I wrote a column earlier this week about U.S. workers’ widespread and well-founded anxiety about retirement, and how, in the absence of any meaningful public or private efforts to address those concerns, many plan to work into their 70s.
I proposed that this newly-contemplated fifth decade of work presents a golden opportunity to fund retirements quite cheaply -- for just $16,500 per worker by my estimation -- assuming that: 1) We set aside that money at the beginning of workers’ careers in order to leverage the magic of 50 years of compounding returns, and 2) We invest the money in a straightforward 50-50 U.S. stock-bond portfolio.
The problem, of course, is that very few workers have $16,500 jangling around in their pockets when they start their careers. Nor do they earn enough at the beginning of their careers to save anywhere near that amount. According to the Census Bureau, the average full-time worker age 15 to 24 earned just over $24,000 in 2014.
The unfortunate reality is that the optimal time to save for retirement is when we begin our careers, which is precisely the time when most of us have no money. But there are several ways that government and employers can bridge the gap.
The rolling 50-year returns of a 50-50 portfolio of U.S. stocks and bonds have shown remarkably little deviation.
Methodology: 50 percent S&P 500 and 50 percent five-year U.S. treasury notes, including dividends.
First, the federal government can simply give every 21 year old an IRA with $16,500. Workers would repay the federal government through payroll taxes over time, which would be a fraction of the hundreds of thousands of dollars that workers currently pay in payroll taxes over the course of their careers. (Realistically, one or two or maybe even three future generations of workers will have to continue paying some additional amount into social security in order to make good on promises to current workers, but that amount should decrease over time.)
We can also give young workers the opportunity to fund their future retirements through public service. The federal government could sponsor a program in which 18 to 25 year olds volunteer to spend a year working in schools or on infrastructure projects or for non-profits in exchange for a more generous IRA contribution of, say, $24,000 -- the average annual income for workers that age.
The private sector can play a role too, as it stands to gain from a more efficient retirement system. Employers spend a fortune on workers’ retirements through 401(k) contributions or payroll taxes or both. Here again, those costs would be far lower -- and would go much further -- if they were made earlier in employees’ careers.
Employers are unlikely, however, to change their approach to funding workers’ retirements if left to their own devices. For one thing, as long as employers are required to pay payroll taxes, a good portion of the cost is outside of their control. The workplace also is increasingly transient and many employers would be reluctant to cut generous checks to new employees who can walk out any time.
This is where a public-private partnership would make sense. The federal government can offer employers a modestly better than one-to-one reduction in payroll taxes for IRA contributions between, say, $15,000 and $20,000 that they make to employees under the age of 26. Employers would actually save money by making those IRA contributions, and over time the federal government would also be better off because what it forgoes in payroll taxes it will more than makes up in funded retirements.
How these accounts are invested is equally important. My analysis hinges on a 50-year investment in U.S. stocks and bonds, so everyone has to be dedicated to the task of leaving that money alone for a long time. We also could think of different approaches to how Social Security funds are currently invested, but that's yet another complex issue and a prescription I won’t address here.
In 50 years, our economy will be much bigger than it is today, companies will be making much more money, and, as a result, stocks will be sharply higher. (If that’s not the case, we will have bigger problems than how to save for retirement.) Yes, there will be more than a few scary moments along the way, which is why a 50-50 portfolio of U.S. stocks and bonds is a sensible way to harness growth while balancing risk.
The playbook for a more efficient retirement system is simple. All that's left -- which is undoubtedly the bigger hurdle -- is making it a reality.
Nir Kaissar is a Bloomberg Gadfly columnist covering the markets. He is the founder of Unison Advisors, an asset management firm. He has worked as a lawyer at Sullivan & Cromwell and a consultant at Ernst & Young.
This column does not necessarily reflect the opinion of The Sun Bay Paper, Sea Level Broadcasting, Bloomberg LP or its owners.
In the past few weeks it seems some prominent noses have been tweaked. Because of changes in the wind, lines have been drawn in the sand (easy to do here) and gruff challenging words were spoken. It is well known there are monetary problems within the city but what puzzles most citizens are that none of the troubles ever seem be addressed. Instead there are such statements as, ‘ we have no money’, we’ll check in to it, I can’t speak to that now, the coffers are good with 6 million in assets( whatever that means), and my two favorites, we change council members a lot, and money comes in and money goes out’. What on earth does that mean?
I would say that probably 75% plus of FMB residents and 100% of business owners know what it means to handle all sizes of budgets. One buys, one receives (or uses), one gets a bill, and one pays the bill. Rocket science it is not…and if one is not a CPA but wants to know how the ‘state of the state’ is going, one has only to hire a bookkeeper who shows up each week, or month with actual facts showing ‘money in, money out’, and ‘how much is left’!
Mr. Bobeck speaks truthfully about the city not having faith in all of its employees. The proper channels to separate Mr. Stillwell were taken with many more people aware than what was stated, as shown by the speakers before the discussion of his removal. He was aware of the action prior to the meeting and declined to resign….Having said that it is not the actual situation, but subtle insinuations of illegalities concerning Mr. Bobeck that cause a bad taste in one’s mouth. Somebody had to make a move about the city not being tended to, and it fell upon his shoulders, as mayor.
City councils come and go…..employees in all businesses come and go….that does and should not cause a company or city to be run poorly. If the outrageous nonpayment situation had been addressed properly, bills paid properly, and employees taught to do their jobs properly, Mr. Stillwell might not have found himself being let go. If TDC money had not been improperly used to tear down docks…and taken from Mound House coffers, (against the rules), they might still have been standing. And if the money inadvertently sent to FMB by FPL had been discussed and reimbursed properly (which is the honest thing to do), we would not today have to listen to the collective gasp whenever it is brought up.
We have many community situations to be addressed...Bay Oaks, storm water appeals, Lake O, TDC, and the budget. This council is very capable of working together as a viable and indivisible unit. Their success is based only on their obligation to work together for the sake of the city they were sent to care for. They need staff to help them concerning rules and regulations and codes; they need city attorneys to be advised and ready for critical opinions; and they need to see how, when, and where the money flows, frequently. Downtown business and residential areas need to be listened to and for different reasons. (i.e. residents don’t need street cleaning, but downtown sure needs power-washed)
Push on city council…make amends; agree to disagree even….as long as it is in the best interest of our town.
A sea turtle floats trapped in a derelict fishing net off the west side of Oahu, Hawaii, June, 4, 2016. Petty Officer 1st Class Matthew Young and Seaman Cameron Ables, members of Coast Guard Air Station Barbers Point rescued three sea turtles trapped in the derelict fishing net and brought the net to shore for disposal. (U.S. Coast Guard photo by Petty Officer 1st Class Matthew Young/Released)
Today we celebrate World Oceans Day, a global day of ocean celebration and collaboration for a better future. This year’s theme is “Healthy Oceans, Healthy Planet.” Individuals and organizations across the planet are taking action to prevent pollution in our oceans.
The Coast Guard is known worldwide as America’s premiere lifesavers on the water. Rescues take many shapes ranging from a cruise ship passenger in distress to the crew of a fishing vessel foundering in a storm. Recently two Coast Guardsmen performed a different sort of rescue on their off-duty time. This resulted in not just three lives saved, but protected marine life, kept waters free of hazards, and ultimately cared for our oceans.
The word for sea turtle in Hawaiian is “honu.” Conservation efforts have allowed the population of green sea turtles to rebound somewhat, but they remain threatened and are covered by the Endangered Species Act of 1973.
Petty Officer 1st Class Matt Young and Seaman Cameron Ables rescued three honu from a derelict fishing net off the west side of Oahu Saturday.
“As we approached, we saw a mass of net and fishing line with three turtles entangled and we decided to take action,” said Young. “We both slid into the water with knives in hand.”
Young attended to the first turtle he saw while Ables attended another. They found clear fishing line wrapped around the fin and head of the first turtle. It could swim a little, but it couldn’t go far from the mass of netting. Young cut the line and the turtle pulled itself free and swam away. Ables moved heavy netting aside, freeing the remaining turtles.
Realizing this mass of derelict net and line was still a hazard to other marine life and safe navigation, they made the decision to bring it to shore by attaching a line to it and towing it in. The weight and size of the netting made moving and steering their 16-foot boat a challenge. When they reached approximately 1,000 yards from shore, Young and Able swam the net to shore.
“We would swim about 12 feet then the swell would pull us back 6 feet,” said Young. “Lucky for us we are professional swimmers!”
Originally from Connersville, Indiana, Young has been in the Coast Guard for 14 years and swims competitively in races such as the annual Alcatraz race across San Francisco Bay. Ables is from Clovis, California, and has been in the Coast Guard for about 14 months. He was a varsity swimmer and water polo competitor in high school, but didn’t really develop a deep love for the ocean before being stationed in Hawaii.
As they came closer to shore, the seabed became shallow enough for them to grab rocks by hand or brace their feet on rock ledges and hold the net from being pulled out by the big swell.
Derelict nets present a real hazard to marine life of all sizes throughout the world. It can entrap and drown them. Since 1996 the National Oceanic and Atmospheric Administration has removed more than 904 tons of marine debris from the Northwestern Hawaiian Islands alone, not including Oahu or the other main Hawaiian Islands.
The synthetic net and line materials that Young and Ables came upon had unintentionally trapped the turtles because the nylon and polypropylene materials were slow to degrade. Much of the fishing gear recovered through cleanups can be recycled or diverted into energy through local initiatives, but the best-case scenario is that it doesn’t become lost or abandoned and a threat to marine life in the first place.
After their good deed Young and Ables continued their original trip up the coast.
“It’s a good feeling to save lives, all lives. Cameron and I swam back out to my boat and karma gave us an awesome day on the water swimming with more turtles, dolphins and spotted eagle rays,” said Young.
World Oceans Day is a reminder that we all need to do our part year-round, like Young and Ables, because the ocean impacts the health of our environment and economy.
It is sad that so many innocent people lost their lives yesterday. US is supposed to have the Best Military in the world and we can't handle these rats from Middle East?? Obama want to give Asylum and to get 100,000.00 people /refugees to settle in US? Why would we knowingly help these people to settle in U.S.? They will make Washington, DC like their Caliphate. They will screw America as they did to Europe!! What is wrong with our politicians? They are poor leaders or are fooling us for reasons they don’t share.
WAKE UP PEOPLE, THESE REFUGES ARE LIKE the TROJAN HORSE. THEY WILL MAKE WASHINGTON, DC THEIR NEW CAPITAL.
The Clinton Foundation is the greatest criminal enterprise and money-laundering operation in existence today. It's nothing more than a slush fund for the Clintons and their minions/stooges.
We love your focus on illegal fishing since we are a third generation Florida Commercial Fishermen family. Your article about the Chinese was spot on. Chinese fishermen are widely known for being destroyers of natural acquatic habitat that include coral reefs causing it to drive away fishery resources within its territorial waters not to mention the gears they used that entangle sea otters and get them to drawn. They also illegally engage in trading tortoise that are considered endagered. For this reason, they are forced to fish outside of their own boundaries and ruin other countries' environment. They feel they are untouchables.
Bob, Mary and Lou Wlliams
To reach the Venus Project Research Center, a utopian compound created by a 100-year-old futurist, drive through vast stretches of fields, orchards, and dirt roads in south-central Florida. There's little cell phone service and no signs of other humans on the way to a white gate. A sandy path flanked by lush tropical trees leads to a cluster of white dome-like structures. Inside one sits Jacque Fresco, hunched on a couch within his own model of an ideal society.
The compound itself is intended to show what the outskirts of a city built in the image of the Venus Project might look like. "We didn't build what we wanted to build, we built what we could afford to build," says Meadows, who gives tours of the grounds. The couple, who met 40 years ago when Meadows came to hear Fresco talk, purchased the property in 1979. It had previously been a tomato farm. They planted hundreds of trees, dredged the land, and began building examples of mass-produceable housing.
"We labored in obscurity for a long time," says Meadows. Everything was financed with money they scraped together doing various odd jobs, such as freelancing as model builders for architecture firms and medical equipment companies.
As for Fresco, he remains convinced his computer-governed city can become reality. "We already have the technology to do it," he says, speaking with the group after the tour. What’s lacking, as he sees it, is the will. Once modern life gets truly hard, Fresco believes there will be a revolution that will clear the way for the Venus Project to be built. “There will be a lot of people getting shot, including me,” he says wryly. “I’m surprised I haven’t been shot already.”
By 6:30 p.m., the 100-year-old visionary is starting to fade. It’s been a long birthday week. “Thanks so much for coming,” he tells us. “Now I’m gonna hit the sack.”
On a late Sunday night more than 300 people came under attack
Please stop cutting the old electric poles in half and putting up new more expensive ones.
It is dangerous for the workers and the public.
Put the lines underground now when it is easy to do during construction. This will be vital when the next hurricane hits.
Remember Charley when there was no electricity and water for two weeks and nobody could get back to save their belongings.\
Transformers will be safe from lighting.
Precious space will be more available for transportation.
Traffic visibility will increase; think about the views of our precious island and gulf without them.
Please use pervious pavers on our sidewalks and boulevard and side streets( or just turn it back to hard packed sand) to solve our storm water issues and thus prevent discharges into our estuary as well as save on our water bills and the need to spend 60 mil more on storm water treatment loans.
The value and ascetics to our island will increase greatly.
Please explain why we are not using alternative methods of construction such as trenchless and directional technology as outlined on page 14 of Tetra Tech's water facilities report resulting in minimal disruption and further damage to our economy.
Why can't construction go full force 24/7 especially during off season?
Why are we not asking for Emanate Domain on the sugar land instead of a water treatment component for C-43 in order to prevent a disaster such as the 1928 hurricane event?
Why did weekly town manager reports stop being published in the town hall's archives in 2015?
What happened to the letter from Tetra Tech to the town and their reference to not being paid?
The time is now, it is not too late.
We have the opportunity to be one of the greatest places on earth.
Choose Utopia not Myopia