Monday, December 6, 2010

The Sarcasm Report v.71

Top 10 Tips for a Financially Safe Retirement

Plus, stock prices sometimes plunge. That's why retirees who buy stocks for income should probably limit their exposure to this strategy and stick with large, very stable companies with a history of paying dividends.

Here's a tip. Think Citigroup back in 2007. Stable? It was way too big to fail. Don't forget the decades of rich dividend paying history it had back then either. That just shows the power of the rear view mirror. There's all kinds of fun things to see.

Life insurance really isn't meant to be a retirement plan, but it can be a welcome additional income source for retirees who find they're a bit short each month. The safest policy for the job is one like whole life or universal life that builds cash value on a schedule.

Indeed. You definitely want a safe whole life policy. Those extra commissions on whole life will help keep everyone solvent.

That brings us to CD's and savings accounts.

When it comes to generating income, there's nothing safer or more reliable. While this strategy obviously isn't viable when CDs and savings accounts pay 2%, 1% or even less, it can be a fine option when interest rates are reasonable.

Obviously. You can't be earning 2% safely and reliably when inflation is just 1.2%. Wait for inflation to hit 3.2%. That way you can earn 4% instead. It might feel the same in some ways, but the extra taxes you pay on those inflationary profits will make all the difference.

And since you clearly cannot own CDs and savings accounts right now even though inflation is so low, that leaves you with only one obvious conclusion. You must chase returns elsewhere just like everyone else. Perhaps something that has skyrocketed in price over the past few years? Oil? Gold? Silver? Stocks? With so many obvious choices to choose from, how could you possibly lose?

Working part-time can be a good way to do that while earning extra income. And the only thing at risk is some time.

Time spent looking for work in retirement is time well spent. That's especially true when unemployment is 9.8% and age discrimination is prohibited.

Also keep in mind that gasoline is roughly $3 per gallon. The IRS believes it costs you
51 cents per mile to operate a vehicle. That means you'll want to find a high paying part time job very close to where you live of course.

As an example, if you are earning $7.25 per hour (
minimum wage), keep roughly $6 after taxes, you work 2 hours per day, and you accept a job that's 12 miles from your home, then you can expect to net $0. It won't feel like it at first, but it will when your car eventually needs maintenance.

I should probably stop here but I will leave you with a sarcastic haiku.

Financially safe
And yet TIPS are not offered
Snowball's chance in hell


Stagflationary Mark said...

As you can probably guess, I'm disappointed that the safest forms of government debt (inflation protected TIPS and I-Bonds) were not specifically mentioned in the "Top 10 Tips for a Financially Safe Retirement" list but whole life insurance was.

How disappointed?

Forehead. Desk. Whack. Whack.

Wisdom Seeker said...

I hear you... especially after the new "print and spend and cut taxes" policymaking in Washington...

The deficit-reduction panel got ko'd by Congressional sleazes, so...

Bernanke gave Obama the green light to cut the Social Security tax, by offering to print more, so...

As long as no one takes the keys away from Bernanke, there's gonna be a lot of new imaginary money in the economy in 2 years...

Stagflationary Mark said...

Wisdom Seeker,

Why did the chicken cross the Rubicon?

Because it felt that higher oil prices would have miraculously stopped The Great Depression.

Wisdom Seeker said...


Although, actually, in this case, higher oil prices could be a good long-term thing. We need to stop subsidizing Sunnis and Shiites with oil money, and there's never going to be a good time to start, so we might as well get on with it now. If you include the military and "homeland security" costs associated with oil dependence (and the associated loss of international influence), oil's a lot more expensive than the pump price...

Stagflationary Mark said...

Wisdom Seeker,

"Although, actually, in this case, higher oil prices could be a good long-term thing."

I honestly wish that we had been taxing energy at higher rates in the past. Just think how much better off we'd be right now, especially if those taxes had been put to good use.

We chose instead to drive "large energy inefficient" single occupant vehicles many miles each day as we commute from our "large energy inefficient" homes in the suburbs to where the jobs are.

Unfortunately, what was easily done will be difficult to undo. Those homes in the suburbs are already built. I live in one. Sigh.

dearieme said...

I've hit on the answer. Buy goats. You can drink their milk, eat their meat, weave their wool and wrap yourself in their skins. And they'll graze on just about anything.

Heather H. said...


I agree with you totally. There's so much wasting energy, inefficient commuting...One time when I was just waiting on a bus stop I counted the cars with the driver only and no passengers an guess what. 90pc of the drivers were alone. IMO, this is a habit sponsored by long term low gasoline prices. But imagine the expenditure rise of all the companies if they go up to $4 per gallon!

Stagflationary Mark said...


We're tempted to rent a goat just to deal with our blackberry bushes. No joke!

Perhaps Goats 'R Us might be a viable business model, lol.

Stagflationary Mark said...

Heather H.,

"IMO, this is a habit sponsored by long term low gasoline prices."


I rented small apartments until I was 33. Amazingly energy efficient! My neighbors helped me heat my walls, ceiling, and/or floor.

Why the government wanted ALL of us living in free standing houses I have no idea, other than the higher property taxes of course. Sigh.

Renting an apartment *should* be much cheaper than owning a large house (assuming home prices rise at the pace of overall inflation, which has been true over the long-term). That's especially true if energy prices keep moving higher faster than inflation overall.

Further, a house *should* be a depreciating asset since money and time needs to be spent just to maintain its value. The National Association of Realtors and the government managed to temporarily convince us otherwise though. Go figure.