Guest Post: Who's Living Large in Retirement?

Tyler Durden's picture

Submitted by Dennis Miller, via Casey Research,

Who fares better in retirement, pensioners or folks who saved up their own respective nest eggs? If you look at the numbers, you might be surprised to learn who's really "living large" after retirement.

Regardless of how you made your money, what determines if you're rich when you retire? Frankly, it isn't how much money you made, but how much you accumulated that counts. So who are the real rich people?

Retirees generally fall into one of four groups: folks who retired from the private sector with a 401(k), IRA or a lump sum payout in lieu of a private pension; those with a government pension; self-employed folks who saved their own respective nest eggs; and finally, those scraping by on Social Security alone.

The U.S. Census Bureau reports that in 2010 the top 10% had a median net worth of $1,864,000. If you're worth that much or more, 95% of the population thinks you're rich. But are you?

When my wife and I were first married we had a negative net worth. No silver spoons for us! By our late 50s we were successfully self-employed and in the top income tax bracket. And yet, once we paid federal and state income taxes, plus Social Security and Medicare, about 50% of our gross income went to taxes. We raised a family with what was left.

Once the children left the nest, we were in the race to the retirement finish line. For us, like most folks, that's when we really began to accumulate wealth for retirement. Here was our challenge.

For a self-employed person to end up in the top 5%, with a net worth of $1,864,000, he would have to earn a spare $3,728,000 before taxes. Now that sure sounds rich, but is it?

Assuming this person lives in a paid for home worth $564,000, that leaves $1,300,000 in his portfolio for retirement. And let's assume he and his spouse receive $35,000 a year in combined Social Security payments.

Today the best rate for a FDIC-insured CD is 1.1%. If the entire portfolio was in CDs, it would pay $14,300 in interest. Add that to their $35,000 in Social Security and they earn just under $50,000. Remember, 95% of the population thinks they're rich. Their retirement income is likely no more than 40% of what they earned when working.

And the winner is...

Firefighters in Contra Costa County, CA have a state law protected pension; many receive over $100,000 annually. (Their department is also closing four stations to make budget.) I have several friends who retired from the government who've received a large increase the last couple of years, bumping their pensions to well over 80% of their former salaries. Many regularly risked their lives, and I don't begrudge them a dime.

But it would take a self-employed person $2 million in earnings to net $1 million, which could fund an $11,000 pension. It would take just over $9 million for a person in the private sector to fund the pension equal to a Contra Costa County firefighter.

So who is living large?

Those who are fortunate enough to have sound government pensions are living very well compared with those in the private sector.

So what do I tell baby boomers in the private sector? First get out of debt. The quicker you can start accumulating wealth, the better. If you have any type of tax-deferred retirement plan like a 401(k) or an IRA, strive to maximize your contributions.

Once you have maximized tax-deferred accumulation, move on to the next phase. Start accumulating wealth long before your nest is empty. Even saving just $20/week beginning at age 50, with a modest 4% growth rate, will turn into $31,573 by the time you are 70. Through the magic of compounding, $20,800 saved over 20 years will earn $10,773 on top. Start the process and watch it grow; it will make you want to save more.

Don't rush out and join the fire department. Whether you are in the government or private sector, the combination of tax-deferred retirement income, savings and prudent investing, and most importantly—having an easy to use plan that you’ll actually follow—is what will help you enjoy your "golden years."

In our Money Forever letter we recently developed a monthly income plan using some of the safest dividend stocks on the market. The plan is easy to follow, doesn’t require an extensive background in investing or even that you start with a lot of money; you just need a willingness to learn and a desire for reliable monthly income. Click here to find out more.

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Umh's picture

You can by sheet or wire sterling from jewelry supply companies.

ILikeBoats's picture

I bought at $2.50 over spot, or could buy American silver eagles at $5 over, just a few days ago, at 2 different local shops.  Where are you, that price over spot is so high?

SilverDOG's picture





Feels good when you BTFD !

cherry picker's picture

If there was a way of puking on the Internet, it would be after reading this post.

There are a lot of people who risk their lives to help others.  Some get paid for it, some not.

However, bankrupting a county, city, state or country for six figure pensions is rediculous at best and probably closer to the definition of insanity.

Anusocracy's picture

If fire fighting were privatized, how much would those privatized fire fighters be paid? What they're worth, about a third of the cost of government ones.

The government ones are just another bunch of tremendously overpaid parasites.


ultimate warrior's picture

Where I live we have volunteer fire departments. It works great.

Edelweiss's picture

  I guess it depends on who's volunteer fire department we're talking about.  My town's volunteer fire department details all calls they respond to on facebook.  In the past week they have arrived at someone's home twice to discover the fire was in fact in the fireplace, and being used to heat the house.  I shit you not.  For both of these dire situations, several engines, and at least one fire chief attended.  Both times, more than one department was dispatched to the scene due to overlapping jurisdiction I suppose. Wise use of resources? They may volunteer(respectable) time, but they don't pay for the fuel, equipment, etc. 

A Lunatic's picture

Buy a little farm, eliminate all debt, become at least moderately self reliant.

Fuck the system.

NoDebt's picture

Done, done and done.  I lump guns under the "moderately self reliant" heading.

fuu's picture

Now sit back with the rest of us and poke fun at the thing.

Hulk's picture

and have a cigar

you're going to go far

you're going to fly high

you're  going to make it if you try

there going to love you !!!!


thats a lot of goings for one song...

McMolotov's picture

"Buy a little farm, eliminate all debt, become at least moderately self reliant..."

Then watch as property taxes (actually rent, because we serfs can't truly own a farm) go through the roof and your standard of living declines. Eventually you die and hand over half of your shit to Uncle Sam.

They'll always find a way to screw you; the best you can hope for is to find your own little ways of screwing them back.

SilverDOG's picture




Alloidial Title the property, if you live in one of the states which continues this opportunity.

Pay 6-8yrs taxes and OWN the non-taxable land.

Why do you think the govt. and banks convinced Boomertards to borrow against and not

free themselves from slavery. Buncha dumbf*^$.

Property liability is also removed. 

At least in this state it is. 


StychoKiller's picture

And which state Sir/Madam, would that be?

PersonalResponsibility's picture

"Alloidial Title" <-- Definitely going to look into that.


What state please?



Searching; looks like only Texas offers that.  MOVING!

Silver Bully's picture

'Searching; looks like only Texas offers that.  MOVING!'

Edited Correction: Barring conspiracy theories and tin foil lawyers, Allodial Title does not exist in the United States. Nevada ceased giving it in 2005. In was thought that Texas has limited Allodial Title, to prevent independent, unincorporated lands from being annexed and taxed by a city (a city annexes your lands, then taxes you to death). This does not exist, and has never been used in Texas law.

Bottomline: Allodial Title no longer exists for the average citizen (or 'sovereign') in the United States.

WillyGroper's picture

Texas has a provision for "considering" alloidal land under state law. Key word.

Boomertards & buncha dumbf*^$-----------Show me the law & when it was last considered.

Kirk2NCC1701's picture

Nevada and Texas are the only states, and Nevada stopped the creation of new alloidial titles after June 13, 2005.  If you find one, you'll pay a premium in Nevada.  That leaves good ol' Texas.

I wonder if Oracle's Larry Ellison got alloidial title to the island (Lanai?) he bought in Hawaii.  Then he will truly rule like a king that he thinks he is.  If not, his billions and campaign contributions are sure to 'sway' the election of the next crop of Hawaiian politicians.  /But, unlike all those other countries, we don't have corruption in the US. /sarc.

A Lunatic's picture

The more self reliant you are, the more latitude you have in choosing your battles. Property taxes are a minor inconvenience in the grand scheme of things. A little due diligence goes a long way in improving your chances of success.

MoneyThangs's picture

Obama pays me 90 grand/year to smoke weed and watch non-biased programs like Jon Stewart and Bill Maher. And Yes, Working is for suckers

trollin4sukrz's picture

I have decided to leave this shithole of a pacnw and am off to Texas. I am not about to live in a state that is as liberal as wa. It was not bad raising a family compared to Idaho (total Nazi state) but now that the kids are grown, fvkit.. I am going to go to the eagle ford boom and make my fortune! Oh and I am going to have a high capacity mag in my weapons as well!! Fvk you bernak. obombya, frankenfienstien, boxer and all the other whores like shumer and the fvkin jews in name only.. JINOs

Zap Powerz's picture

Pro tip:  You can use the word "fuck" here.  For example: Your post did not make any fucking sense.

Youre welcome.

Buckaroo Banzai's picture

when you referred to idaho as a "nazi state" that's when I realized you had shit for brains.

CPL's picture

Trees, fresh air, Hippies, tyedye stands, potatoes, big mountains and nice people.  Nazi isn't the first thing to come to mind about Idaho...

knukles's picture

Black Helicpoters.
Lots of Black Helicopters.

Pure Evil's picture

What he meant by Nazi is lots of white people that hate furenoirs.

graneros's picture

Good luck.  Can't blame you for leaving WA. If you don't like Idaho what makes you think you'll like Texas?  They are both "red" states but TX will be blue before too many more years pass.  By the way you might want to brush up on your Spanish.  Just a friendly tip.

trollin4sukrz's picture

I tried North Dakota.. wholy shit I thought Idaho was cold! I lived in Texas in the 80's so I know what to expect also lived 2 years in Vegas. I liked the warm evenings of Vegas.. but wearing gloves to open the car door during sunshine hours was different! N E way.. Texas is booming like no other state and a boom means opportunity so out of all the states, I see Texas as the one that will possibly make me enough money to get out of dodge when/if/as soonas/ tshtf.

NoDebt's picture

Screw pensioners getting huge checks.  Get down here in the cess pool slime with the rest of us.

And don't give me that "the banks and the government stole all the money" BS.  That's only a small player in what was always a radically over-optimistic calculation for those benefits.  They were always calculated from the high-water-mark for investment returns, or even higher.  YOU WERE OVER-PROMISED.  You won't get much sympathy from me if those promises are someday broken.

I was promised nothing, so I know exactly what to expect.  My kids, unfortunately, or perhaps mercifully, will never know what prosperity looked like so they won't miss it.  I'll never tell them what was stolen from them by previous generations before they were even born.



Miffed Microbiologist's picture

I'm so with you there nodebt! Our government worker friends go on and on how they are promised this money. I have to bite my lip bloody not to say what I really feel. When mr miffed was hired in 1981 he was PROMISED a pension of 5000/ month. In the 1990s it was capped at 2000. Last year we were told the fund was severely underfunded. They offered us a cash out which we took figuring by the time we needed it we'd be screwed. We calculated it would be about 250,000. We were given 160,000. Not much for retirement but we feel better it's in our control. We'll see what the future brings. My gov pension pals are very comfortable and complacent. I'd be scared shitless if I were in their position.


lasvegaspersona's picture


load up on fixed rate debt, buy something real (does not have to be gold but some would be nice)...

be sure you can service that debt load....then....wait...

the currency will hyperinflate or pigs will fly, if it is pigs flying get your Biden approved shotgun and shoot your lunch...

The nation can never pay it's debt in good , stable purchasing power currency, it will never endure painful deflation, regardless of the DV01 implications....

therefore it will print print print

as the currency collapses pick a few trillion dollar notes out of the gutter, pay off those pesky debts, take your real stuff and retire in style.

Hopefully you invested in something that depreciates for tax purposes and of course you made sure the interest is deductible...


Number 156's picture

Firefighters in Contra Costa County, CA have a state law protected pension; many receive over $100,000 annually.

Rhetorical questions:

What happens if Contra Costa County goes into bankruptcy, and California doesn't have the money either? Will Sacramento bail out the Contra Costa County FD pension funds or themselves first?

What happens if inflation takes off so high where 100k doesn't seem like very much anymore?

lasvegaspersona's picture

Number 156

move up to the head of the class

you have good worries

knukles's picture

In CA depends on the plan
If Contra Costa is a CalPers participant, if CC goes belly CalPers still owes the pensions... but then again makes no further contributions which do muddy the waters...
Now, the Constitutional Protection in CA is not written that you hereby are constitutionally guaranteed a pension, etc.
What is written (oversimplified) is that contracts may not be abrogated unilaterally.  So, Contra Costa (CC) cannot just say, we no payee you, no pension etc/Calpers may not.
What's in it for CalPers is that participating cities, counties, etc., have a contractual commitment to fund the plans for their employees participating therein. 
Fair enough.

But what if they stop?

Rubs and Nuts of Matters.

There is legal gearing up in CA with some of the bankrupted (so called, really no formal legal process as Ch 11) cities where they want to cease contributions to CalPers or cut payments (if not in CalPers) to retirees.

The big fight is drawing the following line.
Who the fuck has priority over tax receipts (not income, not revenues FFS)?
Is it bondholders first and pension plans second, or pension plans first and bondholders second?

You can guess just where the opinions lie for what participants.

This type of decision will be the LandMark WaterShed ruling of the Century and will no doubt make it through the US Supreme Court.  For there are no state bankruptcy laws.. they're all Federal.

Sure, go scratch your nuts while you can afford it, because if the Pensioner comes out on top, the bondholder gets fucked and any increases in taxes and you can betchur ass they'll happen, will go to the pensioners, meaning services just plain cease because of no money and taxes get raised even further..... 

Fred Hayek's picture

There's a simple solution. If the pensions can't be paid they pass the "windfall pensions" tax. Yes, you get your $295,000 per year pension mister non-descript hack government employee school superintendent (drone factory supervisor, really). Annnnnnd then we'll have a special tax on pensions over $50,000 per year such that you end up with $50,500 per year.

Problem solved!

willwork4food's picture

That means they will not have any money left over for golf & the under aged hookers. They'll be pissed!

MachoMan's picture

Depends, in numerous instances, municipalities have been prohibited by courts from denying promised payments to pensioners...  However, that can be fixed with your last question...  I sincerely doubt they will be indexed to inflation, let alone real inflation rates.  [hell, they're already getting shit on, albeit rose smelling shit compared to the rest of the plebs].

KnightTakesKing's picture

What happens if Contra Costa County goes into bankruptcy, and California doesn't have the money either? Will Sacramento bail out the Contra Costa County FD pension funds or themselves first?

No problem. Obama and the Federal Government will bail out California and other "deserving" states.

McMolotov's picture

What the fuck is retirement?

Oldwood's picture

You lie down and stop breathing.

McMolotov's picture

That's what it used to be, and people had better get used to it again. The modern concept of retirement is an anomaly, historically speaking.

TuesdayBen's picture

you go before the regional Gubmint Equitable Longevity Assessment and Resolution Board after a grueling fight and plead unsuccessfully for medical treatment you need to live before wandering off into unauthorized area (the woods) with a pocketful of lethal pills that you had stashed away before the Daily Needs Dispensement System for the Common Good was implemented and the Gubmint confiscated all unauthorized materials such as weapons, meds, metals, chemicals, tools, past print materials such as books, letters, photos, diaries, currencies, etc,.

Anusocracy's picture

Death is nature's way of telling you to slow down.

alien-IQ's picture

Retirement means you go to work at Walmart or McDonalds for minimum wage when your 65.

Miffed Microbiologist's picture

Times have so changed! 10 years ago all of our couriers were young college kids. Now they are all 60+. Their job is to take coolers full of medical specimens and ferry them to various facilities. Every hr each courier comes to our lab and delivers an average of 4 coolers weighing about 10lbs a piece. They now have this elderly man who looks like he's pushing 80. Every hr I see him struggle to load the coolers into his car. We all now take turns helping him, holding the door so he won't get hurt. Frankly sometimes I have to hold back tears as I do it. He always thanks me so profusely. I see my future. I pray someone will, at least, be there to hold the door. Oh... and yes, fuck you Ben!


WillyGroper's picture

Bless you for helping him. We're all headed there if we make it that long.