Defined Contribution Plans

[shiny!]

Re: Defined Contribution Plans

I will state up front that I'm biased. Depending a great deal on specialty, many doctors make a great living. However, considering the time, effort, and money invested in their training as well as the often undesirable work-life balance, I don't think they are overpaid. If any of the people who provide services to me in life deserve to have a second home in the Caymans, it's probably the person who is highly trained to keep me alive and feeling well. It's certainly a field where I want the best and brightest. If doctors don't deserve to be highly compensated, who does?

+1

Four years of undergraduate school, four years of medical school, of which just sending in applications costs thousands of dollars, three to ten years working grueling hours as a resident, maybe $250,000 in student loans to pay off, and you're at least 30 years old before starting to make a decent wage. Add the cost of medical malpractice insurance.

A lot of doctors spend many years eating ramen noodles, putting off marriage, owning a home, raising a family... People envy them their golf and vacation houses, but how many people have the intelligence and perseverence to go through all that to get there? Not many. If it was easy, everybody could be a doctor.

[dcarrigg]

Re: Defined Contribution Plans

dcarrigg,

With regard to DB vs DC retirement plans, I don't understand really what the root of your complaint is. There's lots of charts and figures but I don't see what they prove. For example, young people having less for retirement could be attributable to a dozen other reasons. Simply saying it's because of the transition from DC to DB plans doesn't make it true or prove the point. To simplify the issue:

Both plans take money that ultimately comes from the employer and puts it aside for retirement.
Both plans hope to earn interest on that money so that it can pay out more than is put in.
Both plans can be structured in a way that is generous to employees or not.
Both plans can potentially lose money or earn less than expected.


The best argument for DB plans might seem to be the issue of market volatility and timing. But there are problems here too. If the market is down but the plan continues to pay out the same amounts....how does it recover from this? It now has an even smaller capital pool to earn interest on. Maybe the market comes back up in time to correct for it...or maybe not. If not then the plan will go bust and now instead of giving out level and fair amounts over time it simply screws the people last in line completely.

Milton Kuo did a good job with this. I'd only add the following: Why would you expect a machinist to earn an equal ROI given the 10 mutual funds offered as investment options, when in the DB plan a professional fund manager with all options at his/her disposal is in charge? DC plans kill specialization. Every citizen is expected to be a generalist that understands finance. Just as I would do poorly forging an iron railing, I would expect the blacksmith to do poorly in finance.

I agree to an extent. We are often getting the worst of both worlds. However, many of the problems we have are related to government policy: the completely insane tax treatment of company health benefits, the legislated protection of insurance companies, "non-profits" stockpiling billions of dollars, the countless issues with Medicare and Medicaid.

The issues with Medicare and Medicaid are that they take the uninsurable and offer them care. This way insurance companies only have to deal with the profitable. The riskiest, the old and the poor, do not factor into the pool. It would cost almost nothing more to throw everyone into a unified plan. Indeed, for nothing more than these programs cost, all other first world countries, and some third world, provide universal care.

Why should the government now be trusted to take over the system completely?

Well, they do a better job in every other country. They provide comparable care for 5% of GDP cheaper. They do it through different mechanisms, but all of them pull it off.

And more philosophically: Why can't the US be the one decent place where we don't try socialism? There are other solutions, but in my experience people who want socialized healthcare are not interested in them. I think fundamentally the desire for a pension is much the same as the desire for government run healthcare: people don't want the responsiblity. They want the money and benefits to be guaranteed and provided by someone else and they don't care how it happens or whether it's even possible.

I think our two schticks here are different. I would characterize them this way:

Mine is: "The middle class is being picked apart. It is dying. Here is the proof. Here is why this is bad for the economy. Here are the reasons it is dying. Here are systems proven to have helped in other places. Here are ideas to stop it. Saving it is important by any means necessary. If doing so is ideologically impure, so be it."

Yours is: "Libertarian ideals are pure and correct. Freedom is important above all things. The elimination of any and all government is always good for the economy. The middle class is incidental. It will do better under my ideas anyways, at least if we go far enough and try new things. It's not as important to stop the shrinking of the middle class as it is to introduce pure markets."

At least this is my take. And we have talked before about how my prescription of pragmatism is at times directly at odds with modern American libertarianism. It is not that the ideas wouldn't worked if tried. Maybe some would. But they have not been tried. And so I question them. Because I look skeptically upon that which I have not seen work.

Universal care and pension systems have existed for decades across the world. It does seem to be possible, as long as it's politically feasible. And at least in the case of healthcare, it seems to work much better and lead to a less stressful, healthier, and cheaper existence for most citizens (taxpayers). To me this is a noble goal. So long as we get there, the means are incidental. Call me Machiavellian if you will.

The middle class is getting screwed. They need to "take the power back". But they can't do that by simply demanding someone else to fix all their problems often with impossible solutions. They need to understand how and why they're getting screwed and fix the root of it. I'm not optimistic in the near term.

I'm not optimistic either. But for different reasons. I think the big chasm here between us is that I think that the middle class has to specialize. Not everyone can build a cabinet. Some people need someone to build cabinets for them. Someone else has to fix it. Forcing them to do it for themselves only leads to half-done, shitty cabinets. That's the essence of the part of my issue defined contribution that you have not addressed as of yet. It wants to make us all generalists. We are not. Even if we should be. But I am no idealist, and so I don't expect a nurse to go toe to toe with a crooked mutual fund manager on his own turf. That is not freedom. It is an unfair fight. And I already know who will win. Vegas odds are paying 30 to 1 against the nurse. It is exactly like pitting me at 6'3" against a 5'6" man. It is unfair and unsporting. And every time I see a climate like that, there's a Red Flag warning for FIRE.

EDIT: To pre-empt the argument that the nurse should hire a financial advisor, I put this to you. Imagine a world without drug regulation. We deregulated financial markets, but not drugs. What if a nurse was paid varying commissions like a financial advisor. She got paid more based on what drugs she handed you. So she's getting paid better for giving you the penicillin from the guy up the road cooking moldy bread on his stove compared to the properly made product. Is it your personal responsibility for testing the chemical purity of penicillin? Or should "someone else fix all your problems."

Should the FDA "get out of your way" like you want government to do in the financial and insurance sectors? Or are the products so complicated as to preclude a general understanding amongst the public? If they are too complicated, regulation is the only way to set up a fair and free market. Because the quality of your drugs might be just as much of a mystery to you as mutual funds are to the chemist.

Should you be personally responsible for each and/or/nand/nor gate on your microprocessor?

Personal responsibility advocates for finance and insurance would deem personal responsibility insane in the realms of medicine and technology and law and engineering and warfare. Why is FIRE the only sector in which many modern American libertarians advocate personal responsibility?

[dcarrigg]

Re: Defined Contribution Plans

Resigns due to backdating scandal, gets billion dollar golden parachute. But don't worry, the SEC made him pay back $461 million from his backdated options PLUS a....$7 million fine. So he just has to live on the scraps of his $1.1 billion parachute and whatever he saved of his ~60-120 million/year salary. Plus he can't be an officer of a public company until 2017 so we are safe for 5 more years! I'm sure that everything else he did while CEO was totally above board and the hundreds of millions of backdated stock options were just a one-time mistake that could happen to any honest person.

Also, another big part of the answer is right above: because 34% of the population is obese. You can't expect the best outcomes with the least healthy population...no matter how much you spend.

The terrifying thing is that the $1.1B is just less than $4 per capita or so. It's far from the $2,300 per capita we're over spending compared to the next large industrialized economy. 1/700th of the mess was this guy that year. How deep does it go?

[rosgal]

Re: Defined Contribution Plans

Great discussion! But I would like to add a couple of comments both on the subject of 401Ks vs pensions and health care.

401Ks v pensions:

Pension costs became highly problematic for companies and employees for several reasons:
- unreasonable rates of returns on investments assumed for compounding of balances over time
- mismanagement of pension assets at some firms/unions (embezzlements and misappropriation of union pension assets a problem some years back)
- continued promised increases of pension benefits or earlier vesting in lieu of wage increases to avoid strikes in unionized companies and municipalities which resulted in a grand kicking of the can down the road instead of negotiating appropriate wage rates at the time
- increasing life spans of the pensioners kicked the butt of actuarial models that already had "fantasy land" interest rate assumptions
- pension accounting on financial statements has been so "whack" for so many years that it was historically impossible to tell if funding was adequate to pay obligations...maybe this is finally getting addressed with FASB changes but companies could hide an elephant under the rug for many years.
- even now, disclosure about the adequacy of obligation funding to beneficiaries although improved is not that easy to figure out and frequently lied about verbally by employers..you have to read the fine print and ask a bunch of "politically incorrect" questions to know the truth.
- if a company finally gets to the breaking point, it can just go into bankruptcy and renegotiate or completely abdicate its pension obligations...so even with a pension, the employee may not get what they have been promised.

401Ks
- employees are getting screwed on the scope of the employer match relative to what employers used to set aside for pension benefits under defined benefit plans
- most decent employers try to present an array of investment options (including an autopilot choice) appropriate for folks who may not be investment savvy and some training (albeit by FIRE guys) on how to invest
- thankfully employers are now discouraged from encouraging employees to put it all in stock of that company (think Enron)
- if its a stupid plan, you don't have to put that much into it...after tax savings is still an option...whatever happened to living below your means?


Health Care
- Technological change is the largest single cost driver in health care...organ transplants didn't used to be standard of care
- Insurance companies spend about $0.30 of each premium dollar trying to deny coverage
- Tort reform is needed...doctors and hospital spend a lot of extra $ and order many extra tests out of fear of litigation by patients
- The treatment emphasis is on curing after sickness has occurred rather than prevention.
- Both private insurance and govt payors pay for tests and procedures, not diagnoses and outcomes....so guess what the providers provide?
- Too many specialists and fractured medical care...not enough generalists
- Penny-wise and pound-foolish resource allocations of care-giver time...more nursing or nursing assistant time to help new mothers would save doctor and hospital time.
- It is very difficult for an elderly person to convince the healthcare system to let them pass away. Even with a DNR form (do not rescuscitate) signed, it keeps getting ignored in favor of invasive, expensive procedures unless there is someone there physically insisting that the patient's wishes be noted and followed.
- Hospitals are legally required to care for anyone who comes in regardless of their ability to pay. Hence uncompensated care is a huge problem and costs are shifted to those who can pay, resulting in the $100 aspirin and ridiculously sized uncertain hospital bills for anyone with the means. After the 3rd cocktail, any hospital administrator will tell you about their $7 Million patient - usually some homeless person or drug addict who gets brought into the ER that they are legally obligated to provide top drawer care to. One community I lived in had a homeless guy who used to live in the local hospitals...he had a medical condition that was an automatic admission, and he exercised his legal right to decline treatment. So they had to house him until he got bored and walked out, and into another hospital to pull the same trick. There are drug addict diabetics who go into coma regularly and expensively on our dime. Many hospitals near the MX border have problems with pregnant women from MX camping out in the parking lot and then racing into the hospital just when their water breaks and the HAVE to be admitted. some of these ladies have had no prenatal care.
- Unplanned health care costs are the single largest cause of homelessness
- What insurance companies will cover under your particular plan is the only check or control on what pharma companies charge Americans for drugs...not sure how "free" the market is...you can't cost shop the same way you would for other items.
- The existing system is a mess, in dire need of reform and cost/outcomes discipline and transparency. It is next to impossible to figure out what an employer-provided health plan will actually cover when the bills come in.

Regardless of the outcome of the Obamacare situation, at least healthcare reform is starting to work its way into the national conversation. It needs to stay there until we get some value for our $...one way or the other. We risk collectively bankrupting ourselves otherwise.

I feel better now. Thanks for letting me get this off my chest.

[c1ue]

Re: Defined Contribution Plans

I've written before that there are 2 health insurance company employees per doctor in the United States.

This is clearly a big part of the problem. While some administration is necessary, I find it impossible to believe that it is that much.

[jiimbergin]

Re: Defined Contribution Plans

whatever happened to living below your means?

Rosgal, great idea, too bad more people do not. I don't know anyone who does who regrets doing so.

[c1ue]

Re: Defined Contribution Plans

whatever happened to living below your means?

Admirable sentiment.

The question is: what exactly will your means be 50 years from now?

Will you even be alive or will you have another 20 or 30 years more to live?

Should every person out there become an expert on the post-cheap peak oil economy, as will need to happen in order to plan for retirement 30 years or more from now?

What about health care economics? It is abundantly clear that Medicare will not be able to continue on as is for another 30 years. What should be planned for then? How can you possibly plan for health care in a non-Medicare world when health care costs are rising multiple times faster than inflation?

And what of the area you plan to retire into. Can anyone now become an expert in the local economy so as to avoid a Detroit style collapse in a local economy? Or a Manhattan style skyrocketing of values and property taxes?

This is what I refer to when I note that 'planning for retirement' is possible if you are moderately wealthy, but is patently impossible if you are not.

Note that none of the above issues are related to wealth management and investment; the pitfalls there are infinitely worse.

[lektrode]

Re: Defined Contribution Plans

and the funny thing? - well... its not funny at all, actually - is that practically every doctor i know all say the same thing: its the insurance mob that is making their professional lives hell.

whether its the liability ins premiums needle sucking the blood right out of their financial veins or the mountain of claims paperwork they have to contend with simply to get paid?

its driving lots of them right out of their practices and into retirement

[lektrode]

Re: Defined Contribution Plans

Milton Kuo did a good job with this. I'd only add the following: Why would you expect a machinist to earn an equal ROI given the 10 mutual funds offered as investment options, when in the DB plan a professional fund manager with all options at his/her disposal is in charge? DC plans kill specialization. Every citizen is expected to be a generalist that understands finance. Just as I would do poorly forging an iron railing, I would expect the blacksmith to do poorly in finance.
....
.......
Personal responsibility advocates for finance and insurance would deem personal responsibility insane in the realms of medicine and technology and law and engineering and warfare. Why is FIRE the only sector in which many modern American libertarians advocate personal responsibility?

+1
excellent question and superbly framed argument, dc - you really are quite persuasive and rightfully so.
(typing as one who has watched, admittedly stubbornly, as the value of a 401k acct setup as a vehicle to collect shares of stocks i had 'faith' in, proceed to lose 98% of its value - so much for 'buy and hold' and 'stocks for the long run? - and then decide to buy a house instead = another 'brilliant investment decision' - tho i at least get the value of the 'owners equiv rent' for an IRR of 10% on that one - but/altho IF ONLY i had found the tulip in 2006... but i digress)

but this question: Why is FIRE the only sector in which many modern American libertarians advocate personal responsibility?

has me wondering the same,
esp in light of this: http://www.democraticunderground.com/101736377#post11

11. Wall St totally backed/protected by both parties in Congress, the Fed, the White House, & the media


Last Year Senator Bernie Sanders reported a long overdue audit of the Federal Reserve revealed an eye-popping $16 trillion in secret loans to bailout out Wall Street banks.
Bernie Sanders has now reporting that 18 Federal Reserve Board Members gave their own banks $4 trillion of these secret bailouts in the form of loans with nearly zero interest.
From the documents released, I put together this list of the offenders:

Citigroup	$2.5 Trillion
Goldman Sachs	$814 Billion
JP Morgan	$391 Billion
Lehman Brothers	$183 Billion
State Street Corporation	$42 Billion
KeyCorp	$40 Billion
Marshall & Ilsley	$21 Billion
Citibank	$21 Billion
General Electric (GE)	$16 Billion
Sun Trust	$7.5 Billion
PNC	$6.5 Billion
Texas Capital Bank	$2.3 Billion
Webster Bank	$2.2 Billion
Popular Inc	$1.2 Billion
Wilmington Trust	$550 Million
LegacyTexas	$5 Million

Here’s the text of the PDF summary released by Senator Sanders highlighting the culprits identified in the GAO audit on the Federal Reserve’s conflicts of interest.
Jamie Dimon Is Not Alone

During the financial crisis, at least 18 former and current directors from Federal Reserve Banks worked in banks and corporations that collectively received over $4 trillion in low-interest loans from the Federal Reserve.
U.S. Senator Bernard Sanders (I-Vt.) Washington, D.C. June 12, 2012
1. Jamie Dimon, the Chairman and CEO of JP Morgan Chase, has served on the Board of Directors at the Federal Reserve Bank of New York since 2007. During the financial crisis, the Fed provided JP Morgan Chase with $391 billion in total financial assistance. JP Morgan Chase was also used by the Fed as a clearinghouse for the Fed’s emergency lending programs.
In March of 2008, the Fed provided JP Morgan Chase with $29 billion in financing to acquire Bear Stearns. During the financial crisis, the Fed provided JP Morgan Chase with an 18-month exemption from risk-based leverage and capital requirements. The Fed also agreed to take risky mortgage-related assets off of Bear Stearns balance sheet before JP Morgan Chase acquired this troubled investment bank.
2. Jeffrey Immelt, the CEO of General Electric, served on the New York Fed’s Board of Directors from 2006-2011. General Electric received $16 billion in low- interest financing from the Federal Reserve’s Commercial Paper Funding Facility during this time period.
3. Stephen Friedman. In 2008, the New York Fed approved an application from Goldman Sachs to become a bank holding company giving it access to cheap Fed loans. During the same period, Friedman, who was chairman of the New York Fed at the time, sat on the Goldman Sachs board of directors and owned Goldman stock, something the Fed’s rules prohibited. He received a waiver in late 2008 that was not made public. After Friedman received the waiver, he continued to purchase stock in Goldman from November 2008 through January of 2009 unbeknownst to the Fed, according to the GAO. During the financial crisis, Goldman Sachs received $814 billion in total financial assistance from the Fed.
4. Sanford Weill, the former CEO of Citigroup, served on the Fed’s Board of Directors in New York in 2006. During the financial crisis, Citigroup received over $2.5 trillion in total financial assistance from the Fed.
5. Richard Fuld, Jr, the former CEO of Lehman Brothers, served on the Fed’s Board of Directors in New York from 2006 to 2008. During the financial crisis, the Fed provided $183 billion in total financial assistance to Lehman before it collapsed.
6. James M. Wells, the Chairman and CEO of SunTrust Banks, has served on the Board of Directors at the Federal Reserve Bank in Atlanta since 2008. During the financial crisis, SunTrust received $7.5 billion in total financial assistance from the Fed.
7. Richard Carrion, the head of Popular Inc. in Puerto Rico, has served on the Board of Directors of the Federal Reserve Bank of New York since 2008. Popular received $1.2 billion in total financing from the Fed’s Term Auction Facility during the financial crisis.
8. James Smith, the Chairman and CEO of Webster Bank, served on the Federal Reserve’s Board of Directors in Boston from 2008-2010. Webster Bank received $550 million in total financing from the Federal Reserve’s Term Auction Facility during the financial crisis.
9. Ted Cecala, the former Chairman and CEO of Wilmington Trust, served on the Fed’s Board of Directors in Philadelphia from 2008-2010. Wilmington Trust received $3.2 billion in total financial assistance from the Federal Reserve during the financial crisis.
10. Robert Jones, the President and CEO of Old National Bancorp, has served on the Fed’s Board of Directors in St. Louis since 2008. Old National Bancorp received a total of $550 million in low-interest loans from the Federal Reserve’s Term Auction Facility during the financial crisis.
11. James Rohr, the Chairman and CEO of PNC Financial Services Group, served on the Fed’s Board of Directors in Cleveland from 2008-2010. PNC received $6.5 billion in low-interest loans from the Federal Reserve during the financial crisis.
12. George Fisk, the CEO of LegacyTexas Group, was a director at the Dallas Federal Reserve in 2009. During the financial crisis, his firm received a $5 million low-interest loan from the Federal Reserve’s Term Auction Facility.
13. Dennis Kuester, the former CEO of Marshall & Ilsley, served as a board director on the Chicago Federal Reserve from 2007-2008. During the financial crisis, his bank received over $21 billion in low-interest loans from the Fed.
14. George Jones, Jr., the CEO of Texas Capital Bank, has served as a board director at the Dallas Federal Reserve since 2009. During the financial crisis, his bank received $2.3 billion in total financing from the Fed’s Term Auction Facility.
15. Douglas Morrison, was the Chief Financial Officer at CitiBank in Sioux Falls, South Dakota, while he served as a board director at the Minneapolis Federal Reserve Bank in 2006. During the financial crisis, CitiBank in Sioux Falls, South Dakota received over $21 billion in total financing from the Federal Reserve.
16. L. Phillip Humann, the former CEO of SunTrust Banks, served on the Board of Directors at the Federal Reserve Bank in Atlanta from 2006-2008. During the financial crisis, SunTrust received $7.5 billion in total financial assistance from the Fed.
17. Henry Meyer, III, the former CEO of KeyCorp, served on the Board of Directors at the Federal Reserve Bank in Cleveland from 2006-2007. During the financial crisis, KeyBank (owned by KeyCorp) received over $40 billion in total financing from the Federal Reserve.
18. Ronald Logue, the former CEO of State Street Corporation, served as a board member of the Boston Federal Reserve Bank from 2006-2007. During the financial crisis, State Street Corporation received a total of $42 billion in financing from the Federal Reserve.
Source: Jamie Dimon Is Not Alone (Senator Bernie Sanders) (pdf)

and I NEVER thot i would get to this point (agreeing w 'the communist from vermont' ;), BUT

GO GETTEM BERNIE! ... GO BERNIE, go!!!

[Raz]

Re: Defined Contribution Plans

I will state up front that I'm biased. Depending a great deal on specialty, many doctors make a great living. However, considering the time, effort, and money invested in their training as well as the often undesirable work-life balance, I don't think they are overpaid. If any of the people who provide services to me in life deserve to have a second home in the Caymans, it's probably the person who is highly trained to keep me alive and feeling well. It's certainly a field where I want the best and brightest. If doctors don't deserve to be highly compensated, who does?

Okay, DSpencer, I'll take my lumps. Both your points and shiney!'s are well taken. But I still have a couple of thoughts as a Conservative.

Doesn't everyone believe they (as in yours truly) should be "highly compensated"? I know two cardiologists, one of them very well.

The one I know best is a devout Christian (LCMS Lutheran) and one of the best in the Southern United States. He makes a LOT of money, but not as much as he could because of the pro bono procedures he provides locally. He also spends about one month each year in Central America as an unmercenary physician, performing heart surgeries there at no charge.

The other is a nice enough guy, but to my knowledge he doesn't do unmercenary procedures. He lives an lavish, opulent lifestyle, to put it mildly. (That's his business, of course.)
How much is reasonable and how much is too much?

Look at the whole economic enchilada: the ridiculous multiples of the average worker salary in a particular industry "earned" by CEOs. Compensation at the top seems grossly out-of-line to me. And it's not just the Wall Street crowd that's greedy - public employee unions fit the bill in my opinion. (And no, dcarrigg, I don't believe they are to blame for the financial collapse of 2008-'09 or the Great Recession.)

My problem with the current health care mess is basic AND ideological: I don't believe the "free market" can work where there are so many situations in which a consumer simply cannot "shop around". It has taken quite a lot for me to arrive at this view because most of my political views are strongly to the Right. (I believe we lost the republic when Congress overstepped the 10th Amendment; everything since then is just the long, slow death.)

Feel free to rip me up; I will still respect you in the morning.

[shiny!]

Re: Defined Contribution Plans

My problem with the current health care mess is basic AND ideological: I don't believe the "free market" can work where there are so many situations in which a consumer simply cannot "shop around". It has taken quite a lot for me to arrive at this view because most of my political views are strongly to the Right. (I believe we lost the republic when Congress overstepped the 10th Amendment; everything since then is just the long, slow death.)

So we remove those entities and systems that prevent people from "shopping around".

Medical insurance started out as a way to prevent financial devastation in the event of a catastrophe. Now, the cost of insurance itself is the financial catastrophe. It's become a cancer. Take the administrative burden of billing insurance companies out of the equation and watch prices come down. We can find different ways to get our needs met without the insurance industry.

We need standardized prices for every procedure code, easily available for everyone to see. They do this in other countries. It should be mandatory.

We should be able to pay doctors directly, like we used to. It shouldn't cost a fortune to see a doctor for a simple prescription renewal or physical exam. For hospital care, all transactions can be directly between hospital and patient- no insurance company in the middle. Heck, doctors and hospitals should give us a hefty discount if we pay them directly.

Become a "member" of your local hospital and pay them a low-cost "insurance" fee to cover you in the event of a major medical expense. Membership could entitle you to discounts for services. This would encourage people to join, thereby supporting their local hospitals which in turn support them. Hospitals would give reciprocity to each other if a member needs care and they aren't near their own hospital.

If people want to pay a private company for better coverage, they can. My hunch is that when the insurance companies start becoming obsolete and marginalized, they'll come up with more affordable plans. Or not. If they can't change they'll eventually go the way of the buggy whip industry, and soon, newspapers.

I'd like to hear from some doctors. Is there any merit to this idea?

[BadJuju]

Re: Defined Contribution Plans

I'd like to hear from some doctors. Is there any merit to this idea?

I like it.

[cjppjc]

Re: Defined Contribution Plans

The one I know best is a devout Christian (LCMS Lutheran) and one of the best in the Southern United States. He makes a LOT of money, but not as much as he could because of the pro bono procedures he provides locally. He also spends about one month each year in Central America as an unmercenary physician, performing heart surgeries there at no charge.

The other is a nice enough guy, but to my knowledge he doesn't do unmercenary procedures. He lives an lavish, opulent lifestyle, to put it mildly. (That's his business, of course.)
How much is reasonable and how much is too much?

Of course this is a good question. I don't pretend to know the answer. The question never seems to be asked.

[Thailandnotes]

Re: Defined Contribution Plans

Of course this is a good question. I don't pretend to know the answer. The question never seems to be asked.

How much is too much?

In my opinion, after 4 - 5 million, if you’re not giving most of the rest away/creating scholarships/truly investing in something new, you’re guilty.

[rosgal]

Re: Defined Contribution Plans

Retirement planning would be SO much easier if you knew how long you were going to live and in what condition.

For those of us descendants of Eurotrash, during the Middle Ages, one lived in constant fear of marauding tribes who might attack and pillage at a moment's notice. We are back in those times, except the pillaging is done with contract, calculator/computer and legal power instead of axe, sword and whatever those round, spiked metal balls on a chain are called (I forget).

Part of the problem with health care economics now is that it is profoundly un-economic. Your employer (whose agenda is the intersection of cost control and just enough coverage to keep you from quitting), is pared with the insurance company (who wants to enrich their employees and shareholders) and set off against you (who wants good quality convenient care when you need it while fobbing off as much cost as possible to others) and your medical providers (who want to provide care in keeping with their professional standards, avoid getting sued and make a decent living - in the case of doctors, or please shareholders as in the case of hospitals).

The goal gets lost amid the competing non-aligned agendas and layers of cost.

You don't need an employer to buy car insurance. The employer needs to come out of the midst of things. Plan offerings need to be standardized a bit (which would save cost for the insurance companies) and make the whole mess easier for patients and providers to understand. Every insurer has a zillion plan flavors to woo and confuse THEIR buyer the employer. Coverage needs to be expanded so that more people can get coverage.

Since companies are now people, both political parties have been duly purchased and nothing will probably change despite who gets elected to what or what they "appear" to do about healthcare. Restructured crap is still crap.

Yes, Medicare is a mess and has been for a while. Many folks who are not seniors collect benefits, and the scope of care that it can be jury-rigged to pay for is mind-boggling. It should be bare bones care, not cover exotic stuff like organ transplants, perhaps phase in a little later, contain cost controls/limited reimbursement for pharma (which it now does not) and supplemental plans should be readily available for purchase by those who want more than bare bones care.

I am not sure my fellow Americans have the stomach to let anyone get less than the "best" care, when currently as a practical matter, care is rationed by limited access.

I am in a position to see folks' financial statements. You would be AMAZED at what some people can save on VERY modest means.

You have to "look sharp" and watch out for those marauders, be ready to change your M.O. when times demand, look at your environment and come up with a creative strategy to deal with it. Example: parents of a friend of mine would periodically move out of their house, rent it out to visitors for top $ while moving into a less expensive area temporarily. They made the equivalent of 6-months wages on the rental (they lived in one of those areas that became VERY EXPENSIVE while they were not so well off), and then would move back in so much the richer.

I worry about property taxes myself, because even the basic annual increase gets to be the size of a mortgage payment if you project it out for 20 years or so. I suggest maintaining some kind of employment post-retirement as the best hedge against the decline in purchasing power of the $ that EJ talks about (which may not be accompanied by an increase in interest rates). You'll live longer and stay healthier if you work for $ anyway.