Friday Reading: Baby Boomers Didn’t Destroy the Economy

By Harry Sit

Before reading the list of interesting articles I’m sharing this week, you should head over to Amazon and download the Kindle book Social Security Made Simple by Mike Piper of Oblivious Investor.

Today is the last day to get it for free. The paper copy is only $5 and it’s eligible for free super saver shipping or Amazon Prime. Remember you don’t need a Kindle to read Kindle books. Amazon has a free Kindle app for pretty much every platform: PC, Mac, browser, tablet, and smartphone.

I downloaded it. I will review it after I read it. Judging from Mike’s previous books and his blog, I’m confident it’s a good one.

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Romney’s tax prep blunder by Allan Roth at CBS MoneyWatch

Interesting suggestion that Mitt Romney should’ve converted to Roth. The conversion would be taxed at the top marginal rate and therefore pull up his average tax rate. Maybe he’s planning to donate the IRA money to charity?

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Does This Piss You Off? We Pay Unemployment for Seasonal Workers Repeating the Same Pattern EVERY Year by Darwin at Darwin’s Money

Seasonal workers get unemployment benefits after the end of the season. That’s news to me and yes, it does piss me off. Speaking of unemployment benefits …

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Who Pays for Unemployment Benefits? by Michael at Financial Ramblings

Yeah, who pays? Employers, employees, or consumers? I say employees because it’s part of direct labor cost, just like employer’s portion of the Social Security and Medicare tax. Employees have to earn it through their labor and forward it to the government via the employer. The employer is only an agent like FedEx delivering a package.

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Representatives urge renewal of expired state and local sales tax deduction by Kay Bell at Don’t Mess With Taxes

Don’t! Here’s the thing I don’t understand: they say people in the benefiting states depend on the sales tax deduction. Since this deduction didn’t come into existence until a few years ago, how did people live before then? Since it came as a temporary gift, how do people depend on something they know will go away? Dear Congress, establish some creditability. Temporary means temporary.

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Who Destroyed the Economy? The Case Against the Baby Boomers by Jim Tankersley at The Atlantic

This long read will require some deep thoughts and reflection. I wouldn’t accuse the baby boomers of destroying the economy but I would say some generations fare better than others. As some commentators pointed out it’s actually the generation before the baby boomers — the silent generation — doing the best economically.

During good times people thought good times would continue forever and they voted for things that would cost a lot more than they thought. The question is should we continue down the unsustainable path or come to grips with reality sooner.

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I Am 1 Percent: Think big when building wealth by I Am 1 Percent at Dime Spring

I’m not a fan of latte factor either. However you don’t have to wait for really big-ticket items. As my "double the bond yield" exercise will show, small things do add up. The trick is that ideally it’s a one-time effort reaping repeating rewards.

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Best Bond Investments Today by Mike at Long-Term Returns

Mike recommends EE Bonds in addition to I Bonds. I should think about EE Bonds more. If they pay 3.5% a year straight they would be a no-brainer. But they only pay 0.6% a year before a final spike at year 20. Only for the truly patient?

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Risk Tolerance: Assessed Through Real World Experience by Mike Piper at Oblivious Investor

Mike suggests investors "test and learn" their risk tolerance. Previously I suggested calculating the "potential loss to income" ratio. That was written in December 2008 in the midst of real world experience. When someone doesn’t have a lot of money invested, even losing 50% isn’t a big deal. When you already have $1 million invested and you have a small income, losing 50% would be a serious blow.

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60% of Doctors Would Retire Now If They Could at White Coat Investor

I would too if I could. Not that I don’t like my job but I would choose to do less of it if I could.

Blog of the Week: Long-Term Returns

I came to know this blog because someone posted about it on the Bogleheads investment forum. The author Mike is an engineer who worked as a trader on Wall Street for several years before returning to the engineering field.

Solid information on investing; better than mine. The blog has been out there for almost two years but I only knew about it now. It just shows there are many great blogs out there. If you find a good one and you don’t see me linking to it yet, tell me!

Blog Carnivals

Carnival of Personal Finance #382 hosted at Walking to Wealth included the guest post from Bob’s not my name on insurance tips for new graduates.

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Software picked, likely related posts:

Posted on October 12, 2012 under News. Keywords: , , , , , , .

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Comments

3 Comments on Friday Reading: Baby Boomers Didn’t Destroy the Economy

  1. serbeer on October 12, 2012
     

    Seasonal workers had some problems getting out-of-season unemployment benefits lately in some states:
    http://money.cnn.com/2012/05/31/news/economy/seasonal-unemployment-benefits/index.htm
    but friendly federal government came to their rescue (at state’s expense, of course):
    http://blogs.ajc.com/atlanta-forward/2012/08/22/end-jobless-benefits-for-seasonal-workers/

    So, unless voters vote for a change in White house on Nov. 6 , this will continue to piss you off, I am afraid

  2. David C on October 13, 2012
     

    Regarding the state and local income tax deduction: well if you trust the Tax Foundation’s figures for 2009 all of the states that would presumably benefit from this deduction the most have lower state tax burdens versus other states (Washington state comes up at 29th out of 50, the others ranking-wise are even lower on the tax burden scale). So that would suggest taxpayers in those states are not exactly being crushed by state taxes and in need of relief in the form of a federal tax deduction.

    From a perspective of fairness it’s probably not fair that the ability to deduct state income taxes creates a subsidy for states that choose to have state income taxes (and may encourage state lawmakers to increase state income taxes more than they would since the tax increase would be partly offset at the federal tax level). Nevertheless as I mentioned on your blog in the past I still prefer to not pay state (Texas) income taxes in the first place even if I have to pay a bit more federal tax…

  3. David C on October 13, 2012
     

    As for series EE savings bonds, yes you have to be really patient. Grok87 on the bogleheads forum has offered his thoughts on them (http://www.bogleheads.org/forum/viewtopic.php?p=1207422#p1207422)… basically pointing out that if interest rates rise before the 20 years are up it may be hard to decide when to cash the bond in before 20 years. If you are really dedicated to holding the bonds for 20 years then that dilemma doesn’t really come into play…

    Full disclosure: David owns EE bonds but only because the bonds he purchased (http://www.bogleheads.org/forum/viewtopic.php?f=1&t=85688#p1227554) had rates comparable to savings account rates. David is not currently planning on holding onto his bonds for 20+ years… but I do reserve the right to change my mind ;-) .

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