Montag, Dezember 28, 2009

The Wisdom of the New York Times...

Meant only, of course, as a ironic comment.

This is one of the less ... clever articles that the New York Times has published, one that is mind-boggling dense.

As anyone with a couple of working brain cells and an ability to read knows, interest rates are effectively zero. The Fed controls the Fed Funds Rate that governs how the banks generate money from deposits, and because the banks screwed things up fairly drastically, the Fed Fund rate is about as close as you can get to zero without going negative (in terms of current dollars: in terms of real dollars, i.e. those adjusted for inflation, the Fed Funds rate is slap-down negative).

So what does the New York Times complain about?

How pensioners aren't getting any returns on their money. Apparently the days of 5%-6% returns on safe money are somehow, magically, evilly, gone. People are actually having to dip into their retirement equity to do things like pay for increased medical costs and aren't able to maintain their life styles without having to dip into savings. It's just terrible!

Ye Gods.

From the tone of the NYT article, written by Stephanie Strom: Oh, the humanity of it all! Seniors are going to have to live on a budget, their money is going to double only every 6,392 years (really, if your interest rate is 0.01%, what did you expect?), and and and and...

Well, duh: sorry, all you baby-boomer retirees, if you want safe money, then you're not going to earn anything on it.

It's the result of your government - largely Congress - having encouraged people to ignore the Gods of the Copy Book Headings and indeed not merely the laws of logic, but more importantly the laws of the market.

Go complain to them.

And another thing: the whole point of saving for your retirement isn't to live off the interest (nice if you can, but that's increasingly unlikely for the foreseeable future).

The whole point of saving for your retirement is to have the safety cushion for increased medical coverage not paid for by what is apparently inadequate insurance coverage, plus spending to maintain the chosen lifestyle whilst living off what little income you may or may not receive from whatever pension schemes you were involved in.

The whole point of saving for your retirement is to be able to do the things you wanted to before retirement but didn't have the time to because ... you were working.

The whole point of saving for your retirement is because you don't want to be a burden to your children.

The whole point of saving for your retirement is using your savings.

It's not about leaving a big nest egg for your grandchildren or kids, or for your church or whatever.

Seriously: anyone who dies with lots of money in the bank has made serious errors of judgment. You want to do with nothing left over, because you spent your last years living, rather than doing nothing, and when you can't do things any more because of health and age, don't spend money like you do when you're active.

Right and proper insurance covers your aging costs, and if you're not getting it early because you don't want to pay for something you might not use, then you have no comprehension why you should be buying insurance.

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