move in with his girlfriend, and the additional space seemed fine.  Everything was going so well that I decided to stop using the anti-anxiety mediation, Lexapro, that I had been using since my divorce.

Then the perfect storm hit.  The after-effects of the knee surgery were worse than I expected.  I have a low pain threshold, so I used the hydrocodone as much as authorized, but still experienced significant pain because the dosage was too weak.  Then when I started weaning myself from the pills, I felt like I was in a funk, and a friend has told me that it is common to feel that way when getting off pain pills.

But another friend has told me that it is also common to feel that way when a person is suddenly prevented from exercising.  Even though I am now riding a stationary bike for 30 minutes a day, she said that is no substitute for the one-hour outdoor ride I did for 68 straight days before the surgery.  She said something about endorphins and such.

And what about the fact that I discontinued the Lexapro just prior to the surgery?  That certainly can contribute toward a funk.

For good measure, let’s add that one of my best friends moved out of town, the stock market is in a dive, and Washington D.C. is justifying its 9% approval rating.  Further, I finished a fascinating book on Lincoln.  Finishing a great book is always depressing, but this was even worse because of the sad ending.  And finally, the shortest day of the year is just around the corner.

Because of this perfect storm, I was so depressed about politics last night that, for the first time in forever, I simply turned off the TV at 7PM and went to bed.

Now, to snap out of it, I have resumed taking Lexapro, I am going to redouble my efforts get back on my road bike and back into yoga class.  And most importantly, I have concluded that my life was already getting too solitary, and in the past month it became significantly worse.

Time for a mid-course adjustment.

The CLASS Program and long-term nursing care as a part of Medicare

A few days ago, I blogged about the need to modernize Medicare.    The blog posting was prompted by a critique in the NY Times that suggested the 1965 Medicare program was providing generous coverage for things that participants didn’t want or need (exotic drugs and treatments), and was failing to cover things that participants wanted and needed (nursing care).  The critique suggested, and I agreed, that Medicare coverage should be shifted from what participants didn’t want to what they did want, and that this could be done in a cost-neutral way.

Yesterday, the NY Times published an editorial commending the Obama administration for eliminating coverage under ObamaCare for nursing-care coverage (CLASS or Community Living Assistance and Support).  Although the coverage was meager (up to $50 a day), the Obama administration concluded in a 50-page report that there was no way that the coverage could pay for itself because the benefits to old people were too generous (they could start collecting after paying in for a mere five years) and the costs to young people were so excessive that there would be a serious problem with adverse selection.  (The same Ponzi-type thing happened to Social Security many years ago, but it was circumvented by requiring the young to participate – i.e., a mandate.)

CBS News reported the demise of the CLASS Act as follows:

• But a central design flaw dogged CLASS. Unless large numbers of healthy people willingly sign up during their working years, soaring premiums driven by the needs of disabled beneficiaries would destabilize it, eventually requiring a taxpayer bailout. 
• After months insisting that could be fixed, Health and Human Services Secretary Kathleen Sebelius finally acknowledged Friday she doesn’t see how.  “Despite our best analytical efforts, I do not see a viable path forward for CLASS implementation at this time,” Sebelius said in a letter to congressional leaders.
• The law required the administration to certify that CLASS would remain financially solvent for 75 years before it could be put into place.  But officials said they discovered they could not make CLASS both affordable and financially solvent while keeping it a voluntary program open to virtually all workers, as the law also required.
• Monthly premiums would have ranged from $235 to $391, even as high as $3,000 under some scenarios, the administration said. At those prices, healthy people were unlikely to sign up. Suggested changes aimed at discouraging enrollment by people in poor health could have opened the program to court challenges,
  officials said.
• “If healthy purchasers are not attracted … then premiums will increase, which will make it even more unattractive to purchasers who could also obtain policies in the private market,” Kathy Greenlee, the lead official on CLASS, said in a memo to Sebelius. That “would cause the program to quickly collapse.”
• That’s the same conclusion a top government expert reached in 2009. Nearly a year before the health care law passed, Richard Foster, head of long-range economic forecasts for Medicare warned administration and congressional officials that CLASS would be unworkable. His warnings were disregarded, as Obama declared his support for adding the long-term care plan to his health care bill.

In hindsight, the CLASS Program was remarkably naïve.  How can the federal government develop a program that is voluntary and does not require subsidization?  If such a program were feasible, private business would have already done it.  If private business can’t do it, there is no way the federal government can.

The critique in the NY Times is correct in suggesting that CLASS Program should be suspended, not repealed.  Nursing care is an issue just as big as universal healthcare.  America wants and needs both, but without busting the budget.

Republicans need to prove that “Repeal and Replace” is not an empty slogan.  If ObamaCare needs to be repealed (it does), then the Party should tell voters what it should be replaced with.  The same thing applies to nursing care – i.e., if we don’t like the CLASS Program, what do we like?

As noted above, the CLASS Program is a lot like Social Security except that, instead of trying to reform it, we are starting with a blank slate.  I suggest that creative Republicans should use this program as an opportunity to test their ideas for fixing Social Security.  For those who think Social Security can be privatized, show us how it can be done with the CLASS Program.  For those, like me, who think that Social Security needs to be mandated, we should pursue legislative tweaks to the CLASS Program so that it includes a mandate for public or private nursing-care coverage.  Alternatively, we could incorporate some coverage for nursing care into Medicare.

The bottom line is that we need to do something; it’s just a matter of deciding what would work best for America and Americans.  This is exactly the kind of issue that Mitt Romney is ideally qualified to handle.

Supply & demand or asleep at the wheel

Supply & demand generally ensure that a person receives a fair salary – not too little and not too much.  Occasionally, though, our capitalistic system becomes distorted, and some privileged people are excessively compensated even though other capable and qualified people would be willing to do the same job for a fraction of that amount.

A prime example of distorted capitalism is the compensation to people in an auto union.  Historically, unionized auto workers (UAW) have received generous salary and benefits even though non-union people would do the same work for half the price.  This travesty survived for so long because the UAW negotiated the same salary and benefits with all American car manufacturers, and thus no manufacturer had a competitive advantage or disadvantage, and the manufacturers were able to pass the exorbitant labor costs on to the hapless American consumers.  Only with the advent of competition from overseas, nonunionized manufacturers was this cartel broken.

A similar situation of dysfunctional supply & demand can be found today in San Antonio, where our police and fire personnel are compensated far beyond what the city would have to pay to maintain a high-quality workforce.  These employees, who are generally high-school graduates, are paid like college graduates (more than teachers).  According to a Texas Tribune analysis of SAPD salaries:

• The highest salary was $185,321, the lowest salary was $22,048, and the median salary was $57,804.
• 824 employees (unclassified) made 20-40k; 1210 employees (from call takers and dispatchers to police officers) made 40-60k; 1069 employees (detective investigators and  sergeants) made 60-80k; 71 employees (lieutenants and captains) made 80-100k; 1 administrative person made 100-120k; 8 employees (deputy chiefs and assistant chiefs) made 120-140k; and the chief made 180-200k.

Interesting stuff.  Not only are police personnel better paid than teachers, they are given a better career path, with more than one-third of them in lead/manager positions.

As generous as their salary is, it is their pension that is almost obscene.

Texas teachers are thought to have a generous pension because they are entitled to an annuity of 2.3% per year of service, receivable in their early 50s (when their age and years of service equal 80).  For comparison, my pension at USAA (before USAA dropped it a few years ago) was for 1.5% a year, up to a maximum of 45%, but only after reaching 62 years of age.

San Antonio police and fire pensions put teachers and USAA to shame.  Police and fire personnel in San Antonio are entitled to an annuity whenever they have 20 years of service, which could be as young as 38 years old.

If that weren’t enough, the percentage of their annuity will knock your socks off:

• 20 years – 45%
• 27 years – 80%
• 30 years – 86%
• 33 years – 87-1/2%

Although you might think a 45% annuity to a 38-year-old retiree would be mighty tempting, a closer examination would suggest that the youngster should stick out his job an additional seven years, by which time the 45-year-old person would be entitled to 80% annuity.  A 45-year-old retiree with an 80% annuity (plus medical insurance) for the rest of their life – you’ve got to be kidding.

The next time some conservative tells you that many of America’s problems will disappear if we shift responsibilities from Washington to private enterprise or to state and local government, just remind them of the United Auto Workers and the police and fire personnel.  Or the United Way, for that matter.

Misfeasance or malfeasance can be found wherever and whenever the people let down their guard.

AARP demagoguery

While watching the news on TV this afternoon, I caught the tail end of an AARP commercial weighing-in on the debt-ceiling negotiations in Washington.    According to the retired teacher in the AARP commercial, the Washington negotiators are considering cuts to Social Security and Medicare, when they should be looking to cut waste and eliminate loopholes.

As I blogged only yesterday, there is always an open season in Congress for eliminating waste, but if they knew what the targets were, they would have already eliminated them.  Cuts at this time have to be made to programs that many believe to be worthwhile.

The AARP commercial is demagoguery because no one is suggesting cuts to Social Security that would affect the retired teacher in the commercial.  The proposals that I have heard discussed would affect future retirees only.  Furthermore, the AARP website claims that the Social Security system is financially solvent, but conveniently fails to mention that Medicare and Medicaid are two of the biggest reasons for our current financial pickle.

I guess it is expecting too much for a group like the AARP to take positions that look beyond its own special interests.  But we have to hope that its members do.

Federal-employee pensions

A recent article in the Washington Post reported that VP Biden’s deficit-reduction talks with Congress are looking at federal-employee pensions.   Although these pensions aren’t as generous as pensions for state & local government employees (such as those in rebellion-state Wisconsin), they are extravagant when compared to those few private-employee pensions that still exist in America. 

The group headed by Biden is exploring the possibility of increasing the amount that employees contribute toward their pension.  Currently they pay 0.8% of their salary toward their pension, whereas the Biden group is considering increasing the employee contribution to 6.0%. 

Opponents of the proposal claim that this would be equivalent to a 5.2% pay cut and would make federal careers less attractive.  I agree.  No employee would be happy about a significant put cut, and most employees decline a generous pension if they have to pay for it.

I think a different approach to reforming federal pensions would better serve the interests of employees and the federal government.  Employees don’t want to have their pay effectively cut, so leave their pay alone.  The federal government wants to rein in its pension costs, so do that by modifying the age at which an employee is entitled to a full pension, which is the real extravagance, if not an outrage.

Currently, federal employees can retire with a full pension at age 50 if they have 25 years of service and at age 55 if they have 20 years of service.  I think that is outrageous.  Such employees will likely receive a full pension for more years than they worked.  Can you imagine if Social Security included a similar benefits formula?  Working for the federal government should not be a financial nirvana. 

Speaking of financial nirvana, the Texas legislature is continuing to flounder with its budget shortfall as it approaches crunch time for its 140-day session, but I have not heard a peep about reforming our generous state-employee pensions.  Perhaps that is because the legislators are beneficiaries under that system, and it provides them with the lion’s share of their compensation.  Although they are supposed to be part-time citizen-legislators who are paid only $600 a month, plus a per diem of $150 a day during the session, the legislators have finagled the system to give them the same pension as a district judge, whose annual pay is $125,000.  Thus, a 20-year, part-time citizen-legislator can receive a pension of almost $60,000 a year at age 50.  Talk about financial nirvana.

Getting legislators to reform their pension is like getting them to vote for term limits.  In many states, these problems could be addressed through an initiative, but the Texas form of government, unfortunately, does not authorize this type of direct democracy.  I am left hoping that a grassroots uprising like the Tea Party or talk radio adopts the issue.