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How long do you expect to be dead?

ilene's picture




 

Having never been asked this before, I convened with my inner philosopher and estimated the times between death and reincarnation, heaven (assuming a straight path), hell, and the end of the universe--year, month, month, forever. I was on the wrong track. ~ Ilene

How long do you expect to be dead?

By Paul Price

The question in my title is often used by life insurance salespeople when somebody asks the price of a ‘too small’ policy amount. A too small policy – for instance $50,000 or $100,000 – is not enough. To determine if a life insurance policy is adequate, divide the death benefit ($) by the actual annual cost of maintaining the beneficiary’s current lifestyle ($ per year). The result is the number of years the payout would cover the beneficiary's expenses.

If the beneficiary lives beyond those years, the “too small” policy will run out. The insured will be summoned back from the dead.

It’s the same story with retirement savings. Most people have not calculated how much money they need to retire. However, many people fear that they won’t have the resources.  A recent survey by AARP found that nearly 70 percent of non-retired baby boomers in Florida thought they would have to delay retirement. 51 percent worried that they would never be able to retire. (Baby Boomers Worry They Won’t Be Able To Retire)

A new study by LearnVest and Chase Blueprint showed the net worths claimed by respondents in various pre-retirement age groups (below).

 

Retirement Savings by Current Age Category sources LearnVest Chase BluePrint Daily Finance Nov. 14 2012 How long do you expect to be dead?

[Note: 12% - 23% of people in the different age groups gave no indications of the wealth. Thus the percentages listed in each specific category do not add up to 100%.]

It’s understandable that 25 to 32 year olds do not have significant savings. It’s alarming that 45 to 54 year olds have a median nest egg of only $101,000. That means 50% have less. How many years of your own lifestyle could you pay for with $101,000 or even the average, $219,000?

Thanks to Bernanke and the Fed’s ZIRP (Zero Interest Rate Policy), we can’t even make a reasonable risk-free return on the median or average savings amounts. At 1%, the interest on $219,000 would come to a whopping $6.08 per day, pre-tax. In the future, that probably won’t even buy a Happy Meal.

There are various reasons why savings rates are so low. Political promises tell us:

  • Social Security will be there to support you.
  • Obamacare, Medicaid or Medicare will provide you with health care.
  • Food Stamps will ensure you’ll always have food.
  • Subsidized housing will be offered if necessary.

If we did defer immediate gratification by providing for ourselves:

  • We may be denied some or all of our SS benefits because we don’t really need them. Others are more deserving (aka: means testing),
  • We will need to pay for health care. No subsidies for rich folks.
  • SNAP is straining the system. No free food for us.
  • We will pay our own property taxes and utility bills.

 

Naughty or Nice How long do you expect to be dead?

 

Forego spending now and we’ll subject ourselves to double or triple taxation later. Spend every dime and we’ll be taken care of by the ever-dwindling pool of suckers that are still working.

Our warped world is now rewarding bad behavior (failure to save and invest) while punishing good behavior. We are teaching entire generations that they are chumps if they do the right thing.

If we raised our children or dogs this way, we’d have bratty kids and out of control pets. If we continue to run America this way, we’ll get the same result.

 

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Fri, 11/16/2012 - 05:13 | 2986964 Peter Pan
Peter Pan's picture

If someone put away $100,000 in gold back in 2000 and simply sold $4000 worth of gold each year, this would not only give them a nice 4% return but would also leave them with an amount of capital far in excess of the original $100,000.

By the way, the same thing would happen if you invested your lump sum in 2001, 2002, 2003....all the way up to and including 2011.

Which turkey said that gold does not pay interest????

Fri, 11/23/2012 - 20:17 | 3007706 Dr. Sandi
Dr. Sandi's picture

I like your practical way of looking at this, PP. The only difference between this and bank interest is that you would have to get up off your butt and do something to collect the gain, and that might be considered unumericun.

Fri, 11/16/2012 - 03:49 | 2986928 Supernova Born
Supernova Born's picture

I never expected to be alive, so you got me on the flip side of the equation.

Fri, 11/16/2012 - 00:05 | 2986739 DarthVaderMentor
DarthVaderMentor's picture

and all of these figures are based on QE inflated equities and treasury markets....

Thu, 11/15/2012 - 23:25 | 2986672 Cosimo de Medici
Cosimo de Medici's picture

If Bernanke goes to heaven then we all better hope you can take it with you, because it's going to get expensive up there.

Fri, 11/16/2012 - 00:10 | 2986750 DarthVaderMentor
DarthVaderMentor's picture

He isn't going to heaven, not to worry, my beloved Monsignor. God has reserved a special permanent place with gold as a currency in purgatory where banks and fiat money are outlawed. 

Thu, 11/15/2012 - 22:23 | 2986556 1eyedman
1eyedman's picture

whats funny is the idea of retirement in general.  the xpectation that at a certain age most of us get to stop working and live, play tennis etc.   very few people really ever retire, they get too frail to work, sit at home trying not to spend money and then die.  

retirement as a national 'right' as it is discussed is brand new.  ww2 generation fell into it after surviving the depression and winning the war.  their kids, the boomers grew up feeling it was a birthright.   no generation before has ever contemplated the concept of retirement....

Thu, 11/15/2012 - 22:02 | 2986527 spanish inquisition
spanish inquisition's picture

The IRS is prepared! The following is a paraphasing of an actual letter.

Dear Mr Inquisition's relative,

We agree that you do not owe any taxes due to the fact you are deceased. Should your status change at any time in the future, please contact the IRS.

The IRS

 

Thu, 11/15/2012 - 21:09 | 2986359 Supernova Born
Supernova Born's picture

Due to circumstances in banksters' control we have all been declared fit to work until you are unable to resist involuntary composting.

Everyone lays down in a big field. 2.5 feet of dirt* are dumped on top of you. If you can dig your way out in 3 minutes or less, you are free to go. If not, the big landfill style bulldozers come in, level the field and the next group of unemployed and seniors are brought in for "testing".

*dirt composition subject to change

Fri, 11/16/2012 - 06:11 | 2986987 andrewp111
andrewp111's picture

Sounds like something that should happen in Gaza, except that no one will simply "lie down". They have to be forcibly plowed under by the monster bulldozers.

Thu, 11/15/2012 - 22:55 | 2986619 Bohm Squad
Bohm Squad's picture

I once read the human body is worth $4 or $5 in raw materials.  So I'm having a hard time believing the bankers would simply throw that kind of money away.  [/sarc]

Fri, 11/16/2012 - 03:54 | 2986930 Supernova Born
Supernova Born's picture

Self-burial saves money and motivates those with the will and strength to live. Win-win.

However, the Colonial Penn "insurance for burial expenses" folks will lose clients.

Those who chose to be euthanized for the value of their soon to be carcass could meet with vendors in kiosks outside the "rebirthing" facility to sell their odds and corneas.

Thu, 11/15/2012 - 20:34 | 2986305 misnomer
misnomer's picture

I never expected to retire comfortably, if at all.  Any sort of savings or retirement investing scam is just so they can tax the shit out of you when you actually need your money to live.

I'll work until I drop dead, or lose my mind, whichever comes first.

Thu, 11/15/2012 - 20:29 | 2986294 disabledvet
disabledvet's picture

that is correct. having said that if you have a job you can buy life insurance and start contributing to your "death benefit." in some cases there may be tax benefits as well.

Thu, 11/15/2012 - 20:07 | 2986242 Ungaro
Ungaro's picture

How long do I expect to be dead? Four years, of course. Just before I go, peacefully in my sleep, just like my grandpa did, not screaming and hollering like the people in his car, I will re-register as a Democrat and will be resurrected every two or four years to vote my conscience.

Fri, 11/16/2012 - 06:15 | 2986989 andrewp111
andrewp111's picture

I guess you can be frozen in liquid nitrogen for 4 years, or 4 centuries, and the cold will not run out in deep space.  The resurrection part is a bit of a problem, though.

Thu, 11/15/2012 - 21:23 | 2986422 lunaticfringe
lunaticfringe's picture

I regret that I only have one green up arrow to give to my comrade.

Thu, 11/15/2012 - 19:59 | 2986217 whotookmyalias
whotookmyalias's picture

Pretty decent article on Marketwatch: 

http://www.marketwatch.com/story/health-care-bill-in-retirement-240000-2...

Then, the logic flaw.  She ends with "Bottom line is that many people are not saving enough for retirement". How about bottom line we are heading for a freaking disaster?!?  Lot's of people don't know how they are going to get by and this article simply wants us to save more in order to cover the $240K gap in our health costs?  Oh, OK, why didn't you say so.

Thu, 11/15/2012 - 19:58 | 2986211 spinone
spinone's picture

They've always been ripping us off.  We're just beginning to understand the details.

Thu, 11/15/2012 - 19:27 | 2986120 Diamond Jim
Diamond Jim's picture

always glad to wake up every day on the right side of the grass...........

Thu, 11/15/2012 - 19:32 | 2986130 Dr. Sandi
Dr. Sandi's picture

I'm just gonna pull that lawn up over my face and hit the snooze bar.

Wake me when it doesn't suck anymore.

Thu, 11/15/2012 - 19:17 | 2986097 blindman
blindman's picture

long , like being alive. eternity

Thu, 11/15/2012 - 19:52 | 2986190 petolo
petolo's picture

Death insurance and taxes. 

Thu, 11/15/2012 - 19:16 | 2986085 pitz
pitz's picture

0% is an awesome risk-free return when the returns on 'risky' assets are in the negatives, ie: the stock market for the past decade, etc.  I don't see what old people are complaining about. 

Thu, 11/15/2012 - 19:08 | 2986068 A Lunatic
A Lunatic's picture

Once I'm dead I plan on staying dead, at least until the next election.............

Thu, 11/15/2012 - 23:08 | 2986646 BORT
BORT's picture

Are you from Chicago??

Thu, 11/15/2012 - 18:53 | 2986014 SKY85hawk
SKY85hawk's picture

There's an easy way to legally avoid future double taxation on retirement savings. 

Start transferring your 401-k money to a Roth-Ira.  If you're not working your deductibles will allow sizable transfers at no cost.  Even FORBES has described this technique. I've been transferring 20,000 each year.  You have to figure what works for you.

Then there's the question of how to invest the money.  I move between Long and Inverse ETFs.  When the market goes down the Inverse ETF rises in value.  These positions will run for months.  June 1 was a good time to go long. 

Currently, the market is trending down and the Inverse ETF is rising in value.  Take a look at Energy(ERX is long, ERY is short) or Financials(FAS long and FAZ short).

Withdrawals after age 59.5 are not taxable at all. 

Keep in mind there is/was a 5 year rule on starting withdrawals, so get started!

Fri, 11/16/2012 - 06:31 | 2986997 Ar-Pharazôn
Ar-Pharazôn's picture

stock gold without saying to nobody bitchezzzz!!!

Fri, 11/16/2012 - 03:28 | 2986918 Manic by Proxy
Manic by Proxy's picture

Dear Mr Sky85hawk,
In accordance with Executive Order 23564, issued by Premier Obama, the Department of the Treasury and Confiscation hereby informs you that all retirement accounts, including IRA's, Roth IRA's, 401K's and private pensions shall be forthwith possessed and transferred to the Public Treasury. In exchange, you will receive an equivalent value of long term Treasury Bonds, backed by the full faith and credit of the Government of the Eastern Coalition. Please note that your local and regional commissars must approve any and all redemptions of said Bonds. Premature liquidation will result in a penalty tax of 100%. Thank you supporting our Dear Leader.

Thu, 11/15/2012 - 21:32 | 2986448 imbrbing
imbrbing's picture

You assuming they haven't taken it from you already. I ain't giving nobody my money anymore to keep it "safe".

Silver Bitches....

Thu, 11/15/2012 - 20:08 | 2986244 ebworthen
ebworthen's picture

Oh they'll be stealing the Roth IRA's just like any other or 401K.

Remember; any past law can be superceded by a new law.  Things like property rights, or bondholder rights, or habeus corpus, or the Magna Carta, etc., etc. 

They've already done it, they'll do it again.

Thu, 11/15/2012 - 19:32 | 2986131 LMAOLORI
LMAOLORI's picture

 

 

Obama Begins Push for New National Retirement System

http://www.nationalseniorscouncil.org/index.php?option=com_content&view=article&id=89:obama-begins-push-for-new-national-retirement-system&catid=34:social-security&Itemid=62

The problem I have with these articles is grouping in Social Security with other real Welfare programs. The real problems are the programs that are REAL Welfare (meaning taxpayers fund them) like Medicare, Heat Assistance, SNAP, Subsidized Housing, Child Care Assistance, Pell Grants those are all programs that are REAL WELFARE ENTITLEMENT PROGRAMS.  Those are the programs that should be cut! The young people can whine all they like about Social Security but the fact remains people and their employers paid for it not the taxpayers or the government. Since Social Security can't tax or deficit spend it has ZERO effect on the budget other then when it collects on the $2.7 Trillion the government borrowed. The program left as is will simply reduce benefits when it doesn't have the money to pay S.S. in full anymore. 

The next problem I have is the crap about ". Others are more deserving (aka: means testing)" who decides and what makes anyone more deserving then another who paid in that is just more forced redistribution!

Today’s Retirees First to Pay More Into Social Security Than They’ll Get Back

 

Thu, 11/15/2012 - 22:48 | 2986606 Bohm Squad
Bohm Squad's picture

Many of your ideas about SS are not entirely correct.  If you're interested:  http://mises.org/daily/3469

Thu, 11/15/2012 - 22:16 | 2986546 Papasmurf
Papasmurf's picture

Means testing would unfairly punish those who saved for their future and reward those who lived to keep up with the neighbors.

 

Thu, 11/15/2012 - 23:12 | 2986653 BORT
BORT's picture

Thanks Mr. Obvious.  It's been going on a while

Thu, 11/15/2012 - 18:25 | 2985923 negative rates
negative rates's picture

Or, you can just live as if each day were to be your last, and don't worry about retirement money!

Thu, 11/15/2012 - 23:23 | 2986668 Cosimo de Medici
Cosimo de Medici's picture

The great Irish toast gets it right:  May your last check bounce

Thu, 11/15/2012 - 19:05 | 2986061 Bastiat
Bastiat's picture

Obama got yer back!

Thu, 11/15/2012 - 18:38 | 2985963 Bicycle Repairman
Bicycle Repairman's picture

Bernank, is that you?

Thu, 11/15/2012 - 18:23 | 2985911 Bicycle Repairman
Bicycle Repairman's picture

"If we raised our children or dogs this way, we’d have bratty kids and out of control pets. If we continue to run America this way, we’ll get the same result."

Too late.

Thu, 11/15/2012 - 18:11 | 2985873 worbsid
worbsid's picture

What color was the really good Soylent?

Thu, 11/15/2012 - 19:11 | 2986069 Manthong
Manthong's picture

That’s something that’s been bothering me ever since the whole zombie lifestyle, er, deathstyle came into vogue.

I prefer to stay securely dead after the big inflection point. 

It’s just way to bothersome having to wander around scrounging for living flesh to feast upon.

Do food stamps cover living flesh?

Fri, 11/16/2012 - 02:07 | 2986869 Things that go bump
Things that go bump's picture

I fear death will be a lateral move.

Thu, 11/15/2012 - 21:32 | 2986446 Kali
Kali's picture

Double tap!  You forgot to double tap!

Thu, 11/15/2012 - 18:04 | 2985841 Rainman
Rainman's picture

Great news....whether you live or die you'll be wiped out anyway.

Financial Repression has it all priced in.

Thu, 11/15/2012 - 18:01 | 2985822 asteroids
asteroids's picture

I see a generation retiring into poverty.

Thu, 11/15/2012 - 23:24 | 2986667 Chuck Walla
Chuck Walla's picture

I am nearing that retirement point. All my assumptions have been rendered moot with the coming of B-Rock of Benghazi Obama.  There is no way to just sit back and call it a life now, current income has become essential.  The politicians, Sen Tom Harkin, have been dreaming and scheming of ways to steal the retirement wealth.  Things just haven't reached the critical mass yet and thats a hell of a thought, that these are the good old days.  The thievery hasn't really started in earnest at all.

 

FORWARD SOVIET TO POVERTY!

Thu, 11/15/2012 - 17:50 | 2985784 aerojet
aerojet's picture

Funny we see this on the same day the powers that be are talking negative interest rates--there is not any meaningful way to do the kind of calculation this article talks about because it makes too many assumptions about the safety of our savings, and it is quite clear that our collective savings' are completely unsafe and that attempting to put away any kind of retirement nest is a fool's errand because it's going to be robbed from you in broad daylight by a bunch of sociopaths until we collectively get together and kill the motherfuckers doing this to our money.  And that's where that stands--either we grows some balls and do something, or we starve in retirement.  There is no third option here and there never was.

Thu, 11/15/2012 - 19:35 | 2986142 spankthebernank
spankthebernank's picture

Bravo aero!

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