My Thanksgiving and a Nightmare for Washington, DC.
November 27, 2010
Buz Livingston, CFP
www.waltonsun.com
My ?things to be thankful? list had a much-needed entry. With the Georgia Bulldogs still chasing bowl eligibility, family infirmities and a dear friend?s muchtoo-early death, my thankful cupboard was barren.
Then Robert Reynolds of Putnam Investments spoke at the National Press Club.
When Wall Street types show up in Washington, D.C., you can count on them asking for money, railing against regulations or paying a politician. The Wall Street gang rarely has an idea good for America. Perhaps being headquartered in Boston rather than The Big Apple gives Putnam immunity.
As a disclosure, we never recommend Putnam mutual funds. Their lineup consists of actively managed funds and active management doesn?t work, at least not for clients. When I was a child, I used Putnam; when I became a man, I put away childish things. Nonetheless, their CEO speaks with unusual clarity.
Reynolds touched the third rail of American politics ? Social Security. Instead of lobbying for privatization as most financial leaders, he lauded the program calling it a ?cornerstone element of most Americans? retirement.? He lambasted an item high on the Republican agenda ? private accounts ? as being unnecessary for the solvency of Social Security. Most people cannot or will not save enough to equal the present value of their Social Security benefit. Sure, small business owners and the self-employed bear more of the burden since folks like us pay both sides of Social Security but those were the rules when we got in the game.
He realizes society benefits handsomely from a system where retirees can live with dignity and wellbeing. Reynolds laid down a marker unveiling a ?new solvency? initiative where he spelled out changes in tax-and-spending policy along with measures to strengthen individual savings. Included is support for mandatory IRAs allowing workers at companies without a companysponsored plan to save via payroll deduction.
Pay yourself first works, and if you never see it, you don?t spend it. Employee participation in 401K plans has increased at companies with voluntary automatic enrollment (opt-out), Reynolds said. He recommends making enrollment mandatory. We should evaluate if tax incentives for employers/employees would be beneficial.
Reynolds also supports many initiatives leaked earlier this month from the deficit commission-gradually raising the retirement age, adjusting how benefits are calculated for higher earning workers and broadening the tax base. Liberals unfairly label the first two as gutting Social Security while Republicans complain about taxes and both sides are wrong. All three will require something seldom seen ? ?unusual political courage.?
Social Security is no Ponzi scheme, ask a Madoff investor. The Social Security Administration projects a 22 percent benefit reduction in 2037 when reserves are exhausted. Madoff investors face a 100 percent reduction, so drop the hyperbole. Goofy allusions to Social Security being little more than government IOUs further muddies the water. The ?IOUs? Social Security detractors denigrate are U.S. treasury bonds and allow Social Security to match beneficiaries? projected needs.
We need solutions, not sound bites.
I am so thankful for common sense recommendations instead of bumper sticker rhetoric, and I hope Pop comes home for Thanksgiving. If Georgia gets bowl-eligible, I hit the trifecta.
Unfortunately, our Thanksgiving table will have one empty glass.
Buz Livingston is a certified financial planner. He operates Livingston Financial Planning Inc. focusing on hourly financial planning and investment management. Contact him directly at 850-267-1068 or at buz@Livingston ? Financial.net? .
November 27, 2010
Buz Livingston, CFP
www.waltonsun.com
My ?things to be thankful? list had a much-needed entry. With the Georgia Bulldogs still chasing bowl eligibility, family infirmities and a dear friend?s muchtoo-early death, my thankful cupboard was barren.
Then Robert Reynolds of Putnam Investments spoke at the National Press Club.
When Wall Street types show up in Washington, D.C., you can count on them asking for money, railing against regulations or paying a politician. The Wall Street gang rarely has an idea good for America. Perhaps being headquartered in Boston rather than The Big Apple gives Putnam immunity.
As a disclosure, we never recommend Putnam mutual funds. Their lineup consists of actively managed funds and active management doesn?t work, at least not for clients. When I was a child, I used Putnam; when I became a man, I put away childish things. Nonetheless, their CEO speaks with unusual clarity.
Reynolds touched the third rail of American politics ? Social Security. Instead of lobbying for privatization as most financial leaders, he lauded the program calling it a ?cornerstone element of most Americans? retirement.? He lambasted an item high on the Republican agenda ? private accounts ? as being unnecessary for the solvency of Social Security. Most people cannot or will not save enough to equal the present value of their Social Security benefit. Sure, small business owners and the self-employed bear more of the burden since folks like us pay both sides of Social Security but those were the rules when we got in the game.
He realizes society benefits handsomely from a system where retirees can live with dignity and wellbeing. Reynolds laid down a marker unveiling a ?new solvency? initiative where he spelled out changes in tax-and-spending policy along with measures to strengthen individual savings. Included is support for mandatory IRAs allowing workers at companies without a companysponsored plan to save via payroll deduction.
Pay yourself first works, and if you never see it, you don?t spend it. Employee participation in 401K plans has increased at companies with voluntary automatic enrollment (opt-out), Reynolds said. He recommends making enrollment mandatory. We should evaluate if tax incentives for employers/employees would be beneficial.
Reynolds also supports many initiatives leaked earlier this month from the deficit commission-gradually raising the retirement age, adjusting how benefits are calculated for higher earning workers and broadening the tax base. Liberals unfairly label the first two as gutting Social Security while Republicans complain about taxes and both sides are wrong. All three will require something seldom seen ? ?unusual political courage.?
Social Security is no Ponzi scheme, ask a Madoff investor. The Social Security Administration projects a 22 percent benefit reduction in 2037 when reserves are exhausted. Madoff investors face a 100 percent reduction, so drop the hyperbole. Goofy allusions to Social Security being little more than government IOUs further muddies the water. The ?IOUs? Social Security detractors denigrate are U.S. treasury bonds and allow Social Security to match beneficiaries? projected needs.
We need solutions, not sound bites.
I am so thankful for common sense recommendations instead of bumper sticker rhetoric, and I hope Pop comes home for Thanksgiving. If Georgia gets bowl-eligible, I hit the trifecta.
Unfortunately, our Thanksgiving table will have one empty glass.
Buz Livingston is a certified financial planner. He operates Livingston Financial Planning Inc. focusing on hourly financial planning and investment management. Contact him directly at 850-267-1068 or at buz@Livingston ? Financial.net? .
