The Democrat Thread

[StrangeSox]

How many people under 10-20k/year own a home?

I'm not sure if it includes something like second-order rental effects e.g. my rental property is subsidized so I can afford to charge you lower rents, but let's go right back to the origin of this discussion: retirees. The median retiree income is somewhere right about $19k IIRC. Many of these people will own a house and might have a mortgage on it but still have very little income. Or it could be in areas of very cheap housing or could be condos (e.g. my in-law's condo that is probably going to sell for $44k).

 

I liked this example from the linked CBPP article:

 

The deduction’s value depends on a household’s marginal tax rate, so households in higher tax brackets benefit more. To see why, consider this example of two households. An investment banker making $675,000 who has a $1 million mortgage and pays $40,000 in mortgage interest each year receives a housing subsidy of about $14,000 annually from the mortgage interest deduction. The banker pays about 65 cents per dollar of mortgage interest, and the taxpayers pick up the remaining 35 cents.[7] By contrast, a schoolteacher making $45,000 and paying $10,000 a year in mortgage interest on a more modest home receives a housing subsidy worth $1,500 annually. Here, the family pays 85 cents of every dollar of mortgage interest and taxpayers pick up 15 cents. The banker’s subsidy is not only larger than the teacher’s in dollar terms, but also represents a greater shareof the banker’s mortgage interest expenses.

 

Why should we be subsidizing usury payments to private banks?

[StrangeSox]

And what does that mean? Are you expecting people to save their own money or "invest" it at a risk to fund their retirement!?

What? Current median SS benefits are ~$15k. Double that, and we're at $30k. I thought that was pretty clear?

[Jenksismyhero]

I'm not sure if it includes something like second-order rental effects e.g. my rental property is subsidized so I can afford to charge you lower rents, but let's go right back to the origin of this discussion: retirees. The median retiree income is somewhere right about $19k IIRC. Many of these people will own a house and might have a mortgage on it but still have very little income. Or it could be in areas of very cheap housing or could be condos (e.g. my in-law's condo that is probably going to sell for $44k).

 

I liked this example from the linked CBPP article:

 

 

 

Why should we be subsidizing usury payments to private banks?

 

I understand it benefits higher mortgage amounts more, so why would you want to take away that benefit from the poor/middle class? Isn't it better for the teacher in that scenario to pay 85 cents on the dollar for that interest instead of 100? Don't you think taking that away is going to have a negative impact? I think there are other ways to fund an increase in SS if that's what you want to do. Tax the piss out of the rich. Fine with me.

[Y2HH]

While all these suggestions sound wonderful, I'm not sure they'd solve the retirement problem. People tend to have a spending problem. They often spend far more than they make, and never bother planning for the future. Some can't, but most simply claim they can't. Fact is, they don't really want too. Even those that make 100k tend to do this, possibly to an even greater extent, and will end up no better off in the end than the person struggling to get by on 45k.

 

I don't think a government can solve this simply because of the number of people living longer they'd have to tend too. The answer is education, once again, and though you can lead a horse to water, you can't make them drink it. There are finite resources and an increasing number of people that are becoming reliant on those resources, leaving less for everyone else.

 

It's a complex problem, and I don't think a few simple changes in the tax code is going to fix it. Science is awesome, but it's also what caused the problem in the first place. People are living so long, the resources to care for them have been spread so thin they've moved into non-existence.

[Jenksismyhero]

What? Current median SS benefits are ~$15k. Double that, and we're at $30k. I thought that was pretty clear?

 

You used the word "base." I thought in these examples SS would be the only retirement income. Are you saying you'd be fine with 30k total being good enough for retirement? With no other income?

 

I guess I just don't see how that's possible given your belief that 30k a year wouldn't be sufficient for a middle aged adult (and perhaps that's an assumption on my part). I would think retirement workers that you're talking about - the ones that haven't planned properly and still carry a decent amount of debt - would need just as much as that middle aged person especially adding in medical costs.

Edited April 25, 2013 by Jenksismybitch

[StrangeSox]

I understand it benefits higher mortgage amounts more, so why would you want to take away that benefit from the poor/middle class?

 

Because the poor get essentially zero benefit and the middle class gets very little. Eliminating the entire program and using the funds to more directly benefit them is preferable.

 

Isn't it better for the teacher in that scenario to pay 85 cents on the dollar for that interest instead of 100? Don't you think taking that away is going to have a negative impact?

 

Yes, it'll have a negative impact on home prices. ~4% long-term. It'll have a 0.1% long-term GDP impact, or close enough to zero as to be meaningless. This means that housing becomes more affordable price-wise, even if you aren't getting back-end deductions.

 

Teachers are probably the worst comparison here as they don't get SS benefits, but overall shifting the tax expenditures that pay for the MID to something designed to directly benefit lower- and middle-income households would be a net benefit. The CBPP link examines alternative housing-oriented programs that would do so, but it's not related to SS.

 

I think there are other ways to fund an increase in SS if that's what you want to do. Tax the piss out of the rich. Fine with me.

That's what raising or eliminating the payroll tax cap does.

[illinilaw08]

You used the word "base." I thought in these examples SS would be the only retirement income. Are you saying you'd be fine with 30k total being good enough for retirement? With no other income?

 

I guess I just don't see how that's possible given your belief that 30k a year wouldn't be sufficient for a middle aged adult (and perhaps that's an assumption on my part). I would think retirement workers that you're talking about - the ones that haven't planned properly and still carry a decent amount of debt - would need just as much as that middle aged person especially adding in medical costs.

 

I think the point is that the SS income becomes a base amount of income that someone could live on. Most people with disposable income have some kind of IRA and I don't think StrangeSox is advocating those go away. People will still have the ability to invest on their own, but raising the base amount of SS provides a reasonable standard of living to the blue collar guy that spent 40 years contributing to SS and maxed out his income at a level that was insufficient to allow him to save for retirement.

 

Rather than relying on the employer 401k for retirement, you are relying on SS. Basically, this argument would catch people who over the course of their lives only managed to contribute $20k or less to a 401k.

[StrangeSox]

You used the word "base." I thought in these examples SS would be the only retirement income. Are you saying you'd be fine with 30k total being good enough for retirement? With no other income?

 

Yes, a $30k base from SS would seem to me to provide a comfortable retirement. Certainly more comfortable than the median right now, about 50% more. Any other pensions or investments on top of that would just be gravy.

 

I guess I just don't see how that's possible given your belief that 30k a year wouldn't be sufficient for a middle aged adult (and perhaps that's an assumption on my part). I would think retirement workers that you're talking about - the ones that haven't planned properly and still carry a decent amount of debt - would need just as much as that middle aged person especially adding in medical costs.

 

There's multitudes of reasons that overall spending is generally expected to decline in retirement. Medical costs are obviously an important factor, and we could certainly use a much more robust public health care system like most of the rest of the world. Most retirement planning counts on you spending less and less each year. If that's not true, than our "become your own investment banker!" model of retirement is even more flawed.

 

$30k/year for a single adult would also provide a modest living (maybe outside of NYC, SF, etc.), at least a "livable wage." Two adults making that would be above the median family-of-four household income. I think there's merit both morally and economically to a basic income for all adults, which is sort of what the EITC is but in a roundabout way but I don't know enough about it conceptually to go into any detail. One big positive is that it removes a lot of coercive power that employers have in that employees no longer have to rely on selling their labor to avoid destitution and so their agency is greatly increased.

[southsider2k5]

Because the poor get essentially zero benefit and the middle class gets very little. Eliminating the entire program and using the funds to more directly benefit them is preferable.

 

 

 

Yes, it'll have a negative impact on home prices. ~4% long-term. It'll have a 0.1% long-term GDP impact, or close enough to zero as to be meaningless. This means that housing becomes more affordable price-wise, even if you aren't getting back-end deductions.

 

Teachers are probably the worst comparison here as they don't get SS benefits, but overall shifting the tax expenditures that pay for the MID to something designed to directly benefit lower- and middle-income households would be a net benefit. The CBPP link examines alternative housing-oriented programs that would do so, but it's not related to SS.

 

 

That's what raising or eliminating the payroll tax cap does.

 

That isn't fully true. Only about a quarter of states do that. Illinois is one of them, but they force teachers to put in 50% more than what they would to SSDI to get their pension.

[StrangeSox]

While all these suggestions sound wonderful, I'm not sure they'd solve the retirement problem. People tend to have a spending problem. They often spend far more than they make, and never bother planning for the future. Some can't, but most simply claim they can't. Fact is, they don't really want too. Even those that make 100k tend to do this, possibly to an even greater extent, and will end up no better off in the end than the person struggling to get by on 45k.

 

I don't think a government can solve this simply because of the number of people living longer they'd have to tend too. The answer is education, once again, and though you can lead a horse to water, you can't make them drink it. There are finite resources and an increasing number of people that are becoming reliant on those resources, leaving less for everyone else.

 

It's a complex problem, and I don't think a few simple changes in the tax code is going to fix it. Science is awesome, but it's also what caused the problem in the first place. People are living so long, the resources to care for them have been spread so thin they've moved into non-existence.

 

First, the increase in average lifespan has bifurcated based on class:

 

 

So the people who rely the most on SS and Medicade are not really living longer, which is what makes the calls for increased retirement ages so callous and stupid.

 

Increased financial education is definitely important, but so is just having some income. It seems like the $30k level would provide sufficient base income for a modest living.

 

If you're talking about an overall Malthusian resource scarcity, sure, I think the whole house of cards will probably collapse within a hundred years. If you're talking about wealth scarcity, no, there's plenty of that, it's just been increasingly horded by a select few in recent decades.

[StrangeSox]

That isn't fully true. Only about a quarter of states do that. Illinois is one of them, but they force teachers to put in 50% more than what they would to SSDI to get their pension.

Didn't know that, thanks for the clarification.

[Y2HH]

First, the increase in average lifespan has bifurcated based on class:

 

 

So the people who rely the most on SS and Medicade are not really living longer, which is what makes the calls for increased retirement ages so callous and stupid.

 

Increased financial education is definitely important, but so is just having some income. It seems like the $30k level would provide sufficient base income for a modest living.

 

If you're talking about an overall Malthusian resource scarcity, sure, I think the whole house of cards will probably collapse within a hundred years. If you're talking about wealth scarcity, no, there's plenty of that, it's just been increasingly horded by a select few in recent decades.

 

Even the lower income workers are showing 80's...that's the point.

 

When SS began, they were in the late 50's.

[StrangeSox]

Even the lower income workers are showing 80's...that's the point.

 

When SS began, they were in the late 50's.

 

Life expectancy at 65 has only increased a few years since the 40's and was expected to do so when the program was designed.

 

http://www.ssa.gov/history/lifeexpect.html

[Y2HH]

Life expectancy at 65 has only increased a few years since the 40's and was expected to do so when the program was designed.

 

http://www.ssa.gov/history/lifeexpect.html

 

I think those are pretty significant gains.

[StrangeSox]

I think those are pretty significant gains.

2.5 years for men, 5 years for women overall. Which, again, were anticipated when the program was created. They weren't stupid and knew about the trends in increasing adult life expectancy. The Greenspan Commission in the 1980's knew this as well when they overhauled SS and set up the trust fund. The bottom half, though, with their flat-lined life expectancy, likely hasn't seen any growth at all since the 40's or 50's.

 

Either way, it's pointless to look at life expectancy from birth in the 30's. The comparison needs to be done based on "years collecting retirement benefits."

Edited April 25, 2013 by StrangeSox

[Y2HH]

2.5 years for men, 5 years for women overall. Which, again, were anticipated when the program was created. They weren't stupid and knew about the trends in increasing adult life expectancy. The Greenspan Commission in the 1980's knew this as well when they overhauled SS and set up the trust fund. The bottom half, though, with their flat-lined life expectancy, likely hasn't seen any growth at all since the 40's or 50's.

 

Either way, it's pointless to look at life expectancy from birth in the 30's. The comparison needs to be done based on "years collecting retirement benefits."

 

It's not just about the years, but the sheer number of people living longer is far greater.

[StrangeSox]

It's not just about the years, but the sheer number of people living longer is far greater.

Well, yeah, and that's why we created the trust fund for the boomers in 1983. Once that giant wave is past us, we'll go back to where SS was in the decades prior with retirees and active workers more or less balancing out. There will be numerically more retirees, but there will be numerically more workers as well. This has all been known for decades and specifically accounted for.

 

Where this runs into trouble (and it already has since 1983) is the growing income inequalities and the payroll cap. Since more and more of the share of the income is going to people already (well) above the cap, there's less that's taxable to fund SS (and Medicare).

[Y2HH]

From my own observation, although anecdotal, I think it's one of the biggest contributors to peoples lack of savings, it's that they have no patience...for anything.

 

For example, I let my wife redo our living room this year...something she wanted to do LAST year. New carpet, furniture, etc. She had to wait until this year to do it. Most people would simply say, ok, I'll borrow the money now and pay it off when I get that money we were planning on using for this project next year, after all, they're offering 0% for 12 months, and by then it'll be paid back! The issue here is, this plan leaves no contingency in case other expenses come up, and they almost ALWAYS do.

 

We waited until we had the cash, on hand, to have this done. And now it's done, and it's 100% paid for.

 

Most people wouldn't have waited. They'd have borrowed to do it last year, and then something else would have come up...but the point is, the money they had originally earmarked for that project would have been spent on something else along the way, leading to a deficit, leading to debt.

 

I see this allllllll the time. Have some patience and WAIT until you can afford something.

[StrangeSox]

There's an interesting discussion (kicked off by the horrible factory collapse in Bangladesh that has killed over a hundred people) over whether the US should impose requirements/restrictions/tariffs on imported goods made by manufacturers that don't meet US levels of workplace safety and environmental protection. We've outsourced much of our industrial pollution and our Triangle Shirtwaist-like working conditions to other countries, and both companies and consumers reap the benefits for the dangers, low wages and environmental destruction done overseas.

 

It started with labor historian Erik Loomis and Yglesias has responded that no, we shouldn't.

http://www.slate.com/blogs/moneybox/2013/0...ory_safety.html

 

The reason is that while having a safe job is good, money is also good. Jobs that are unusually dangerous—in the contemporary United States that's primarily fishing, logging, and trucking—pay a premium over other working-class occupations precisely because people are reluctant to risk death or maiming at work. And in a free society it's good that different people are able to make different choices on the risk–reward spectrum...

 

Bangladesh is a lot poorer than the United States, and there are very good reasons for Bangladeshi people to make different choices in this regard than Americans. That's true whether you're talking about an individual calculus or a collective calculus. Safety rules that are appropriate for the United States would be unnecessarily immiserating in much poorer Bangladesh.

 

 

 

some responses to Yglesias here

http://www.lawyersgunsmoneyblog.com/2013/0...-then-wrong-now

 

and here

 

The gut instinct here is to deliver a rant full of righteous anger about the nature of global capitalism, the devaluation of life in developing countries, and the injustice of cheap Bangladeshi labor going to create cut denim that sells for $300 in developed countries while investors in garment companies drink champagne off the difference. But the problem with Yglesias' argument isn't so much that it's morally craven or drawn from a position of comfort and first-world privilege. The bigger problem is that it shows the horrific extent to which rational actor theory has corrupted economic thought.

 

In order for conservative economics to work, it must be assumed that everyone has an abundance of choices as well as the information needed to make the proper choice. In the conservative worldview, businesses will automatically move in to fill every need in the marketplace at the highest price they can extract; consumers will carefully choose from among the products on offer, buying the best products offered for the lowest price; employees will find the companies that deliver them the best payment package and quality of life according to their skills sets; and companies will hire the best workers they can at the lowest wages they can.

 

All of this is supposed to be a beautiful system of free choice in which every product, service, and employee achieves its perfect value on the market, and in which every employee, consumer and business is free to make the choice that best befits their lifestyle and comfort with risk. If government simply steps out of the way and ceases to create "distortions" in the market, everything will be perfect. There will be no inflation, and any misery or failure will be solely attributable to the poor choices of those who are suffering.

 

There are, of course, innumerable problems with this worldview: not everyone has access to the information needed to make good choices; the amount of time needed to acquire said information is a time and energy cost that makes it not worth attaining; many people can be compelled or deceived into making poor "choices"; prejudice and other social ills can create inequities that betray market meritocracy; the rational actor system is unable to solve long-term problems like climate change for which consumer punishment is wholly inadequate; systems of taxpayer-funded services such as firefighters, roads and street lights would either cease to function, or only function in wealthy areas; and so on.

 

But the biggest problem with this worldview is the failure to recognize that human life and dignity are drearily cheap on the open market. Absent laws to prevent such exploitation, the open market looks like Dickensian England: abundant child labor, eighty hour work weeks, mass immiseration, horrific discrimination, and a host of other evils. It turns out that consumers don't much care how a product was made so long as it works, and businesses are more than happy to institute revolting practices in order to create even more decadent wealth for owners and investors. Contrary to social conservative claims, there is no amount of religious fervor or charitable giving that even makes a dent in the horror of purely market-driven economics.

 

Which leads to the other great failure of rational actor theory in libertarian economics: the artificial separation of government and the governed in a democratic society. At least in representative democracies, the government exists as a mutual compact of citizens who choose to prevent the ills and excesses of the coldhearted markets by funding a protective system of checks and balances, social programs, guaranteed infrastructure, worker protections, product regulations, and a host of other goods and services that reduce the ability of the powerful to exploit the powerless on the open market. The choice to pay taxes to regulate meat companies so that consumers don't have to do the research and take on the purchase risk of which companies' hamburgers might be tainted, is just as equally valid a decision as the choice between going to Burger King or McDonalds.

 

What does all this have to do with Bangladesh? Everything. No Bangladeshi chooses to work in a dangerous factory at risk of implosion. They do so because they have little other choice, and because profit-driven companies are more than happy to exploit them while charging top dollar for the products they create so cheaply. Certainly, in theory that is a risk that Bangladesh and its citizens may take because if they instituted stronger wages and labor protections, the sociopathic corporations that hire desperate overseas labor would simply move on to the next country. That's the rational actor theory at work.

 

But in theory we as citizens of the world can also choose to not allow those corporations to engage in recklessly criminal behavior anywhere in the world. We can choose as human beings living on planet earth to create a networked system of global checks and balances that can tell Nike and Levi's that they will, in fact, not be taking as much excess profit on their preposterously overpriced products as they have been accustomed to do because we won't allow them by treaty to pay workers less than a living wage or work them in dangerous conditions. They won't be able to pass on the extra costs to consumers because there's only so much the developed world will pay for a pair of jeans or sneakers. If that causes shares of Nike or Levi's to fall on Wall Street, then so be it. It's not as if record profits and high stock values were redounding to the benefit of workers or consumers in either the developed or developing world, anyway.

 

 

Edited April 25, 2013 by StrangeSox

[Balta1701]

(This one blew up while I wasn't around, but getting Y2 and 2K arguing about investment strategies produced some interesting results, btw).

 

And yes, the Mortgage interest deduction has become terrible policy and should be destroyed and replaced with more intelligent and cost effective methods of subsidizing housing purchases. Unfortunately, removing it without severely damaging the housing market isn't easy, so a bill phasing it out over a 35 year period would be my favorite method...that would just require Congress to not tinker with it over 35 years. Thus, getting rid of it becomes completely impractical as well.

[illinilaw08]

From my own observation, although anecdotal, I think it's one of the biggest contributors to peoples lack of savings, it's that they have no patience...for anything.

 

For example, I let my wife redo our living room this year...something she wanted to do LAST year. New carpet, furniture, etc. She had to wait until this year to do it. Most people would simply say, ok, I'll borrow the money now and pay it off when I get that money we were planning on using for this project next year, after all, they're offering 0% for 12 months, and by then it'll be paid back! The issue here is, this plan leaves no contingency in case other expenses come up, and they almost ALWAYS do.

 

We waited until we had the cash, on hand, to have this done. And now it's done, and it's 100% paid for.

 

Most people wouldn't have waited. They'd have borrowed to do it last year, and then something else would have come up...but the point is, the money they had originally earmarked for that project would have been spent on something else along the way, leading to a deficit, leading to debt.

 

I see this allllllll the time. Have some patience and WAIT until you can afford something.

 

What's the point of saving money when interest rates are 0? I agree with you that people should show greater patience with large purchases (wife and I bought a house a couple years back and still haven't filled some of the rooms with furniture - making one big purchase a year), but that's not the overarching point.

 

For instance, take student loans. I'm about to pay off my car (hooray!) and losing that monthly payment could certainly be used to bolster my savings. But why would I do that? That money is much more effectively used to pay down student loan debt at 4-6% interest than to sit in a savings account paying .02% interest.

 

The current state of the economy penalizes savers. And it penalizes people that can't afford to get into the market.

[StrangeSox]

the attempted Bush hagiography this week is pretty nauseating.

 

Joseph Weisenthal @TheStalwart

 

Well put from @JimPethokoukis "Bush’s six-year economic record, from 2001 through 2006, was OK, actually."

 

Other than that, Mrs. Lincoln...

[Y2HH]

What's the point of saving money when interest rates are 0? I agree with you that people should show greater patience with large purchases (wife and I bought a house a couple years back and still haven't filled some of the rooms with furniture - making one big purchase a year), but that's not the overarching point.

 

For instance, take student loans. I'm about to pay off my car (hooray!) and losing that monthly payment could certainly be used to bolster my savings. But why would I do that? That money is much more effectively used to pay down student loan debt at 4-6% interest than to sit in a savings account paying .02% interest.

 

The current state of the economy penalizes savers. And it penalizes people that can't afford to get into the market.

 

So you have some when you need it?

 

If you have debt, savings don't make much sense. Pay down the debt first, THEN save.

[StrangeSox]

Certainly, there is a convenience factor. Being cost effective can be a plus, of course, if you're using the tests wisely.

 

I'm happy to have more money going into education, whether that involves higher taxes or maybe just taking some money from the Defense Department.

The Industrial Classroom looks at the links between the "data-driven" school reform movement and Scientific Management of the previous century and the dehumanizing nature of it

 

The common retort from neoliberal reformers is that teachers must be subject to accountability, and that the most objective way to measure teacher performance is student test scores. Many also favor releasing those figures to the public (so parents can determine the effectiveness of their child’s present or future teacher) and linking pay to exam results. But test scores are a notoriously poor way to gauge teacher quality. Student backgrounds, while certainly not determinative, can still impact educational achievement as much as classroom teaching. Equating good teaching with good test scores reduces a complex, human process, and the teacher-student relationship, to a cold data point, bereft of nuance. Under neoliberal reform, rote learning and “teaching to the test” replace critical thinking and problem solving. Taylor’s “one best way” is reborn as the “one best answer.”

Teachers are, however, fighting incursions on labor autonomy and self-direction that are very reminiscent of Taylorism. As Harry Braverman argues in Labor and Monopoly Capital, Taylorism was a program of dehumanization. Properly conceived, human labor is purposeful, deliberately designed, and consciously carried out. The work environment that Taylorists favored — regimented, dictated, with conception divorced from practice — was organized according to the needs of management rather than labor. Workers’ wellbeing was an afterthought, entering into the equation only if its consideration could be shown to boost production or prevent labor strife. This amounted to what Braverman calls “the degradation of work,” a trend that continued apace through the twentieth century and, to this day, hasn’t abated. The same can be said about the corporate school-reform agenda: it results in the “degradation of education.”

 

Corporate reform appears to be on a similar trajectory. Beaten back in some districts, it nevertheless remains on the march. Charter schools have expanded exponentially over the past decade and now number more than 5,000, operate in more than 40 states, and enroll more than 2 million students. The number of tests given — and the money spent on them — varies by state, but a recent Brookings Institution report estimated that, in total, states shell out about $1.7 billion annually for assessments. And because under capitalism economic power is political power, wealthy philanthropists (the “Gates-Broad-Walton triumvirate,” in Joanne Barkan’s coinage) play an outsized role in determining the fate of public education. Top-down decision-making is the order of the day.

 

The anti-reform fight should not be understood as an anti-progressive, hidebound resistance to inexorable technological and historical advancement. Anti-corporate reform educators aren’t hostile to educational progress. They’re fighting a neoliberal model in which teachers as agents — subjects teaching subjects — are reduced to objects constrained and acted upon, told what to do and how to do it.

[Y2HH]

(This one blew up while I wasn't around, but getting Y2 and 2K arguing about investment strategies produced some interesting results, btw).

 

What exactly did you find interesting about it?

 

I feel 2K is way over the top conservative, and believes there is more risk in the S&P 500 Index than I believe there is, to the point he calls it gambling. I think the beauty of the S&P is that it never under performs the market, and is diversified in and of itself, as it represents only the top 500 stocks. I don't disagree that you should begin moving money out of it (and other stocks) as you near retirement, into cash or ultra safe investments, but the idea that you should be doing it for every year you are closer to retirement is absurd to me, and merely moves money into dead investments way too prematurely, that could have otherwise been compounding over the years.

 

If you plan on retiring at 65, when you hit 50-55, you can start moving money into conservative investments IF you are selling at near highs. If not, you have 10-15 years to wait for the S&P to rebound to begin the selling spree, and when the market rebounds, the S&P will NEVER miss the rebound. Since it's inception, the S&P 500 has NEVER taken longer than 10 years to rebound back to it's previous highs. Not once. Is there always a first time? I don't think there is for this, since it automatically re-balances itself into the top 500 stocks over and over again, so it will always ride the top of the market. And if the doomsday scenario does strike, and the market crashes and stays crashed, frankly, it doesn't matter what you were invested in, be it bonds, or straight cash at that point, it's over.

Edited April 26, 2013 by Y2HH