I don’t think RE was ignored but your point is well taken
I sold all my stocks and bonds today.
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Real estate, aka a place to live, is a critical component, IMO. Unless I am mistaken, this thread is more concerned with the market.
FYI, I saved and saved and made extra payments, took no vacations, etc until my house was paid off. It's a great feeling; more so when you consider I was homeless for years.
Everyone needs to live somewhere
Tiny home on the dole for me!
Tiny home on the dole for me!
You can only fix Social Security with the stroke of a pen if there is a bill to sign that does that, and it looks like nobody wants to do that, and six years isn't exactly a long time.
So I would tell people to take whatever Social Security says you're getting and anticipate 74 cents on the dollar unless anyone will fix it, but not to count on that.
At 74%, that's not even a heated room with underwear. Sorry, but it's true.
The only action on Social Security lately was to make the Trust Fund even more depleted than this by repealing double dipping provisions without any offset.
Social Security basically has two sources of funding. Payroll taxes and interest on special issue treasury bonds from years there were surpluses. Eventually, those surpluses get tapped into in order to draw down and keep paying benefits until they're gone, and then legally the only money they can spend is what they take in payroll taxes.
They seem to be fine with making people suffer and are not accepting any of the obvious and simple fixes. The sooner they would have acted, the less it would have taken to solve this problem.
Every year the actuarial report comes out and that date where the Trust Fund is dry keeps getting moved forward. A lot of that is because there's less payroll tax coming in, more benefits going out than anticipated, largely because of high COLA years to deal with inflation.
So they were saying 2034, then 2033, then 2032, and now maybe 2031. The only consistent message they have is it's worse not better. The Social Security Fairness Act eliminated double dipping for certain government workers who already get pensions. So there was another gouging of the Trust Fund.
The intent behind the WEP was that government workers on a pension are already doing a lot better than most people are, so no double dipping, and that's still the case in some States like Illinois where the Constitution prevents the government doing what Indiana did and hosing them and making them need Social Security because they worked for the State for many years and the cake was a lie.
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FWIW, the cash in a person's Fidelity acct can earn about that. Forget what it's called but you get interested on the cash plus it is available instantly for trades.On a lighter note,, thanks to those here who turned me on to high yield savings accounts. I have a chunk of emergency funds sitting in one making 4.3%. Much better than the local banks near zero interest.
74% can be decent money for some. I think both my parents and MIL are living on SS and not touching investments (granted, that's today and thus not impacted by these pending 26% cuts). I could be wrong, maybe they are dipping--it's not like I'm in the loop.
But there have been some reports about how a number of retirees are finding that they are spending less than 80% of their pre-retirement income. 80% is a far distance from the 40% that SS is supposed to provide, but there seems to be stories of it. I suspect it depends on how much you made and how fast you got your house paid off, and if you settled into a low cost of living area.
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I realize that this 26% cut is pending and not cast in stone. Still. For my planning, which is hard to do when retirement is still 20 years away, is trying to take that into account. If I'm wrong, that just means I can retire earlier. But otherwise, I do think there is some validity to worrying about these pending cuts. Hope for the best, plan for the worst sort of thing. [But I'm not stocking up on TP, canned goods and ammo. That's a bridge too far for me.]
It was up close to 5% but I think it's in the 4% region at the moment.
But there have been some reports about how a number of retirees are finding that they are spending less than 80% of their pre-retirement income. 80% is a far distance from the 40% that SS is supposed to provide, but there seems to be stories of it. I suspect it depends on how much you made and how fast you got your house paid off, and if you settled into a low cost of living area.
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I realize that this 26% cut is pending and not cast in stone. Still. For my planning, which is hard to do when retirement is still 20 years away, is trying to take that into account. If I'm wrong, that just means I can retire earlier. But otherwise, I do think there is some validity to worrying about these pending cuts. Hope for the best, plan for the worst sort of thing. [But I'm not stocking up on TP, canned goods and ammo. That's a bridge too far for me.]
Money Market Fund. That's what my Fidelity is using for its cash holdings. I'd look it up but Fidelity's website is done.
It was up close to 5% but I think it's in the 4% region at the moment.I don't understand not paying taxes on tips-it's still income. Yet-somebody making $12.00 an hour working at a car wash will pay taxes on those wages. Makes zero sense.
I don’t consider my home part of my net worth….. but that’s just me.
Not concerned at all. 6 years at the least is a long time. It's actually another Presidency is my feeling. I am fine if anyone is concerned. I am not concerned in the slightest. No one is suffering, benefits are still being paid and will always be paid. On time and the full amount.
Anything else is speculation.
AS far as the Fairness Act. The way I am reading it is they are allowing Double Dipping again. But trying understand the wording.
"The Act ends the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO). These provisions reduced or eliminated the Social Security benefits of over 3.2 million people who receive a pension based on work that was not covered by Social Security (a "non-covered pension") because they did not pay Social Security taxes...."
https://www.ssa.gov/benefits/retirement/social-security-fairness-act.html?tl=0,1,2,3,5,9,10,11
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Veering into political, but yah, it's income... not supposed to be paid under the table. We know it happens but usually it's small beans. This is a job and expected income (albeit quite variable). IMO it just divides us further, those who pay taxes and those who don't.
It's nice to split it out. Assets that can be more easily liquidated vs a house. It counts in the very simplistic formula, and for some, it truly is net worth--if their plan is to downsize their home and move to a much cheaper place.
I think there might be an argument about how a paid off house might be valuable... no rent, no payments. How one would factor that into net worth I'm not sure, as that impacts one's cash flow instead of net value. Which is quite important but a different topic. Yet related in retirement and day to day life.
In most States, the tipped minimum wage is much lower.
In Illinois, the tipped minimum wage is $9 an hour and for normal workers it's $15 an hour, Chicago is higher.
But in many States, like Indiana, it hasn't budged since Roseanne complained that it was $2.12 an hour in 1992.
I remember helping someone get on a Marketplace health insurance plan when the ACA was new. He worked at a restaurant called Bandidos in Fort Wayne, Indiana that wasn't a very good restaurant. He always complained that he'd get worked like a dog on Sundays and then they'd stiff him and then there were also college students that stiffed him. Bad tippers. Table of nine leaves you two bucks.
When I saw his income tax return for the previous year, it was only like $13,000 and something, which is poverty level.
The problem with tipping is that it's very uneven. The only guarantee you get is if your tips don't bring you to an average of $7.25 in Indiana that week, the employer has to.
Meanwhile, less than 0.2% of jobs in Indiana pay $7.25 because it's laughable in 2025.
There's also people who do things like Uber and Doordash and Walmart deliveries where they don't even get the adjustment to the normal minimum wage if they don't equal that at the end of the week.
Most people who make tips exceed minimum wage, but it's not saying much. A better fix would be just applying the normal minimum wage. Some places do that and there are still restaurants and stuff. They like hiding the cost of the service in their low menu prices and then subjecting workers to the cruel whims of some of the customers.
And there go the "cheap" deliveries where people want someone to lug their groceries and bottled water up the stairs but not to pay a fair wage.
Our economy "works" because there's an underclass and people screaming that those people don't deserve a living because "they didn't go to college".
Me personally, I don't ever use those things. I could but I just drove somewhere or use commuter rail, or buses.
I don't tip because I don't use anything if it requires that. It's not that I'm just a lousy bum that stiffs people. I just don't think that people should have to rely on generosity after they do work.
By disregarding tips from the income tax, we'd make more people eligible for things like the Earned Income Tax Credit, and potentially help them in other ways.
The Negative Income Tax is not a new thing. It's a conservative answer to various workfare programs that uses the tax code to quit patronizing people and hand them cash.
It emphasizes work and personal responsibility. Instead of saying "We have to give you food stamps when you may need more money for rent or healthcare." it just gives money and quits insulting people and treating them like little kids.
There's an appeal here as far as I'm concerned because of that and the lack of overhead (government workers, different eligibility requirements, etc.) to manage the NIT.
The tax code doesn't appear to make sense up front because it's as much about controlling behavior with carrots and sticks as it about revenue.
They're fine with incentivizing retirement savings at the cost of some revenue because they're not going to have a bunch of people in poverty if they manage their affairs and therefore don't reach retirement going "This sucks! Triple my Social Security because I saved nothing!"
Social Security is indeed supposed to be a floor not a ceiling. They're well aware that many people can't get all the way where they need to be on their own so Social Security gets you maybe 40% there.
The problem here is they don't advertise things to low income workers like if you don't take the carrot like the SAVERS Credit, they'll hit you with the stick (taxes).
It promotes all sorts of things that have a benefit to the economy beyond taxes, from investing to energy efficiency.
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In California there is not a second tier minimum wage for servers. My Son worked at RainForest Cafe at Downtown Disney probably close to 20 years ago. The average check was close to $100.00 . So-with tips and minimum wage he was making $20.00 plus an hour then. Corporate did indeed hold back taxes on tips. Most checks were paid with credit cards.
I am having trouble betting against the USA at this point. Yes I am well aware the market is expensive, but a lot of that expense is rooted in the Mag 7. Their multiple is around 24x, while the other 493 is much more reasonable at 18.5x. With an equal weight fund and the distinct possibility of the tax cuts being extended, gov't waste being reduced, and systemic deregulation, I think market tailwinds will blow for the next few years. Right now, I don't want to bet against the USA.
Curious... Why not? Your equity is an asset, right?
Owner's Equity = Assets - Liabilities.
I consider my home a huge asset for 2 reasons:
- I never wanna be homeless again. Period.
- Appreciation is beyone my wildest dreams. I bought the worst house in a great neighborhood. And everything's done; it needs nothing. I even charge my car with the sun via solar panels. And my electric bill is peanuts.
My mantra is, if you aren't paying your mortgage you are probably paying someone else's...
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Those might go down soon regardless of what the Federal Reserve does, because the Treasury says it has a plan to force interest rates down anyway. It would certainly get interesting if the Treasury and the Federal Reserve get into a slap fight.On a lighter note,
There's certainly better ways to promote stock growth than trying to cut interest rates to nothing, like not getting into antagonistic trade wars that drive up consumer prices and cause inflation.
When inflation goes up, even due to tariffs, the Federal Reserve's first instinct will be to fight it. The problem with this reaction is that consumer spending will already be depressed due to high prices, and the economy will contract, potentially at a fairly rapid pace, which will bring markets down anyway when corporate earnings are affected in a highly negative manner.
Rich people don't like inflation, and as we all know, they're good at getting what they want, always, even if it's radically destructive for everyone else. They'll prioritize low inflation and low taxes over economic growth in my opinion.
Warren Buffett has a lot of cash like investments, and people poo-poo that sort of thing when they look at their short term investment results (trailing months or so) and wonder why the hell Berkshire is pulling back on things like Capital One Bank.
Well, I would say that it's because when the consumer has a problem, the banks have one too. The retreat into more cash-like investments and commodity stocks and counter-cyclical stock holdings like Walmart is a defensive play. People have to eat, people have to pay for trash removal, the government has to pay its debts.
Mortgage debt is not a great thing to take on right now. I wouldn't consider it attractive at all unless prices fall or rates do.
Prices won't fall because most of the housing inventory out there is still at 3-4% and you'll have to "pry that out of my cold, dead hands" as Charleton Heston would have said. Nobody is going to want to give up 3% so they can buy another one at 7%, and at 7%, many people just rent instead.
So this market isn't going anywhere right now.
Some people are taking out HELOCs at high rates because they simply have no choice. They stupidly ran up credit cards and auto loans and stuff and their house is the only significant source of value. It's not wise to start signing for a bunch of things you can't pay for and just hoping there will be money later, but people do that every day in this country.
One of my mother's foreclosures was because a house that should have been paid off decades prior to her bankruptcy was continually viewed as a source of money for car note payoffs, expensive vacations, credit card consolidation, etc. until the house was too leveraged and her ex-husband died having never taken her name off the loans.
You, the reader, should do more than the government minimum, like having a few hundred thou in an IRA/ 401k. It's like the parable of the bear chasing the hikers-- don't be the slowest hiker. Macroeconomics. There will always be a gaggle of poor people who get hit the hardest. Be above them and you can out-compete for beds in nursing homes, home health care, senior apartments (but you should try like heck to own your own place), etc. There are waiting lists for all that stuff, and their lengths vary depending on the social services available in your state.
I was putting money in my 401k when I was making ten bucks an hour and patching my cars together with soup It was during the late 90s Asian financial crisis. It worked out for me, and then some.
I don't expect that the government's budget problems will go away or be on a better path.
Government efficiency programs have started to work in the past, like in the 90s, only to be undone in a matter of a few years under the next people, like with EGTRRA and JGTRRA and the wars.
There was a report from the Congressional Budget office in 2000 I think, somewhere along there, envisioning a world where the 2000s wars and tax cut bills never happened, where there was no government debt by 2011 and wondering how the world would function without any treasuries in circulation.
And $36 trillion in debt in 2025, we no longer have to worry about there being no US federal debt in the system. There's a trillion in new federal debt every 100 days or so now. It's awful, it's just awful. But you can invest in that like I do if you want.
In Japan, the government is heavily indebted, very heavily, but owes most of the money to its own citizens, who seem to be fine with the government owing them money.
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