Thoughts for today

Taxes and Retirement Savings

I believe that all businesses (and all people receiving money from them) should be made to file their taxes electronically, with multiple backup systems available. (Including paper printouts when necessary). The employees should have access to these systems as well, to make filing taxes quick and easy (well, easier). I feel that if we filed taxes that way, tax dodgers would have nowhere to hide.

I also think that decentralization of assets away from major banks would be a good idea. The federal government should be able to keep a backup record of a person or company's financial records as a safeguard against data loss, but people should be able to keep their savings with them, in their own secure, biometric-activated "piggy bank" device. Even if the device were to be physically stolen, it would not be able to be used, because the device would be coded for its proper owner only.

Pension Plans

How are pension plans funded?

Taking a little bit out of your pay cheque every time to put it toward the future.

(Currently in Canada, I believe it is “5% of income between $3500 and $50,100”)

So what would I do if I had my own country to run?

I'd just say “do it yourself”, so that your retirement funds don't get loaded into a big pot that gets invested (and possibly lost on a bad investment). All investments carry risk, and as was seen with the housing crisis that launched the worldwide recession, that was one heck of a bad risk.
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A careful budget would allow someone to set aside money for retirement on their own.

If you can make $16,000 per year (($400 X 40 weeks x $10 per hour) or (350x48x10)), and your costs of living are $400 per month for food, $500 per month for rent, and $80 per month for other things, then your total monthly expenditures on average will be $980 (yearly expenses: 11,760). $620 will be left over to be put toward retirement per month (Okay, the numbers are a little off – yearly savings of $4,240).

That's $4,240 per year. Over a period of 30 years, this simple frugality would give you $127,200.

If your monthly expenses remained at $980 after you retire, that amount of savings would keep you solvent for 130 months (10 years). So if you retired at 55, you would have enough savings to live until 65, just on your savings. Obviously, that's not enough, so let's extend the working period.

If you worked from age 25 until 65 (40 years under this model), your savings would end up being $169,600. That would be enough savings for 14 years (age 79, which is the average life expectancy for Canadian men).

Now, it is highly unlikely that people can be this frugal for 40 straight years, but even a 40-year savings of $100,000 from a theoretical maximum of $169,600 (spending of an extra $69,600 on trips or things over a time period of 40 years) would still give you enough savings for 8½ years of retirement (age 73). If you sell some of the items you accumulate over the years (even possibly your home, which you have been steadily paying off with rent over the last 40 years – I'll get to that in a minute), you could live comfortably for the rest of your days. And all this assumes that your salary does not increase at all over your entire working life, so the savings are likely to be higher.

*To put a point on selling your home: Let's say the assessed value of a 1000-square foot condo is $100,000 (not feasible in Sudbury, but I'm dreaming here, so leave it be). Under a payment plan of $$250 per month (let's say half the rent cost goes to this), the condo would be under your full ownership in 400 months (33 years, 4 months). So if you got your condo at age 25, you would fully own it by age 58. Not bad! That's a $100,000 asset that you can now sell at any time. Add that to the projected retirement savings of $100,000, and you now have 17 years of retirement savings, all without investing your money in any crazy schemes that would bankrupt the world.*

So why can't we do this now?

I've noticed that there's one thing that seems to cost a lot of money, but that most people seem to want/need in order to live independently in society. That thing is an automobile. Cars cost a lot of money, not just for the initial purchase or lease, but for upkeep, licensing, and worst of all, car insurance. I see ads on Spike TV for car insurance all the time, and I think to myself “That's nice and all, but I'd rather not have to own a car, and pay ZERO on my car insurance every month.” It would be one less expense to worry about for someone living on minimum wage.

So that's why I designed my compact cities. If you don't have to do a daily commute of half an hour in the car, it will save you a lot of money over your lifetime. And for those that still would have to commute to work (let's say lumberjacks, miners, etc.) because their workplace is in a remote location, their businesses should contribute funding to a train system that gets people to and from work reliably. If there's only one train on the track as opposed to hundreds of cars on a road, it's a lot less likely to have a collision. And what if the train system breaks down? Well, of course there should be a backup plan to get people to work. The backup system could be a road, I suppose, and people could ride electric vehicles to work if they needed to. My point is that this need not be an every day occurrence for 90+% of the population.

So what about all those people that would be put out of work in the auto industry if this were to happen?

I don't think those workers would necessarily have to lose their jobs at all - they would simply be changing industries. In switching to rail transport, a lot more manufacturers of rail-specific parts would be needed. I'm sure that with the proper training, auto assembly plant workers could make a smooth transition to manufacturing things such as motor scooters, emergency vehicles, and mass-transit systems.