Tag: personal-finance

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I was once discussing Social Security with a much younger colleague. She was convinced it wouldn’t be there when she got old enough to receive benefits and couldn’t understand why I was supporting a system that could be belly up at any time soon.

This recurring concern still continues to bother young people entering the work force — social security will be bankrupt by the time I retire. Why should I contribute to a failing system? My argument 30 years ago is the same one I will give young people today.

  1. If you are going to place a bet on what institutions are going to be around in 40 years, my mark goes on the U.S. Government. It has been around, as we know it, since 1789. The best estimate of businesses making it 100 years is 0.5 %.
  2. If Social Security collapses, there is a good chance that there any private businesses handling retirement accounts are also going to be in trouble as well. Hell if Social Security collapses there is a good reason to believe that there is no Federal Government, no Federal Reserve, and no law and order. So, good luck collecting on your 401K in this dire situation.
  3. My colleague, based on absolutely no evidence, thought she could invest her money better. But she wasn’t investing any money at all. She was spending every last dime to live. How she thought she was going to out invest Social Security was beyond me.

The corporate shill that encouraged me to invest in my company’s 401K advised me that retirement was a three legged stool — Social Security, 401K/pension, and savings. We needed all three in order to retire. For some reason, Social Security is seen as the weak leg of this stool is worrisome when it is the most dependable leg of the stool — just ask the 73% of retired people who depend upon social security for over half of their monthly income.

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I had numerous misgivings about Bryan Caplan’s It’s Not Who You Know, It’s Who You Are. Caplan’s bottom line is that there is no advantage to being rich in a capitalist society. The cream always rises to the top and it is because the rich have better genes than the poor and middle class and this is why they always rise to the top.

How did he determine this? Did he give a bunch of poor kids a million dollar trust fund, a financial advisor and entrance into all the best private schools and then compare it to the rich kids who had this advantage already? Or did he force rich kids into resource stretched public schools, make them work three jobs just to meet rent, and made it impossible to talk to Daddy during the length of the study? A little more information is needed here in order for me to buy the bull shit Caplan is selling.

If he is just looking at where people ended up, then he failed to prove his point. Are you telling me that knowing other rich people isn’t helpful to rich kids looking for jobs? Almost every job I have ever gotten was because I knew someone in the company. I knew a job was available and I knew who to talk to in order to be seen. Being seen is half the battle in getting a job. This is a tremendous advantage over someone who knows no one. How does he factor that in to his analysis?

Why would rich people spend upwards to $100,00 a year for private education if this doesn’t give their child some advantage? If their child got the same education in a local public school, they would be a fool not to — it comes with their taxes. Yet these rich people, and Caplan believes smarter people, still spend a lot of money on a private education for their genetically superior kids. There can only be one explanation — expensive private schools make a difference. They are worth the money. If, of course, you have it.

Finally, I thought one of the assumptions of market capitalism is that poor people have to learn to work hard in order to pull themselves up by their own bootstraps. Anyone can make it to the top if they work hard, they too can become rich. But if they are too genetically inferior to make it happen, why needlessly raise their hopes if they are going to end up being poor no matter how hard they work. How sadistic is that.

Genetic superiority is a pernicious and dangerous lie. When people believe they are superior, it opens them up to differentiate between human beings. There are better people who deserve more. To diminish the value of money is equally dangerous. Why have public schools and Head Start if the kids are hopeless. You can’t spend enough money on rich kids and no amount of money will change the results for poor kids. Why waste time and money on lost causes? Nothing personal here. It is all genetic.

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Marianne Lake, who runs Chase Bank, announced that Free Checking is going to end for that bank and she anticipates the other big banks will follow.

I only stay with the big banks for 2 reasons — Free Checking and Free ATM’s. If this ends I see no reason to stay with the big banks. They are completely useless to me as a normal business customer because every time I use my ATM, I am taking money out of my checking account. I am guessing that means if I use an ATM, I will be charged for writing a check. This ends Free Checking and Free ATM in one fell swoop.

The big banks are useless especially to those of us on the more modest side of the pay scale. I tried getting a saving’s accounts at a big bank. It cost more money to have the account than I received in interest. CD’s are better in the sense that I don’t lose any money but when I close out my last CD with a big bank I was getting in the neighborhood of .50 cents. You heard me right — .50 cents.

The sad part of this whole thing is my leaving will not be a problem for my big bank. In fact, a clerk accidentally spilled the beans with me one day when I was trying to find the best place for my $5,000. The answer was loud and clear. I just didn’t have enough money for the bank to bother with my accounts.