Will Trump be Re-elected?

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Will Trump be Re-elected?

Trump is more effective than people are willing to admit [ala Scott Adams] and will be re-elected.
24
38%
Hillary will run again in 2020, and thus Trump will beat her again.
3
5%
Trump will cause the GOP to lose one or both houses of congress in the mid-term elections.
6
10%
The Dems in congress will be so insufferable, Trumps wins by a small margin despite them.
14
22%
Trump will choose not to run for re-election, since he never really wanted the job anyway.
7
11%
Trump is a disaster and will lose by a landslide.
4
6%
Trump will not only lose, but will lose to a candidate so far to the left that people will wish he'd stayed.
3
5%
Other, please elaborate.
2
3%
 
Total votes: 63
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Kbg
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Re: Will Trump be Re-elected?

Post by Kbg » Fri May 10, 2019 10:30 am

I think there is so much dishonesty when it comes to pensions. I’ll mention a couple thoughts for my area of work.

The military is a young persons profession by and large. After WW2 the system was revamped to force people out at younger ages based on rank. Heart attacks and strokes were a very common occurrence amongst the professionals during the first year of the war. It should stay that way. Recently the system was changed to be more like the normal world. This was also tried in the early 90s with disastrous retention results.

Locally, do we really want 60 year old line police officers or firefighters?

I don’t profess to know where the exact line is but a system needs to recognize these aren’t lifetime professions in the traditional sense.
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Re: Will Trump be Re-elected?

Post by jhogue » Fri May 10, 2019 3:08 pm

My point was simply that many military and first responders retire in their 40s—and most of them probably should. I would also point out that most of this population of retirees go on to develop second careers and really can’t be tagged as hangers-on with “outsized pensions.”

Other professions do not have the same physical demands and those in good health may continue working into their 70s and 80s. Warren Buffett (now age 88) does not draw a pension or Social Security (as far as I can tell) and nobody at the recent Berkshire Hathaway annual meeting called for his resignation or retirement.
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A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: Will Trump be Re-elected?

Post by sophie » Sat May 11, 2019 1:15 pm

Military, police, and firefighters absolutely deserve their early pensions. I'm talking about MTA workers (e.g. train drivers/conductors/the guy who sits in the subway elevator and pushes buttons) or equivalent. They get to draw pensions early at a discounted rate once they've done their 20 years of service, but they can pump up their final pension basis by doing a lot of overtime in their last year. Many end up retiring on close to the same salary they earned working full time.

https://nypost.com/2019/04/24/lirr-reti ... s-pension/

However, the poor slob working full time at McDonald's for minimum wage is the one we're discussing here...just saying that I don't think such a person exists in this city, at least not for long. There are too many easier or more lucrative routes to self-sufficiency, including things like qualifying for SSI. That's the thing about a complex system, it's too easy to game it.
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Re: Will Trump be Re-elected?

Post by jhogue » Tue May 14, 2019 3:51 pm

Sophie, your MTA pension freeloader is clearly an outlier who has spent the last 30 years studying up on how to game the pension rules in the one city in the country where monopolistic unions continue to prop up a bizarre system for the benefit of fewer and fewer workers. I suppose this sort of pension scheme will disappear in our lifetimes.

Defined benefit pensions used to be altogether common in the USA. Since then, there has unquestionably been a nation-wide shift toward defined contribution pension schemes. It seems to have worked quite well for Wall Street types looking forward to stashing away their next bonus, but not necessarily so well for the middle and working classes.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: Will Trump be Re-elected?

Post by moda0306 » Tue May 14, 2019 4:48 pm

jhogue wrote:
Tue May 14, 2019 3:51 pm
Sophie, your MTA pension freeloader is clearly an outlier who has spent the last 30 years studying up on how to game the pension rules in the one city in the country where monopolistic unions continue to prop up a bizarre system for the benefit of fewer and fewer workers. I suppose this sort of pension scheme will disappear in our lifetimes.

Defined benefit pensions used to be altogether common in the USA. Since then, there has unquestionably been a nation-wide shift toward defined contribution pension schemes. It seems to have worked quite well for Wall Street types looking forward to stashing away their next bonus, but not necessarily so well for the middle and working classes.
This brings me to something I've realized since working in business tax... and that's that Employer-based contributions are woefully under-used, but mostly because I don't think workers value them that much. The maximum for a SEP or 401k Profit Sharing is 25% of an employee's wage income. That means 20% of an employees compensation can be not only free from their income taxable income, but also free from BOTH sides of FICA/Medicare, which amounts to 7.65% for each party (employer/employee), or 15.3% total.

The former can be accomplished through employee contributions (lowered income tax), but not the latter. That means that the "penalty" between employer and employee for employees not valuing (and/or employers not providing) an employer contribution to retirement, is resulting in at least 15.3% of missed opportunity to help both parties save tax money.

Further, if you go with a 401k option, but very richly fund the Profit-Sharing portion, you can accomplish all that, but also have a vesting schedule too, which helps "vest" the employee with the future of the company to a certain degree that's not very possible in other ways.

I think these are drastically underused tools. It's a shame we live in a society where both employers and employees are too short-sighted to use/value these things. Even if we're seeing stagnant real wages, and if we have to accept that as a part of reality, it still makes sense to shift contributions from employee to employer.

Of course, municipalities should structure their damn pension so somebody can't game it in the final years. Hard to blame anyone for gaming a Pension like that. Don't even give them the option.
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Re: Will Trump be Re-elected?

Post by Kriegsspiel » Tue May 14, 2019 11:03 pm

moda0306 wrote:
Tue May 14, 2019 4:48 pm
This brings me to something I've realized since working in business tax... and that's that Employer-based contributions are woefully under-used, but mostly because I don't think workers value them that much. The maximum for a SEP or 401k Profit Sharing is 25% of an employee's wage income. That means 20% of an employees compensation can be not only free from their income taxable income, but also free from BOTH sides of FICA/Medicare, which amounts to 7.65% for each party (employer/employee), or 15.3% total.

The former can be accomplished through employee contributions (lowered income tax), but not the latter. That means that the "penalty" between employer and employee for employees not valuing (and/or employers not providing) an employer contribution to retirement, is resulting in at least 15.3% of missed opportunity to help both parties save tax money.
YUP. When I was operating as an LLC, I contributed the maximum legal amount to my individual 401k. It was awesome.
Further, if you go with a 401k option, but very richly fund the Profit-Sharing portion, you can accomplish all that, but also have a vesting schedule too, which helps "vest" the employee with the future of the company to a certain degree that's not very possible in other ways.

I think these are drastically underused tools. It's a shame we live in a society where both employers and employees are too short-sighted to use/value these things. Even if we're seeing stagnant real wages, and if we have to accept that as a part of reality, it still makes sense to shift contributions from employee to employer.
What do you mean by the bolded.
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Re: Will Trump be Re-elected?

Post by pugchief » Wed May 15, 2019 7:17 am

I think he is saying to shift the burden of retirement $ from 401k to profit sharing, which is entirely employER funded.

Here's the problem, from the perspective of a small business owner: there are only so many staff salary dollars to go around and still be profitable. So you can give those dollars to employees as salary, benefits (medical insurance, 401k match, etc), or profit sharing. Guess which of the 3 people value the least? If I told a prospective employee they could either be paid $2 more per hour salary for the entire year or get the equivalent amount via profit sharing which they can't touch until they are 59.5, which do you think they would choose? Can't do both.


edit for spelling/grammar typo
Last edited by pugchief on Wed May 15, 2019 10:38 am, edited 1 time in total.
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Re: Will Trump be Re-elected?

Post by moda0306 » Wed May 15, 2019 9:14 am

Kriegsspiel wrote:
Tue May 14, 2019 11:03 pm
moda0306 wrote:
Tue May 14, 2019 4:48 pm
This brings me to something I've realized since working in business tax... and that's that Employer-based contributions are woefully under-used, but mostly because I don't think workers value them that much. The maximum for a SEP or 401k Profit Sharing is 25% of an employee's wage income. That means 20% of an employees compensation can be not only free from their income taxable income, but also free from BOTH sides of FICA/Medicare, which amounts to 7.65% for each party (employer/employee), or 15.3% total.

The former can be accomplished through employee contributions (lowered income tax), but not the latter. That means that the "penalty" between employer and employee for employees not valuing (and/or employers not providing) an employer contribution to retirement, is resulting in at least 15.3% of missed opportunity to help both parties save tax money.
YUP. When I was operating as an LLC, I contributed the maximum legal amount to my individual 401k. It was awesome.
Further, if you go with a 401k option, but very richly fund the Profit-Sharing portion, you can accomplish all that, but also have a vesting schedule too, which helps "vest" the employee with the future of the company to a certain degree that's not very possible in other ways.

I think these are drastically underused tools. It's a shame we live in a society where both employers and employees are too short-sighted to use/value these things. Even if we're seeing stagnant real wages, and if we have to accept that as a part of reality, it still makes sense to shift contributions from employee to employer.
What do you mean by the bolded.
My bad for the lack of clarity on the bolded.

I tend to assume that the general consensus around the abandonment of Employer-based retirement contributions has been the stagnation of real wages income, and that being an easier place for employers to abandon expense without actually lowering an employee's paycheck. My point was that even IF we have to suffer that stagnation, it'd still be better to do more employer contributions if the employee was going to save the money anyway.

Obviously eventually this will drag against their budget, and even more obviously, as pug mentions, people just don't value dollars they don't see, even if taxed higher. Especially depending on the type of employee you're hiring.

That said, I see it even on middle-high incomes where one would think there's more appreciation for savings, tax strategy, long-term employment, etc. However the other thing I see is a complete lack of motivation by many (not all) employers to understand much less communicate the benefits to their employees. I'm sure this is a bit of a chicken/egg thing, and I'll even grant that more of the problem probably lies in the employees than the employers.

So yeah pug I totally understand what you're saying. You can only try so much. It's more of me wanting to shake some wisdom/foresight into employees (and some employers) to appreciate the more nuanced elements of how a compensation package can be structured.
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Re: Will Trump be Re-elected?

Post by jhogue » Wed May 15, 2019 10:06 am

I think moda and pugchief are both right. In some cases employers either don’t set up pension plans for their employees or perhaps don’t explain their advantages very clearly. On the other hand, many employees don’t seem to rationally value each component. It is easy enough to see on paper that:

Net Compensation = Salary + Benefits + Profit Sharing - Taxes

Nevertheless, I have seen multiple instances where workers underutilized or just plain refused to sign up for tax deferred compensation. They preferred cash now to more money and less taxes later. It is even true among college professors-- who one would think are well-educated as a group and capable of calculating their net worth and the net present value of future benefits.

Somewhere in there I think there is a self-selected dividing line between future haves and have nots. Also an explanation for general dissatisfaction with how 401k etc. plans have worked out in actual practice. Many-- particularly those on this forum-- have figured it out. I’ll bet that virtually all of us know people who abjectly insist on leaving money on the table.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: Will Trump be Re-elected?

Post by moda0306 » Wed May 15, 2019 1:12 pm

I tried to tell a client (employer) to look at it this way with her profit sharing...

She can either spend $110 to get her employee about $60 of cash (even if the did a pre-tax 401k they'd still only get $92.35). Or she can spend $100, and put $100 into an account that the employee will SEE, but it only be hers to take with her at a slow-ish vesting rate, the remainder of which she knows she'd be leaving behind if she left the company.

Even $3k-$5k could be really tough to kiss goodbye to because you wanted to take another job.

Even if the employee THINKS they want the $60 more, which I think if properly explained many would take the retirement, I think one could make the argument that it's the profit sharing they'll truly regret losing and will motivate them to be more "invested" in the future of the company, even if it's only a subconscious realization. Of course I bring this up as completely debatable as behavioral economics never ceases to prove me wrong. :)

If you have people you want to retain, Profit Sharing plans can be a great way to save on taxes, help them save on taxes, and give them a "poor-man's" version of golden handcuffs.
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Re: Will Trump be Re-elected?

Post by jhogue » Wed May 15, 2019 6:25 pm

moda,
When an employee leaves before the end of the vesting period, what happens to the funds that they forfeit? Does it go to the other employees?
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: Will Trump be Re-elected?

Post by pugchief » Wed May 15, 2019 7:26 pm

jhogue wrote:
Wed May 15, 2019 6:25 pm
moda,
When an employee leaves before the end of the vesting period, what happens to the funds that they forfeit? Does it go to the other employees?
They go into a pooled account which can be used to offset future contribution liability.
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