Phony FIRE retirees

So, I read it and yes, if you want to live in California or North Carolina as a couple with kids on $45,000 a year, I guess this is possible if you are lucky enough to never make a mistake, attend a state school with $3,000 a year in tuition (no longer available), never get sick, sell property at a 33% profit, earn fantastical rates of returns on your investments, and if both spouses are willing to both work full time and save every penny possible for over a decade.

So, at 33, he would have had, at most 10 years of employment, perhaps less given his law school education. His spouse perhaps of the same age, had another 10 years. Assuming they both started out at $70,000 a year and that wages steadily grew to $120,000 a year over 10 years (not likely, 6.2%/year), had a 35% marginal income tax bracket (all in, CA/NC, local, federal, FICA, FICA-Med, property, sales, etc.), spent $45,000 a year, they could have socked away as much as $750,000. Assuming a 15% per year rate of return on dollars invested, all in tax deferred accounts (not likely), I come up with $1.6MM. So, that must mean that the other $1MM or so is in property appreciation or capital gains from the sale of a home.

So, it is possible, but it required living 10 years with next to nothing margin, a lotta luck (15% per year returns, significant gains on sale of residences?) and, it will require living on a next to nothing margin and counting on subsidies from the government for health coverage as well as avoidance of a wealth tax as well as good health for the rest of their lives… both spouses, all of their children, etc.

They better hope that neither the D’s (wealth tax) nor the R’s (entitlement reform, perhaps a need based test for taxpayer subsidized health coverage) gain full control over the federal government, or their careful plans may suffer a jolt. Wonder how a 5 – 10 year gap in employment will look to the corporate recruiters if they have to go back to work after suffering a setback? Or, if they decide to start a business, wonder just how willing they will be to risk their own money as an investment? Most small businesses fail, by the way.

On the other hand, as we are moving to create an entitlement state that penalizes those attempting to accumulate wealth so as to transfer their property/income/wealth to others “more” deserving from an “equity” perspective, well, us stupid people will end up paying more in taxes to subsidize his health coverage and his children’s college and graduate education with awards and financing that are “need based” – they waiving any residual student loan debt.

This all reminds me of Health Reform, and the academics, like Professor Hacker, who wrote the Great Risk Shift. He assumes that once upon a time (yes, this is a fairy tale), everyone had a lucrative defined benefit pension plan, generous health care coverage, could support a family with high wages from a single earner without working lots of overtime – able to fund all the necessities and all the extras life has to offer, etc. However, that was never the situation – most people never had a pension, or they never vested in a pension, and most never will – except for union employees and public employees who still have them and are counting on people who don’t have them, current day workers and taxpayers, to fund them.

For comparison, I know a young lady, age 33, single, has a job that pays her $30,000 – $40,000 a year, without any benefits, and she also relies on health coverage from the federal government. She pays $300+ a month for her single coverage with a $2,000+ deductible – obviously subsidizing this guy’s family coverage.

So, like I said, they need to vote for D’s so that this can continue, just not too many D’s – such that they gain a supermajority and full control over government and then try to confirm a famous quote President Ford once borrowed:”“A government big enough to give you everything you want is a government big enough to take from you everything you have.”

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