Mike Kueber's Blog

April 12, 2015

Grumpy, old men

Filed under: Retirement — Mike Kueber @ 1:22 am
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I have a die-hard conservative friend on Social Security who is majorly depressed to see the American government drift toward Europe’s level of social welfare.  Like Romney, he is concerned that the looters have taken control of our democracy and will continue on their merry way until they run out of other people’s money to spend.  America’s landing, he fears, will be hard.  On bad days he says he hopes he isn’t around to see the ugly ending, but on his good days he says he is looking forward to see the looters get their just deserts.  Let’s call him a grumpy, old man.

A couple of days ago, I had a long conversation with another old friend who is approaching Social Security.  He started by complaining about the management of large corporations, with their focus on selfish objectives instead of the general good.  From that complaint, he pivoted toward young people and their disdain for the Protestant work ethic and old-fashioned integrity.  On each of the subjects, I cut off the discussion by noting that since my retirement six years ago, I have almost no exposure to the management practices of large corporations or the work ethic or integrity of young people, and therefore am poorly qualified to have an opinion.  And even more relevant to our conversation, I didn’t care about the answer.  What difference does it make whether the values that I have are becoming more or less prevalent?

As I thought about my position of apathy, I wondered if I had become the grumpy old man described in the first paragraph above or perhaps my philosophy has become more like the Serenity Prayer:

  • God grant me the serenity to accept the things I cannot change; courage to change the things I can; and wisdom to know the difference.

While pondering that question, I recalled that when I ran for Congress and the SA City Council since retiring, I ran against a couple of whippersnappers (in their early 30s) whom I criticized severely for running for office at such a young age.  But then it occurred to me that I ran for my hometown school board when I was still in college and for the Minot City Counsel when I was in my early 30s, and it never occurred to me then that I was too young to be running for those offices.

Grumpy, old man, indeed.

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January 19, 2015

My third pet peeve in government

Filed under: Economics,Issues,Law/justice,Politics,Retirement — Mike Kueber @ 11:01 pm
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I recently posted about a progressive Facebook friend who is displeased with SA’s mayor, Ivy Taylor. She also is displeased with her redneck in-laws who, despite their antipathy toward welfare, are not above keeping a cow on their acreage to avoid paying any significant property tax.

While I’m not judgmental re: people who energetically try to avoid taxes, I have previously blogged about my disgust with the farm/ag exemption.  The ag exemption, along with the obscene pension plan that state legislators have provided themselves, are strong evidence of the corruption involved in government.

To my list of pet peeves in government, I am adding a third item – long-term capital gains. These gains are currently taxed at 15% for most people, which is a compromise between some people arguing that these gains should be untaxed and others arguing that these gains should be taxed the same as ordinary income.

I agree with the latter position, but even if I understand the compromise, I don’t understand why the tax code would allow an estate to transfer to its heirs capital assets not only without assessing a tax on its capital gains, but also with its cost-basis increased to its current market value. What uncorrupted legislator would think that makes sense?

For some reason, I’ve never heard this grotesque policy discussed, let alone discussed. Imagine my surprise a couple of weeks ago upon hearing that President Obama is proposing to seek a middle-class tax cut that will be paid for by assessing a capital-gains tax on inherited property.

I look forward to hearing how the Republicans argue against this proposal. Mitt Romney is opening his campaign with an emphasis on helping the middle class, and I would love for him to adopt this proposal.

October 7, 2014

Living for the moment

Filed under: Philosophy,Retirement — Mike Kueber @ 7:13 pm
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This past Sunday, my 59-year-old best friend took a hiatus from his retirement and returned to the workforce by taking a job as a contract employee for State Farm Insurance in Denver. The contract, which runs through December 31, 2014, pays extremely well, and State Farm has apparently decided that highly-paid, short-term contractors are more cost-effective than moderately-paid, long-term employees. But what was my best friend thinking?

Working overtime for more money is as American as apple pie. One of my sons recently went to work as an emergency-room doctor, which is essentially a shift position. Because of a shortage of these doctors, his employer often asks him to work an additional shift, and if my son has no important plans for that day, he will take the shift because he can use the extra money.

My 57-year-old brother in ND helps build planes, and because of a shortage of able-bodied manufacturing workers in ND, his employer is always asking and sometimes requiring him to work overtime. Because my brother is attempting to stockpile some money for his retirement, he will often volunteer for some additional hours, but not when he is feeling drained.

But my best friend is different. He already has more money than he will need for his retirement. He even has more money than he will need for his estate. His primary reason for returning to work, it seems to me, is because he doesn’t enjoy depleting an estate that he has spent his life building. That sentiment reminds me of something a Texas historian said many years ago about a cattle-drive cowboy – i.e., the cowboy was unable to empty his canteen of water that he had so mightily sought to preserve during the long cattle drive. (Damn, I wish I could remember who wrote that. Dobie? Webb?)

A secondary reason for my friend returning to work is that he hasn’t taken to retirement. Although that is a common problem with retirees, I am surprised that it has afflicted him. He is a Jesuit-educated Irish Catholic who prides himself on being reflective. Yet, in the end, he seems more influenced by the Protestant work ethic.  Talk about irony.

There is a lot of talk nowadays about impulse control or deferred gratification, but that is not what my friend is dealing with.  When a person reaches our age, we need to live each year, each month, and each day like it is our last, and I believe that my friend’s sojourn in Denver is just where he should be.

August 28, 2014

Sunday Book Review #145 – How to Retire Happy, Wild, and Free

Filed under: Book reviews,Retirement — Mike Kueber @ 12:34 am
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How to Retire Happy, Wild, and Free is subtitled, “Retirement wisdom that you won’t get from any financial advisor.” As I am halfway through my 6th year of retirement, I thought this book would be full of information or insights that might help me toward a more satisfying retirement. Sadly, it did not, but perhaps that is because my retirement is already at a good place.

A big part of Zelinski’s presentation is directed at people whose identity is tied up in their job or profession, and I agree that many, if not most, people have a hard time post-retirement with losing that identity. Fortunately, I didn’t have any trouble leaving behind the persona of an insurance lawyer; plus, I can still occasionally achieve some additional gravitas by saying I am a retired insurance attorney. For those retirees with an identity deficiency, Zelinski provides numerous ideas for developing new identities.

From a financial perspective, Zelinski’s advice is also something I already knew – i.e., the advice by so-called retirement experts that retirees need 80%-105% of their pre-retirement income is moronic.

Following a general discussion of retirement philosophy, Zelinski turns specific concerns:

  1. Chapter 4 – Health and taking care of yourself
  2. Chapter 5 – Education and continual learning
  3. Chapter 6 – Relationships and friends
  4. Chapter 7 – Travel
  5. Chapter 8 – Relocation

As I was reading those chapters, I detected a strong overlap with the four buckets from Matthew Kelly’s book, The Rhythm of Life – i.e., body, brain, relations, and spirit.    Zelinki’s book comes at it from a different, more specific perspective – that of a retiree – but from some reason it doesn’t have the same intensity as Kelly’s book.

June 27, 2014

My summer vacation

Filed under: Culture,Philosophy,Retirement — Mike Kueber @ 4:48 am
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When you are a kid returning to school after summer, your teacher may traditionally ask you for a report on what you did during your vacation. That report would typically describe a trip that exposed you to fun and interesting things. My recent summer vacation to Aneta, like those vacations to Aneta before it, was focused not on fun and interesting things, but rather fun and interesting people.

My greatest interest in returning to Aneta annually is to observe how people are aging from one year to the next. And I’m not referring to the aging of their bodies, but rather how they are mentally adjusting to getting older. That is a problem that we all must deal with, and I attempt to gather a variety of “best practices.”

In addition to studying the aging issue, I also love to observe the different personalities with a detachment that comes from knowing that I don’t have to live with those personalities for more than a few days. Two unique characters presented themselves to me on my last full day in Aneta:

  1. A friend complained that his academic career was held back because he was always horrible at standardized tests. Instead of taking the politically-correct position that standardized tests are bad, I took a different tack that my friend, as a former basketball player, might understand – I suggested that the inability to do well on a standardized test is analogous to a basketball player being unable to make free throws – i.e., it doesn’t completely define that person, but it hinders that person’s utility in some situations.
  2. Another friend, who was in the process of trying to court a beautiful woman in a neighboring town, was upset that the woman had been told by someone from our town that my friend was “driven” and “particular.” I could tell that my friend was concerned that this description was not a good thing for his courting prospects, and he was highly interested in finding out who had slandered him. Because my friend is widely acknowledged as driven and particular, I decided not to advise him that truth is generally a defense to slander. And I also didn’t tell him that if the woman noticed that this description concerned him, she would have all the confirmation that she needed. I probably should have told him to admit that he is aware of these issues and is working on them.

Traveling to my hometown every summer takes a lot of energy, but the grounding and centering that it affords me is priceless.

April 20, 2014

Sunday Book Review #133 – Guide to Retiring Overseas on a Budget by Suzan Haskins and Dan Prescher

Filed under: Retirement — Mike Kueber @ 1:44 pm
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As the author of a blogpost about visiting NYC on a budget, I was naturally attracted to this book about retiring overseas on a budget.  The subtitle also caught my eye – “How to Live Well on $25,000 a Year.

Of course, a major distinction between the two writings is that my NYC trip was to visit (short-term), whereas this overseas living is to retire (long-term). That distinction is why, before getting into the descriptions of various probable retirement locations, the authors explain how people should decide whether to retire overseas. The most important consideration:

  • If there is one thing and only one thing you take away from this book, it’s that your primary, overriding motivation for retiring overseas has to be a pure and unadulterated love of adventure and discovery. It just won’t work any other way.”

After an extensive discussion of the personality types that are suited for the expatriate lifestyle (incidentally, expatriate is not an offshoot of ex-patriot), the authors discuss two pervasive concerns – (1) medical care (usually good and always cheaper, but Medicare does not travel with you) and (2) language/culture adjustments (manageable if you love adventure).

After establishing a base of understanding, the authors describe the pros and cons of the most promising locations – Belize, Costa Rica, Ecuador, Mexico, Nicaragua, Panama, Uruguay, Europe, and Southeast Asia.

According to the authors, wise consumers can live cheaply in just about any country, especially in countrified areas of those countries. Of course, I suspect that is true of living in rural or small-town America, too. The difference is that exploring rural America is not as glamorous as exploring rural life in some other country. Which brings us back to the author’s initial point – i.e., living overseas is for the adventuresome. Living cheaper is a major benefit of living overseas, but the dominant motivator needs to be a thirst for something different.

The book concludes with the practical nuts & bolts associated with a move, but because I already know that I don’t thirst for the un-American, I glossed over the final section.

This is an excellent guide that is a worthwhile read, even if you conclude that overseas living is not for you.

 

March 27, 2014

Retirement

Filed under: Retirement — Mike Kueber @ 8:07 pm
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As I posted on my Facebook wall this morning, “Today marks five years of retirement bliss for me. They say that people rarely regret retiring too soon, and you can add my voice to that chorus.”

A similar sentiment was expressed by NY Times columnist David Brooks a couple of years ago based on his reading a few short autobiographies written by some people for their 50-year college reunion:

  • The most common lament in this collection is from people who worked at the same company all their lives and now realize how boring they must seem. These people passively let their lives happen to them. One man described his long, uneventful career at an insurance company and concluded, ‘Wish my self-profile was more exciting, but it’s a little late now.’”

Fortunately, I was not career obsessed after the age of 40. In fact, I remember discussing with another career lawyer the relative insignificance of getting that more promotion that might result in another $20,000 of income. I argued that the additional money might enable my family to a have little bit bigger house or a little bit nicer car, but in the grand scheme of things that was not important.

His comeback, however, was a good one. He said I could sock the money away and retire earlier. That made sense then, and it makes even more sense now.

February 23, 2014

Working forever

Filed under: Retirement — Mike Kueber @ 12:55 am
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Many years ago, I worked with a guy who died on the job.  My co-workers were shocked when they learned that the guy was old enough for, not only the company pension, but also social security.  What the hell was he thinking still working?  The only thing we could think was (a) he had an easy, nonstressful job and (b) he enjoyed the camaraderie with co-workers that his job allowed.  Also, the four-day workweeks and generous vacation benefits enabled him to engage in as much leisure as he desired.  So, in a way, it all made sense.

Today, however, most people who talk about working forever don’t have a nonstressful, fun job with generous benefits.  Rather, they are recognizing the fact that they haven’t saved enough (pensions, social security, 401k) to live comfortably the rest of their lives.  Unfortunately, that makes sense, too.

But what about the people who can afford to retire, yet choose not to?  A fellow retiree recently suggested various rationales for such a decision.  Although he was comfortable with his decision, he wanted to consider what other people might be thinking.  Among the rationales that he generated:

  • A bad, unattractive home life (a disagreeable family)
  • An empty home life (no outside interests)
  • A self-image that will shrink because it is based on job status
  • A protestant work ethic that wants to remain productive
  • A job that involves doing good works

In the end, each individual is the best judge on how to maximize happiness, and that is why there is no right answer.  Just consider yourself lucky to have a choice.

 

December 8, 2012

Who has their head in the sand regarding Social Security?

Filed under: Economics,Issues,Politics,Retirement — Mike Kueber @ 2:13 pm
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When Republicans urge that entitlement reform – Medicare, Medicaid, and Social Security – is desperately needed to get America out of its distressing financial situation, the Democrats respond that Social Security should be taken out of that discussion because it is not part of American’s fiscal problem.  Who is right?

The Democrats’ response is accurately reflected by the following so-called myth about Social Security published by Daily Finance:

  • “Here’s the source of the confusion: Historically, Social Security has collected more than it paid out. The extra money built up in a trust fund that collects interest. But due to demographic and economic changes (more on that in a minute), it’s expected that insurance payments will begin to exceed income in 2021. Around 2033, the fund will run out.  But even then, the revenue Social Security collects each year would still be enough to pay out about three-quarters of scheduled benefits as far as the eye can see

Upon closer examination, however, the Democratic response is revealed as a gross misrepresentation of Social Security’s effect on America’s solvency.  Most casual observers of Washington’s fiscal insanity know that a couple of years ago Social Security became a drain on the federal government – i.e., the program spent more in benefits than it was taking in on taxes.  So how does that gibe with Daily Finance statement that the negative cash flow begins in 2021?  This apparent contradiction is caused by the Daily Finance conclusion that Social Security trust fund “income” includes imaginary interest that federal government is paying on imaginary IOUs. 

Fiscal conservatives have argued for years that the concept of a trust fund and IOUs from the general fund is misleading because the health of the trust fund and the general fund are inextricably intertwined.  The fact is that Social Security is already a drain on the federal treasury, as the SS Trustees recently admitted it is annual report:

  • Social Security’s expenditures exceeded non-interest income in 2010 and 2011, the first such occurrences since 1983, and the Trustees estimate that these expenditures will remain greater than non-interest income throughout the 75-year projection period. The deficit of non-interest income relative to expenditures was about $49 billion in 2010 and $45 billion in 2011, and the Trustees project that it will average about $66 billion between 2012 and 2018 before rising steeply as the economy slows after the recovery is complete and the number of beneficiaries continues to grow at a substantially faster rate than the number of covered workers. Redemption of trust fund assets (IOUs) from the General Fund of the Treasury will provide the resources needed to offset the annual cash-flow deficits. Since these redemptions will be less than interest earnings through 2020, nominal trust fund balances will continue to grow. The trust fund ratio, which indicates the number of years of program cost that could be financed solely with current trust fund reserves, peaked in 2008, declined through 2011, and is expected to decline further in future years. After 2020, Treasury will redeem trust fund assets in amounts that exceed interest earnings until exhaustion of trust fund reserves in 2033, three years earlier than projected last year. Thereafter, tax income would be sufficient to pay only about three-quarters of scheduled benefits through 2086.

Incidentally, the Trustees also explained in the same report that the Social Security tax holiday did not damage the long-term solvency of the trust fund because of further artificial accounting:

  • A temporary reduction in the Social Security payroll tax rate reduced payroll tax revenues by $103 billion in 2011 and by a projected $112 billion in 2012. The legislation establishing the payroll tax reduction also provided for transfers of revenues from the general fund to the trust funds in order to ‘replicate to the extent possible’ payments that would have occurred if the payroll tax reduction had not been enacted. Those general fund reimbursements comprise about 15 percent of the program’s non-interest income in 2011 and 2012.

It’s time to jettison the never-accurate belief that Social Security is a retirement account that takes in our contributions, preserves and grows them, and finally returns them to us in our retirement.  It is time to recognize Social Security as a quasi-welfare program (its payout is much more generous to low contributors) that has already distributed most of our contributions (to overpay earlier recipients).  The result is that federal government, just like many public and private pensions, has trillions of dollars of unfunded liabilities that our children will have to pay while they receive diminished benefits. 

Failing to act now to correct this injustice to our children will only exacerbate it.  Who’s in favor of that?

July 28, 2012

My new investing strategy

Filed under: Investing,Retirement — Mike Kueber @ 6:05 pm
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As someone who is fascinated by investment strategies, I have read about a variety of techniques to minimize risk and maximize returns – e.g., dollar-cost averaging, ladder purchases, re-balancing of assets, and numerous diversifying techniques, including indexed mutual funds.  Because I believe the ups and downs of the stock market can’t be timed, I generally don’t focus on trying to buy low and sell high.  Instead, I’m a confirmed buy-and-hold guy.  And, as a young guy, I’m 100% in the market.

Last week, however, with the stock market returning to a relatively high level (and with me not being as young as I used to be), I decided to implement a strategy for moving some of my nest egg out of the market.  This strategy, which I invented, takes advantage of market swings, akin to the dollar-cost averaging strategy.  (Although I am claiming to be the inventor, I’m sure thousands or millions of other people have thought the same thing).   

My plan is to take 5% out of my stock-market nest egg and move it to cash.  Then whenever the market recoups that 5% withdrawal (on average, twice a year), I will take out 5% more.  Thus, I will be forever selling stock on an upswing, and my stock-market nest egg will stay at the same level, less inflation.  A $100k nest egg would periodically generate $5k into cash, and a $1 million nest egg (which seems to be the target for many white-collar workers) would periodically generate $50k into cash.     

The only weakness with this strategy that I can detect is if the market drops and doesn’t return to the earlier level for several years.  If such an event occurs, I hope that I will have pocketed enough earlier withdrawals to avoid selling during a downturn.  But if I have to sell during a downturn, I will be especially motivated to keep the withdrawal to the smallest amount necessary (less than 5%).

A lot of investment advice must be tailored to an investor’s comfort level with risk.  In the past, I was comfortable with all of my savings in the stock market.  Whether the market went up or down, I knew that it had almost no effect on my lifestyle.  My co-workers and I called it paper loss (or paper gain).  Now that I have retired and am spending my savings, the ups and downs of the market are real, not abstract. 

When I sell 5% of my stock on Monday and move it to cash, I am going to feel a lot better knowing that I have cash to live on for a long time and won’t have to sell any additional stocks unless the market continues its upward march (in which case, I will have another 5% cash to live on for a long time times two).  The ups-and-downs of the market will once again be relatively abstract.

Because of my skin in the game, I have been rooting for President Obama’s success for the past three and a half years.  That is also one of several reasons why I am rooting for Mitt Romney to win in November.

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