“Best Places to Retire”?

AARP http://www.aarp.org/home-family/friends-family/info-2017/25-best-places-to-retire-fd.html and others often publish lists of “Best Places to Retire”.  First, “best” is subjective.  One person’s “best” can be another person’s “worst”.

Second, these “best” lists often include taxes, the higher the taxes the lower the rating.  Tax is one of those things you get what you pay for.  If “high” taxes are paying for subsidizing business to get them to relocate, the taxes are not much benefit for retirees.  If the “high” taxes are paying for infrastructure such as emergency services then they can be of great benefit to retirees.

Even a given area can have great variation in benefit to retirees.  For example, most senior housing is in the “middle of nowhere”: infrequent bus service and very long walks to anything.  On the other hand, when we decide to sell our house, there are several senior residences that are close to bus stops and within walking distance of shops and restaurants.

Default Social Security but not China?

A company was founded that used bonds for its financing rather than stocks.  It issued bonds for various lengths of time: short term to smooth cash flow, medium term for starting new projects, and long term for capital improvements such as office buildings and factories.

When it began hiring a large number of people, it started a retirement and disability insurance fund for its employees.  It paid half of the premiums and collected the other half from the employees.  All the premiums purchased short-term bonds of the company.  Essentially, the company used the premiums to smooth its cash flow.

This went on for several decades.  Some employees never collected because they died before retirement.  Others collected for a few decades after retirement.  Few complained about the arrangement.

Then the company hired a new CEO.  He looked at the retirement fund and decided that instead of paying interest on the bonds of the fund, he could use that money to increase his own salary.  He also found a loophole in the decades-old contracts that allowed him to not pay the principle on the bonds.  He could apply it to his own salary.

There was a big hue and cry from current retirees about having their retirement checks reduced, but the votes of the bonds were controlled by the company, not the retirees.

Meanwhile,the holders of the higher interest bonds, the big banks and the foreign governments, including China, were assured that the company would meet its regular interest payments and pay the bonds in full on maturity.

Quote of the Day - Entitlements

"Social Security and Medicare aren't entitlements. They're subsidies to companies that do not sufficiently cover the health care and retirement needs of their employees."
- Gary Peterson, Letter, Star Tribune, 2012-11-24

But companies often more than sufficiently cover the health care and retirement needs of their executives.  See "Let's Look at Entitlements".

Of course I should get more from Social Security than I put in

Many who dislike the idea of Social Security are complaining that recipients are receiving more than they put in. Of course I should get more from Social Security than I put in.

Of course, it is debatable how much more I should get.

OK, why should I get more? Isn't that a bit greedy?

No more greedy than anybody who buys government bonds. They expect payment of interest as well as principal. Since by law Social Security funds are supposed to go into government bonds, then there should be more money available in Social Security than was originally put in.

Social Security is an insurance program, but the reverse of health, house, or auto insurance. In the latter case, the fortunate never get any of their money back. In the case of Social Security or any other pension plan, the fortunate get more than their share back. The less fortunate died before collecting all that they put in.

The real argument should be what should have been paid all along. Some of the past increases bore no reality to the cost of living of many retirees. This is a discussion that would take hundreds of paragraphs more.

P.S. My father's father died before he collected his first Social Security check.  My mother died at 65, and, as far as I know, never collected Social Security.

Retirement is good for public health

Saturday I came down with a cold.  I was really worn out by the time I had split the tree I had cut down earlier in the day.  As my wife was not happy with the low temperatures, she was very glad that I was amenable to returning to Duluth rather than staying another day.

Sunday I was even more worn out, napped a bit, and otherwise lolligagged around the house.  Monday, the same thing.  Today I cough some but have a bit more energy; still, I decided not to go out to a coffee shop.

But if I was still working somewhere, be it in an office or driving a bus, I probably would have gone to work on Monday.  If I did that, how many people would I have infected with my cold, be it by sneezing, shaking hands, or touching doorknobs?

Social Security checks didn't stay the same; they went down

This week we received our Social Security Benefit statements for 2011.  As predicted the "monthly amount" stayed the same, but the deductions went up!

Medicare medical insurance went up $74 per month and the Medicare prescription drug plan went up $4.60.  So, we'll each have $78.60 less every month to spend in the local economy.

We do have other sources of income, but we have saved those to use for big ticket items, like property tax.  For us, this decrease is an inconvenience; for others it can be a major blow.

I sent the above to Sens. Amy Klobuchar and Al Franken and to Rep.-elect Chip Cravaack.

Taxes are not the only consideration for picking a retirement destination

Or picking any other place to move to.

Yahoo Finance republished a Kiplinger article, "5 Tax Factors to Consider When Picking a Retirement Destination", Mary Beth Franklin, 2010-10-06.

I added the following comment to the article.

Beware of isolating tax factors from all other considerations.  Maybe you'll pay less taxes in the State of Bliss but less taxes could mean slower response times by fire departments.  Slower response times may mean higher insurance costs.  Less taxes could mean less road repair.  Less road repair could mean more auto repair costs.  Less taxes could mean less regulatory oversight.  Less regulatory oversight could mean higher electricity costs.  This could mean you pay more for air-conditioning in your retirement home than you paid for heating in your previous home.

Tax factors are only one part of the two really important considerations: the cost of living and the quality of life.  Look at the big picture.