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    Quote Originally Posted by Oldwrench View Post
    My managed IRA beat 10% averaged over the last several years and I am not in anything aggressive. I don't think that's an unusual return. You can get pretty nervous when a statement shows stagnation or a loss in value, but the key is not to be stampeded into cashing out.
    long term 6% over inflation is typical so 1% inflation thats 7% return
    .
    inflation means money worth less every year by design

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    Quote Originally Posted by AndyF View Post
    I consider that there are two parts to the raise. The first reflects inflation and the second any increased value the employee is delivering to the company. If inflation is 2%, the employee might get 2% just to stay even. If they are more valuable because they are more experienced and know more about the work being done in the shop or have improved their skills, they would get a raise to reflect this on top of the 2% for inflation. All of this is dependent upon how well the business is doing also.
    The problem with that is that the official inflation rate, much like the official unemployment rate, is a bunch of hogwash. Independent estimates are 7% to 13% per year.
    If people knew the actual inflation rate, it would crash the economy - Business Insider

    Anyone receiving only a 2% raise per year is going to find their purchasing power constantly diminishing, having to constantly tighten their belt to make ends meet, and is going to feel financially stressed. They will be looking for other work even if it pays only a little bit more.

    As a side note this calls into question the benefit of investments that return in the range of 6%. Sure it's better than stuffing it under your mattress, but I'm thinking that an investment in future earning potential (schooling, buying your own machine, etc.) may have a better true yield for the first half of a career.

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    Quote Originally Posted by Oldwrench View Post
    My managed IRA beat 10% averaged over the last several years and I am not in anything aggressive. I don't think that's an unusual return. You can get pretty nervous when a statement shows stagnation or a loss in value, but the key is not to be stampeded into cashing out.
    The key qualifier to my question was a retirement level of safety. When you're at retirement age, you should be in a different portfolio than in the growth years. Toms expectation of 6% over inflation is an equity expectation, not income, and is not realistic in retirement (without taking more chances than you should in retirement). You really should have a light weighting of equities in retirement. Sure the long term rate is such and such over inflation (thats why people like invest equities obviously), but you can easily have protracted periods (like years and years) of it being crap or even negative. This all of sudden matters in retirement when you HAVE to take the money out when you have to take it out regardless of whether its a good or bad time.

    Without employment income, you WILL be stampeded into taking it. Its quite simply risk/return and that changes when employment income stops - Tom's not going to get 6 points over inflation in the current environment if he's properly weighted into a retirement worthy fixed income portfolio

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    Quote Originally Posted by mhajicek View Post
    The problem with that is that the official inflation rate, much like the official unemployment rate, is a bunch of hogwash. Independent estimates are 7% to 13% per year.
    If people knew the actual inflation rate, it would crash the economy - Business Insider
    BI? that's not a credible source, they're click bate. Some guy talks about burritos and then claims "Unbiased private-sector efforts to calculate the real rate of inflation have yielded a rate of around 7% to 13% per year, depending on the locale — many multiples of the official rate of around 1% per year."

    ....while conveniently omitting just who the the unbiased sources and/or studies are?

    Read up on how the U.S. Bureau of Labor Statistics calculates the CPI. Its inconceivable that this is all just a trick, and they managed to get all the statisticians at other countries to also fudge their numbers so theye all are erroneously low and they've have been able to pull one over on the global bond market at the same time. Think of how many people are involved? Your President can't even get a blow job without it being an epic scandal.

    Unsubstantiated claims like that are click bait tin foil hat stuff.

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    Quote Originally Posted by DyanamicEDM View Post
    We are looking to fill a couple of positions here at work. I am training with my boss who will be retiring this year. While reviewing some resumes today we got into a discussion about pay scales and wages. My question is this; If a job carries with it a given pay scale, let's say $20-$30 per hour, at what point do you as an owner stop giving raises without giving more responsibility? Meaning after years of getting $1.00/hr increases does an employer stop giving a raise? Or do you just caveat the raise with here are mor responsibilities to go with the raise.

    Thanks for learning me folks.
    I feel every job would have a max right? I mean a lowly machinist can't ever expect surgeon level pay. Depending on how old they are etc upon hiring offer performance incentives etc. And give a raise for inflation also.

    SO if you hire a new kid at $15hr at the age of 18 that is good money, then give him his $1hr(.50?) raise plus inflation adjustment each year till he maxes, by that time he should be in a programmer spot etc making more money anyways. That way I hope to god he is smart enough to keep showing up not high as a kite..

    PS-Bureau of labor statistics as well

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    Glad to have so much input on this. Unfortunately like many topics this was quickly derailed by "other" benefits and % made on investments. In order for me to move forward and be a "good" boss for a great company I am trying to get a plan formulated to take care of our employees. After all they are the ones who make my check. So my general feeling is that salary caps are a no no. Got it! Thank you for the input.

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    Read & understand, follow and do not cut prices.
    https://www.nonstopscaffolding.com/d...s%20System.pdf

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    Quote Originally Posted by Mcgyver View Post
    BI? that's not a credible source, they're click bate...
    Ok, how about some other sources:

    Alternate Inflation Charts
    Forbes Welcome
    https://www.cnbc.com/id/42551209

    I spent about 15 years getting about 2% / year, and I know my purchasing power was dropping like a rock.


    Quote Originally Posted by EndlessWaltz View Post
    I feel every job would have a max right? I mean a lowly machinist can't ever expect surgeon level pay.
    Why the heck not? It all depends on the value of said machinist's contribution and the supply and demand of talent. If you have a guy knocking 75% off of cycle times while reducing scrap, down time, and tool consumption you need to be paying him proportionately or he'll go work for those who will or even start up a competing business of his own, while you'll be left with talent that's worth what you're paying.

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    Quote Originally Posted by mhajicek View Post
    Ok, how about some other sources:

    I spent about 15 years getting about 2% / year, and I know my purchasing power was dropping like a rock.
    .
    I know! have you seen the price of Arugula at Whole foods lately . There's a curve where demand changes with price - statisticians have to assume that if the price of thing skyrockets relative to all others, that its reasonable to assume demand will go down. Pretend steak and hamburger were once the same price, then a few years later steak is 10x the price of hamburger. The economist rightly assumes that demand for steak will go down, eventually the amount steak in the CPI average grocery basket goes down. Dynamics like that, one price moving much more than anther and thereby reducing demand, explain a bunch of the difference on why the CPI has to change over time and why referencing earlier iterations isn't really revealing much

    https://www.usnews.com/opinion/econo...inflation-myth

    Arguments like SGS's attract attention and strike a chord with us, but imo its challenge to buy into a 1980's or 1990's basket of goods and think its apples to apples to today. As for how much money we have left each month, a big difference is explained by new categories we choose to spend lots and lots of money on. Compare the in the late 70's, no cells, no computers, no internet and TV meant rabbit ears....and no monthlies. Its astounding what households spend per month as well as the spend on hardware.....sure we can say its worth it, but it explains quite a bit on why it seems like we don't the same spending power.

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    Well, in '81 my dad had an Atari 2600, an IBM PC, a lathe, an electronics workbench, two cars, and a garage full of motorcycles. There was a monthly phone bill for the landline. I have a cable bill that he didn't when he was my age, but that's the only additional monthly. According to the official inflation numbers I've been making more than him at any given age, but my purchasing power has always been less. Many things cost ten times what they did when my dad was my age, computers being a notable exception (his tricked out IBM was about $3500)

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    Quote Originally Posted by mhajicek View Post
    Well, in '81 my dad had an Atari 2600, an IBM PC, a lathe, an electronics workbench, two cars, and a garage full of motorcycles. There was a monthly phone bill for the landline. I have a cable bill that he didn't when he was my age, but that's the only additional monthly. According to the official inflation numbers I've been making more than him at any given age, but my purchasing power has always been less. Many things cost ten times what they did when my dad was my age, computers being a notable exception (his tricked out IBM was about $3500)
    personal anecdotes don't go very far in understanding macro economics - Its hard to rationalize every detail of your life against nation trend lines and on the macro scale things can only ever be statistical and academic. Your Dad was a first mover with the IBM for example, but 80' the basket was based on what most were buying in the late 70's. Today, many households still have a land line, as well as cable, multiple cell phones and internet. Maybe not for you, but on average, it consums a significant portion of disposable income, in a catagory that did not exist in 1980.

    Particularities of your life and your spending habits and tastes might very well leave you in a position of decreased spending power. However there are other explanations for that (devil is in the details) and the criticism of SGS is from the sound principal that the basket does and needs to change over time.

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    So what you're saying is that if people were buying the same things they did in '80 they'd have less purchasing power, but it's made up for by the fact that IRL people are buying more things now?

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    Quote Originally Posted by mhajicek View Post
    So what you're saying is that if people were buying the same things they did in '80 they'd have less purchasing power, but it's made up for by the fact that IRL people are buying more things now?

    I'm saying

    1) personal experience doesn't necessarily reflect accurate national macro economics, if anything it presents an unwanted bias

    2) not all prices go up the same therefor demand on an item by item basis varies over time. As a result the basket should change over time making it somewhat flawed to say CPI isn't accurate because based on the '80 basket it would show higher inflation than the current basket.

    3) Because of technology we have more in our lives now and more costs money.....lots is spent on entirely new categories. That places additional demands on disposable income making it feel like there is less to go around.

    I'm not saying there isn't a discussion to be had about or that I'm the national expert on CPI calcs.....but they are done by a rigorous process open to outside academic criticism, and think the three above points are logical. So, imo, one would do well to be critical of click bait claims of 7-13% rather than accept and repeat them.

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    Where I work they just give you .30 or .5 cents every year and pile more bullshit for you to do on top of what you are already doing, they don't have to worry about guys capping out, they don't stay long enough to get there, and then it takes them a year to find a replacement because everyone turns down the job offers.

    If say if you aren't doing that, you are probably going in the right direction atleast.

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    Quote Originally Posted by EndlessWaltz
    I feel every job would have a max right? I mean a lowly machinist can't ever expect surgeon level pay.


    Why the heck not? It all depends on the value of said machinist's contribution and the supply and demand of talent. If you have a guy knocking 75% off of cycle times while reducing scrap, down time, and tool consumption you need to be paying him proportionately or he'll go work for those who will or even start up a competing business of his own, while you'll be left with talent that's worth what you're paying.[/QUOTE]


    I understand that. I am that guy. But your shop as a whole needs a cap on salary why? Because Jimmy and Bobby who are the same age and worked the same amount of time think they are making the same. Makes a better work environment. But if Jimmy is kicking ass then that is where incentives come into play. Henry Ford said you always pay your workers the maximum you can per their work output and I believe in that, he just didn't mention how you pay them

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    Quote Originally Posted by EndlessWaltz View Post

    Quote Originally Posted by EndlessWaltz
    I feel every job would have a max right? I mean a lowly machinist can't ever expect surgeon level pay.


    Why the heck not? It all depends on the value of said machinist's contribution and the supply and demand of talent. If you have a guy knocking 75% off of cycle times while reducing scrap, down time, and tool consumption you need to be paying him proportionately or he'll go work for those who will or even start up a competing business of his own, while you'll be left with talent that's worth what you're paying.
    Back when I was a manager and had 30 people work for me I had 2 foremen. One of them IMO was worth at least twice that of the other but my hands were pretty much tied because of the company pay system.

    He left shortly after I did but we kept in touch. He's doing very well in his present job and earning more than he could ever have hoped for if he stayed.

    I do realize it's a problem when you have several doing pretty much the same. Who would you least like to lose?

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    Quote Originally Posted by DMF_TomB View Post
    .
    SS is not a savings account and never has been and never runs out of money like some make out.
    .
    workers now ....pay in to retired people now every month. money in, money out redistributed from young to old every month
    .
    when i hear some say SS will run out or they put money into SS account thats not what it is and never has been. it was setup for older people with no savings have bare minimum to not starve. never designed to be comfortable just on SS
    .
    the age to be able to retire was never meant to be for many decades. typically it was for 65 year old who lived to 70 to not starve. takes a millisecond to figure out if people living to 80 or 90 that need to raise retirement age so younger people not paying for older people to not work for 2 or 3 decades
    .
    who says younger people need to pay money to the old to not work for 2 or 3 decades ?? that sounds like master and slave or peasant and king. forcing a class to work so others do not need to work
    Of course social security will never completely run out of money with new tax money coming in every year. Due primarily to the large number of baby boomers there will be too many people retiring compared to the number paying in, there will not be enough money to pay full benefits. They will have to reduce the payouts unless the retirement age is increased and/or social security taxes are increased.

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    Quote Originally Posted by Mcgyver View Post
    I don't know how much the SS is, but if was just the investment.....you'd need a 11.1% return in "retirement level of safety" income investments. Not really happening today. With whatever the SS is taken out, what short of return do you expect on the $1MM
    Most countries that have a SS or equivalent publish the statistics on maximum and average payouts. No point in going overly anal about it, but more of us should check those figures now and then, figure somewhere between median and HALF the max is more likely than most other numbers.

    And then.. try like Hell to not let that "income" be ALL that one has, 'coz it usually ain't but bare subsistence with a never-quite keep-up COLA, if-even.

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    Quote Originally Posted by robert123 View Post
    Of course social security will never completely run out of money with new tax money coming in every year. Due primarily to the large number of baby boomers there will be too many people retiring compared to the number paying in, there will not be enough money to pay full benefits. They will have to reduce the payouts unless the retirement age is increased and/or social security taxes are increased.
    They have BEEN doing "all of the above" methods of reducing the future load for some years now in most developed countries.

    In general, it will get worse, just not be allowed to become any more of a train wreck than the economy of any given host country does, overall. IOW - "western world," not so bad. Former Sov Bloc, not so good, etc.

    For all their vaunted economic success, Germany, for example, has a major future funding problem. So, too China, partly off the back of the "one child" policy. Russian Federation is a disaster-walking unless oil goes above $80-$100 / barrel again. Demographics are all wrong.

    US & Canada? Not great, but better than most "major" economies, globally.

    As to wages? The primary determinant for what an entity has to be prepared to pay has ALWAYS been what other "choices" pay.

    Even if the worker-bee has to shift industry and type of work, they can, and do, make that choice if they feel they must do.

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    Quote Originally Posted by EndlessWaltz View Post
    I feel every job would have a max right? I mean a lowly machinist can't ever expect surgeon level pay.
    ....And yet....somehow.....Salesmen can make unlimited money.

    Many CEO's have obscene bonus schemes (many times without increasing
    the company profits), and yet somehow that's o.k. too ?


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