Author Topic: US Gov. Retirement asset confiscation?  (Read 13635 times)

TheNick

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Re: US Gov. Retirement asset confiscation?
« Reply #50 on: January 05, 2016, 02:39:29 PM »
Saw this article up today...

https://taxes.yahoo.com/post/136676721708/feds-say-gigantic-ira-accounts-are-a-tax-problem

Gave some IRA statistics...

$1 million or less                   42,382,192
> $1 million to $2 million           502,392
> $2 million to $3 million           83,529
> $3 million to $5 million           36,171
> $5 million to $10 million   7,952
> $10 million to $25 million   791
> $25 million                            314

Basically if you have over a million you are, or are close to, a 1%er in terms of retirement account savings.  Don't fool yourself into thinking if the rules change they will be neutral, or in your favor.  I'm definitely making use of the benefits of my retirement accounts but I'm going to make sure to not put myself in what will probably be the target population at some point.

seattlecyclone

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Re: US Gov. Retirement asset confiscation?
« Reply #51 on: January 05, 2016, 03:44:26 PM »
Saw this article up today...

https://taxes.yahoo.com/post/136676721708/feds-say-gigantic-ira-accounts-are-a-tax-problem

Gave some IRA statistics...

$1 million or less                   42,382,192
> $1 million to $2 million           502,392
> $2 million to $3 million           83,529
> $3 million to $5 million           36,171
> $5 million to $10 million   7,952
> $10 million to $25 million   791
> $25 million                            314

Basically if you have over a million you are, or are close to, a 1%er in terms of retirement account savings.  Don't fool yourself into thinking if the rules change they will be neutral, or in your favor.  I'm definitely making use of the benefits of my retirement accounts but I'm going to make sure to not put myself in what will probably be the target population at some point.

I guess these stats just go to show how few people actually max out their retirement savings.

NoStacheOhio

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Re: US Gov. Retirement asset confiscation?
« Reply #52 on: January 06, 2016, 06:47:08 AM »
Saw this article up today...

https://taxes.yahoo.com/post/136676721708/feds-say-gigantic-ira-accounts-are-a-tax-problem

Gave some IRA statistics...

$1 million or less                   42,382,192
> $1 million to $2 million           502,392
> $2 million to $3 million           83,529
> $3 million to $5 million           36,171
> $5 million to $10 million   7,952
> $10 million to $25 million   791
> $25 million                            314

Basically if you have over a million you are, or are close to, a 1%er in terms of retirement account savings.  Don't fool yourself into thinking if the rules change they will be neutral, or in your favor.  I'm definitely making use of the benefits of my retirement accounts but I'm going to make sure to not put myself in what will probably be the target population at some point.

Is it just me, or does it seem like disallowing nonmarket holdings in IRAs would solve that problem without a ton of collateral damage?

BTDretire

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Re: US Gov. Retirement asset confiscation?
« Reply #53 on: January 06, 2016, 09:12:29 AM »

We are using about 8% of our taxes to pay interest on the Federal debt.
  If interest rates rise 2%, we would be spending almost 20% of our tax base to pay interest on the debt.


What happens to the value of the bonds when interest rates rise?

 Bond value goes down as interest rates go up.
The longer the bond duration the more it goes down when rates go up.
AS I understand it,
With bond funds, In general, a fund with a 2yr duration will drop 2% for a 1% increase in interest rates. 3yr duration will drop 3% for a 1% interest rate increase, Etc.

Indexer

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Re: US Gov. Retirement asset confiscation?
« Reply #54 on: January 06, 2016, 08:34:31 PM »

We are using about 8% of our taxes to pay interest on the Federal debt.
  If interest rates rise 2%, we would be spending almost 20% of our tax base to pay interest on the debt.


What happens to the value of the bonds when interest rates rise?

They tend to go down in value.

Now I want to make sure this next part is VERY clear... that doesn't change how much debt the US government has. A 10,000 bond could become a 9,000 bond on the secondary market if interest rates rose, but the US government would still owe 10,000 and that final principal payment would still be par... which is $10,000.

Telecaster

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Re: US Gov. Retirement asset confiscation?
« Reply #55 on: January 06, 2016, 09:25:28 PM »

We are using about 8% of our taxes to pay interest on the Federal debt.
  If interest rates rise 2%, we would be spending almost 20% of our tax base to pay interest on the debt.


What happens to the value of the bonds when interest rates rise?

They tend to go down in value.

Now I want to make sure this next part is VERY clear... that doesn't change how much debt the US government has. A 10,000 bond could become a 9,000 bond on the secondary market if interest rates rose, but the US government would still owe 10,000 and that final principal payment would still be par... which is $10,000.

Exactly.  The amount of interest on the debt doesn't go up, even if interest rates go up because the bond pays a fixed rate.    The government could in theory retire those bonds buying them and issuing new ones and the amount debt would go down.  But that would not change the cost because the new bonds would pay higher interest rates.  Same-same.

So if the amount owed remains the same, where is the crisis?   Down the road perhaps, but we have the growing economy and inflation working in our favor as well.   As I said above, this is a problem, but a completely manageable problem for now.   


maizefolk

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Re: US Gov. Retirement asset confiscation?
« Reply #56 on: January 06, 2016, 11:23:57 PM »
Rising interest rates wouldn't effect how much interest we paid on the national debt if we were paying off bonds as they come due. But what we actually do is issue new bonds to pay for old ones as they mature.

Assuming things haven't changed much since 2014, the US keeps something like $3 trillion in bonds with less than a year's maturity. So if interest rates rose by by 2%, within a year, we'd be paying an extra $60 billion in interest on the national debt, and it'd continue to grow as longer and longer term debt had to be rolled over at the new higher interest rates.