For all that boomers sneer at Millenials and Zoomer as 'entitled' just watch at how their eyes bulge, spittle forms, and veins pop when you point out their entitlements, created by endebting their grandchildren, are creating a mess.
As a boomer I agree. We are now the wealthiest population cohort the country has ever had. Our heirs will be receiving a bonanza of wealth as we pass away. But that may not happen fast enough to counterbalance the tax burdens placed on new generations who will clearly receive much less in net gain if the form of "retirement" investment and other investment goals are not restructured to cancel the SS Ponzi scheme.
And if I recall correctly, the new SAVE Act features have accelerated the required cash out period to a max of 10 years vs. 27 years for our heirs to take distributions from IRA's etc.
Great points. My goal is to have my kids graduate college debt free and with enough money to kick off life. I don’t want to hoard my wealth till I die and when it’s too late to have an impact for them.
You may know this already, but I recently relearned it.
When you gift stock or other valuables to your kids/ grandkids, they have to pay taxes when they sell it based on the original (probably pretty low) basis that you had when you acquired them [so higher taxes]. If they inherit those assets after you die, then the basis is adjusted to the value when they inherited it, which would usually be higher [so lower taxes net].
Not a total game changer in anyone's thinking, but something to factor in as you make investment and potential distribution/ gifting decisions.
Right, that's a great point. But starting before I die, there's also a lot of ability to overtly gift $14K a year and subvertly bestow even more (grocery cards, cell phone bills, etc.) that can fly under the radar. Even now, I can put a lot of money into a kids savings account that they don't have to pay taxes on when they take over the account. You can put $14K per year until they're 18 if you want.
Not sure where your $14K number is coming from, but I understand that for 2025 the max tax free gifting amount is $19K per giver and recipient. I.e., $38K per couple to each grandchild, etc. Maybe you are thinking from several years ago, or have something else in mind? :-)
The only roll of the government should be to establish and secure equal opportunities to all. When land and natural resources are taken as private as apposed to common to all, there will always be excruciating inequality. No amount of band aids will fix this. The community produced value expressed in land values (land being all natural resources), is the natural source of financing for community services, ie.: schools, roads, hospitals, fire department, police, and what ever other amenities the community elects to enjoy.
Good one. The trampoline metaphor occurred to me, too—though I suppose for the elderly infirm, we ought to think of it, perhaps, as a social safety comfy chair.
I was going to ask what to do about all this, but it looks like I should stay tuned for Part II.
A great essay and discussion of our modern status that deserves wider exposure and deeper discussion. Especially your distinction between investing and insuring.
Many decades ago the Consumers Union published a booklet discussing the need to evaluate the real rate of investment returns on "whole life" insurance vs. pursuing the "pure insurance" of term insurance and a separate activity for investing for longer term goals. That kept me from going down a flawed path that had snagged my parents for a time.
One element I am somewhat confused about that might play into this discussion (indirectly?) is the role of depreciation. I gather it is really a form of capital investment but for a time the IRS Schedule E seemed to treat it as an expense [I had two small rental houses]. Then around 2015 (maybe?) they changed the Sch E form to make depreciation a "below the expense line". But when it came time to sell, I was never quite sure just how my deferral of non-capital gains income could be converted to a capital gains benefit via Form 4897 (or whatever it was). Or even that it really was?? [If this is too off topic, please just say so :-) ]
At the federal level, there should also be clarity between expenditures intended for initial capital purposes (infrastructure or war materiel/weapons) and the funding for their ongoing operational costs and eventual refurbishment/recapitalization. If too many of our bridges and airports are rated "D" this is part of why.
But I would be happy if they just separated out the "normal expenses" part of medical care from the contingent unknown care, as you properly mention. Not sure if already recognized major medical problems (aka pre-existing conditions) can be covered via "insurance" per se, vs. some form of welfare, depending on income levels, etc.
We seem to have a lot of people discussing the third rail, but basically no real leadership to convince the electorate/ populace that sacrifices and "hair cuts" are needed NOW!!!
For all that boomers sneer at Millenials and Zoomer as 'entitled' just watch at how their eyes bulge, spittle forms, and veins pop when you point out their entitlements, created by endebting their grandchildren, are creating a mess.
As a boomer I agree. We are now the wealthiest population cohort the country has ever had. Our heirs will be receiving a bonanza of wealth as we pass away. But that may not happen fast enough to counterbalance the tax burdens placed on new generations who will clearly receive much less in net gain if the form of "retirement" investment and other investment goals are not restructured to cancel the SS Ponzi scheme.
And if I recall correctly, the new SAVE Act features have accelerated the required cash out period to a max of 10 years vs. 27 years for our heirs to take distributions from IRA's etc.
Great points. My goal is to have my kids graduate college debt free and with enough money to kick off life. I don’t want to hoard my wealth till I die and when it’s too late to have an impact for them.
You may know this already, but I recently relearned it.
When you gift stock or other valuables to your kids/ grandkids, they have to pay taxes when they sell it based on the original (probably pretty low) basis that you had when you acquired them [so higher taxes]. If they inherit those assets after you die, then the basis is adjusted to the value when they inherited it, which would usually be higher [so lower taxes net].
Not a total game changer in anyone's thinking, but something to factor in as you make investment and potential distribution/ gifting decisions.
Right, that's a great point. But starting before I die, there's also a lot of ability to overtly gift $14K a year and subvertly bestow even more (grocery cards, cell phone bills, etc.) that can fly under the radar. Even now, I can put a lot of money into a kids savings account that they don't have to pay taxes on when they take over the account. You can put $14K per year until they're 18 if you want.
PS; this $19K per year applies to people older than 18 as well, basically anyone.
Maybe you are discussing some form of savings or IRA equivalent account and I am missing that background? :-(
Not sure where your $14K number is coming from, but I understand that for 2025 the max tax free gifting amount is $19K per giver and recipient. I.e., $38K per couple to each grandchild, etc. Maybe you are thinking from several years ago, or have something else in mind? :-)
I was using an old number.
Considering current mess, barely imagine effects of UBI...
The only roll of the government should be to establish and secure equal opportunities to all. When land and natural resources are taken as private as apposed to common to all, there will always be excruciating inequality. No amount of band aids will fix this. The community produced value expressed in land values (land being all natural resources), is the natural source of financing for community services, ie.: schools, roads, hospitals, fire department, police, and what ever other amenities the community elects to enjoy.
Good one. The trampoline metaphor occurred to me, too—though I suppose for the elderly infirm, we ought to think of it, perhaps, as a social safety comfy chair.
I was going to ask what to do about all this, but it looks like I should stay tuned for Part II.
A great essay and discussion of our modern status that deserves wider exposure and deeper discussion. Especially your distinction between investing and insuring.
Many decades ago the Consumers Union published a booklet discussing the need to evaluate the real rate of investment returns on "whole life" insurance vs. pursuing the "pure insurance" of term insurance and a separate activity for investing for longer term goals. That kept me from going down a flawed path that had snagged my parents for a time.
One element I am somewhat confused about that might play into this discussion (indirectly?) is the role of depreciation. I gather it is really a form of capital investment but for a time the IRS Schedule E seemed to treat it as an expense [I had two small rental houses]. Then around 2015 (maybe?) they changed the Sch E form to make depreciation a "below the expense line". But when it came time to sell, I was never quite sure just how my deferral of non-capital gains income could be converted to a capital gains benefit via Form 4897 (or whatever it was). Or even that it really was?? [If this is too off topic, please just say so :-) ]
At the federal level, there should also be clarity between expenditures intended for initial capital purposes (infrastructure or war materiel/weapons) and the funding for their ongoing operational costs and eventual refurbishment/recapitalization. If too many of our bridges and airports are rated "D" this is part of why.
But I would be happy if they just separated out the "normal expenses" part of medical care from the contingent unknown care, as you properly mention. Not sure if already recognized major medical problems (aka pre-existing conditions) can be covered via "insurance" per se, vs. some form of welfare, depending on income levels, etc.
We seem to have a lot of people discussing the third rail, but basically no real leadership to convince the electorate/ populace that sacrifices and "hair cuts" are needed NOW!!!