# The Sequester and your retirement



## Shrek (May 1, 2002)

This and government shutdown have been topics of conversation at our breakfast clup at the corner table at cafe many mornings.

All of us in the breakfast club group have varied concerns depending on our type of retirement (private investment plan, company pension, federal pesion, social security etc.).

Myself and a couple other guys who get our company annuity are being told that the fund our pension comes from is in low risk and separate from the company , however I also have investment accounts that if the sequester shakes the markets will affect my retirement funding in the here and now even though "sequester" is a new term for business as usual since the 1970s that I am aware of.

My girlfriend was fretting about the possible budget cuts and potential government shutdown and although I told her we don't want to see it happen, the government has shut down almost 20 times that I know of since we were in high school and in 1995-1996 while working for my defense contractor employer we got short term lay offs two or three times for up to a month as our DoD production contracts got put on hold due to budget cuts.

What are your main concerns of the sequester threat?


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## Guest (Feb 22, 2013)

"You never let a serious crisis go to waste. And what I mean by that it's an opportunity to do things you think you could not do before."
Rahm Emmanuel, Former Obama Chief of Staff, on how the government should use every available opportunity to inflict maximum misery and abuse of power on the American citizen.

​


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## Ramblin Wreck (Jun 10, 2005)

I think we're arguing over the wrong things, but there are signs of hope. CPAC is having a forum discussion this year on American involvement in wars (basically are we involved in too many of them?). It would be nice to have the $1 trillion we spent on the Iraq war back (Fox says less, MSNBC says $3 trillion so I picked the middle figure often quoted), plus the lives of those who died (and tens of thousands injured). Many democrats (more than some of this forum would believe or admit) want changes made to welfare and other social programs. Personally, I'd like to see each admission to a program supported by a plan from the applicant that documents how they will "graduate" into a self supporting life. There should be a lifetime cap of how many years you can get support, but that support should be sufficient to get a person trained to work and be productive. At my breakfast club Shrek, I have to keep reminding some of my Republican friends about their "welfare" payments. Most of them have drilled wells...you guessed it, paid for by us via farm supplements.

Meanwhile, back at the thread. Across the board cuts are not a good way to get things done, but if it leads to a discussion on how to permanantly cut some programs (rich welfare via farm supplements and defense spending and poor welfare via aid to families with dependent children, food stamps, WIC, others), then it could be a good thing. 

I think the Simpson/Bowles report is a good starting point for discussion, especially on the entitlement side of things...but we've got to cut defense and farm entitlement programs too. Milk, eggs, and meat will go up...but ask our Canadian neighbors what they are already paying for these items. But you know, if you grow a garden and raise some chickens, you can still save a lot of $'s, God willing and the rains come and the deer don't eat it.


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## Shrek (May 1, 2002)

This morning one of the ancient old timers (82 or 83) pointed out that the media and admin use of "across the board" was inaccurate because as every past budget cutting he recalled they started at item #1 ct, went to two and cut a different percentage, went to item 3 and decided to bypass it, went to #4 and decided etc...

He said if it was a true across the board cut every thing would be cut the same percentages and the nation and the world would go into critical shock .

He was still presenting his perspective when I had to leave but I hope to run into him at lunch to hear more of his perspective,


I am looking at the influence my living below my means,on hand savings, low risk investments that don't tumble as bad as higher risk funds and my agricultural interests here at home and how close to the 100% of my current budget I can maintain depending on what happens next week.

On first glance of my various streams I feel I can belt tighten and stay within a range of 15% to 20% as my father did during the 1970s and I did during the recession in the 1990s.

One of the guys retired out when I was lamented that if things got any worse for him he would have to return to industry and I reminded him that we were on the high side of the industrial age range when the company bought out our contracts and early outed us over a decade ago and the industry market still considers the age we were the the high side cut off.

After I said that to him , he looked at me and asked me not to remind him that our buyout early retirement was entered by a one way door. My response to that was that if he felt the life we entered when our industry moved us out had no reverse that he should consider other skills he has that younger folks may lack and pursue avenues where he can put them to use.


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## newcolorado (Jan 31, 2012)

I do not conside myself ancient Just cause I am 81. 

If I understand this across the board cuts is not a line by line budget deal. Line by line in regualr budget cutting, this deal different. To be honest I am not up on it . They are now calling it sequester. I Looked what that meant.

What this will do to my retirement income. They hae already did my pension some time back. You must take it faster. I could not stop that. So my pension was what was paid in and when gone stops. We had it figure it would got till I was 84 and was taking more then the pension guy thought I should. Feds decided had to take faster. Ended at 81. And you know what they did to the interest rates. My income is down a $1000 a month for this year. Just SS coming. If I will like on SS yeah I will do some belt tightening. I have all ready started some. But this is not because of their budget cuts. I knew it would happen. What will happen to SS? It could be new income line to get , probably no raises or very darn little ones. Some on SS have all ready sold off things. My nephew and his wife have. If they have anything to sell. I have not yet and and it is costing me. Rather I can this year sell things or next it is coming. Got to cut expenses. So will not go down hill. They have already cut the senior bus service down here. Still running but not like it did. Why I do not know but was cut last Oct. I have not been going to city inless had to. If I go could spend money and really nothing I need. I am not doing with out, bread when I have not baked. I need to start stocking some in the freezer for those times. I do have crackers here all the time. My nephew told me they had to budget to make it. I always have budgeted.


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## Big Dave (Feb 5, 2006)

Ok so what if all the goverment funding stopped. Markets crashed? Bad news huh? I have lived by my wits for 61 years. So I know some of the things I do will change. I started Homesteading as a way to over come this exact thing. Growing and preserving my own food. Harvest from the wild. Fish, hunt, and gather. Economies have changed since time recorded. We are not where we were in the 40's 50's 60's 70's but we are all reliant on our own wits. If a meteor hit washington DC what would we lose? We could reverse things and Bring back jobs to the USA but we would still be in the same shape. OUR MONEY IS NOT WORTH WHAT IT AS IN THOSE BOUNTIFUL YEARS.Well this may not fit here but I just felt the need to give my .02


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## Shrek (May 1, 2002)

NewColorado,

My mother gets SS and is worried also, however when I was discussing my current safer portfolio strategies and possible future ones with my now retired former adviser and current adviser both indicated that currently cuts to SS are set to be achieved by reducing the approvals for the SSDI side of the program and the possibility of further increase in the eligibility age for retirement SS and not be aimed at the current recipients except probably in COLAs.

While that is a mix of good news and bad news for folks as my mother already drawing SS, it is more incentive for me to live lean and mean preserving the stability of my investment accounts until the time comes again when I can leverage the one back into high risk /high return in hopes of adding to the safe account I currently use to augment my company pension.

When I first started my career in the 1980s I doubted SS would be available for me when I reached retirement age for SS and chose to concentrate on my own personal retirement funds. When my employer bought my contract out and authorized me for my company pension pay out, I knew my private accounts would play a part in my strategy until I was 67. Now although retired from my industry sector I have even more doubt that SS will ever be a possibility for me and trust only in my investments to supplement my company pension.


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## newcolorado (Jan 31, 2012)

Shrek, 
I know I sure was having my doubts on SS also back then. I think it was money magazine that had a good article on retirement back then. I read on things I could get my hands on. So many pension now are like what I had. Not life time. 

I would guess be harder for them to get SS disability. They will tighten things up. I was 70 when I started SS as I was working. Worked till 72 to build up SS and pension. Early years I worked only part time. All the hours the job had. My husband SS was really no good to me as it was the smallest they paid I think. I had to earn my SS. I am living now to hilt of my SS. Trying to keep it lower. I donot think they will or can cut payments that you are getting. They can make different rules and they did on having to pay income taxes on SS. Age for full amount.


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## MoonRiver (Sep 2, 2007)

The sequester should have a minimal effect, unless it is politicized. Which of course it will be.

Let's say your yearly budget is $100. My understanding is that the sequester will mean that next year, your budget will be $105 instead of $107. 

I made up those numbers, but I think they are in the ball park. The cuts are actually a decrease in the rate of growth and not an actual decrease in spending. A 2% decrease in projected spending should have a minimal impact.

But just in case, I sold a bunch of stock and am about 30% in cash. I also took a few short positions.


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## used2bcool13 (Sep 24, 2007)

I read an article about billionaires selling their American company stocks because of their predictions of decreased consumer spending ( my guess due to less available money or income), and they were selling big name companies P&G, and just about all of the big bank names.
I don't know how to interpret the combination of events and I am very uneasy about our economy its future etc.


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## katheh (Jul 21, 2012)

After many years, I am finally at the point where I wish they would do something with the interest rate. 0% return on cash has had a critical effect on the spending habits of retired people (reluctant to spend principal when they thought they could be living off the interest).

I know the mortgage people wouldn't like it, but I gotta think raising the interest rate (right now the major index is at +0%) would put more actual money into the economy.

Might also dump out people who can't afford mortgages, and cause people to use credit cards less, and save more.

Maybe a pipe dream...


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## newcolorado (Jan 31, 2012)

They have been fussing over the budget for so long now. I wish they would settle what they will do an get it over with. This no interest is terrble as us older ones where we figure on some as you said. They paid better interest many years ago. They have hit us hard there. They have raised SS up and taxed it. They gave out free money there a couple times. Showed up in my bank account. So poor SS people got more and those with more got less. I know I left that extra money in the bank and did not blow it. Knew I would need it. I guess no interest to get you to spend your money as it will not increase. We had better save what we can. I cannot figure out anything better to do. 

I read too about American rich selling off stocks. Stocks market at that time I saw dropped down some with it. 

A lot of us older ones have tightened our belts and any more will be cutting our backbone in two. Internet will be my last cut. Our saving are going down hill. 

Moon River, I hope you are right. Medicare jumped $5 a month. SS did come up for this year. After they take medicare out I get $18 a month more. Very glad it came up that much. What you get depends on what you paid in to SS. 

People have to live somewhere and sometimes house payments are less than rent. They do build big houses.


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## retiredpara (May 17, 2011)

There has been no real budget cut in modern times. The governenment uses zero based budgeting, with all agencies spending all of their budgets in a given year, with no reward for saving. The only thing cut may be the percent of growth to a given department. Under Clinton's first two years, the VA and DOD were actually cut, but the net federal budget rose. 
As far as retirement, the President gets to choose how federal funds will be spent during this time, not congress. Look for defense related cuts, and security related but I doubt SS or welfare recipients will not see their checks.


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## MoonRiver (Sep 2, 2007)

*Perspective*










http://danieljmitchell.wordpress.co...se-deep-spending-cuts-you-keep-writing-about/


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## mnn2501 (Apr 2, 2008)

Shrek said:


> What are your main concerns of the sequester threat?


That the Republicans will cave in and compromised with the Democrats to not cut spending


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## Nevada (Sep 9, 2004)

Both Social Security and Medicare are safe from sequestration cuts. They are mandatory expenditures set by law. Checks will go out on time and be for the full amount.


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## Wolf mom (Mar 8, 2005)

MoonRiver said:


> The sequester should have a minimal effect, unless it is politicized. Which of course it will be.
> 
> Let's say your yearly budget is $100. My understanding is that the sequester will mean that next year, your budget will be $105 instead of $107.
> 
> ...


I'm so tired of the fear mongering created by the lies that are being told by this president - The list of things that will be cut immediately just are not true unless it's done like letting illegals out of jail which was a political move - 

Man, I can't believe how gullible so many people are.


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## motdaugrnds (Jul 3, 2002)

I'm only concerned because we kept all the politicians in the same xxx office they were already in! I'ld like to toss them all out on their ear...even highschool students with any smarts at all could do a better job! Politics is just that...politics! It no longer has anything to do with the "...will...of '...we the people...'" Grrrrrrr

Whatever is done in Washington will have little effect on us at this time simply because my family is living off the land for the most part; and we have no interest in "keeping up with the Joneses"! We have healthier foods than what can be bought in the stores; and even better medicines...to a large degree...by making use of what can be extracted from wild plants growing here!


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## Laura Zone 5 (Jan 13, 2010)

Help a 'dumb' girl out.......

We are not "cutting" spending (meaning if we are spending 100.00 today, we will spend 75.00 instead).
We are 'slowing down' our spending (instead of spending 100 this year and 150 next year, we are slowing down and spending 125.00 next year).

Another dumb question:

I make 30,000.00 of income in 2013, and I budget so that I spend 27,000. on 'living' and save 3000.00. 
I make 30,000.00 of income in 2014, and I BLOW my budget (because I went on a binge shopping spree) and I not only blow my 3 k in savings, but NOW I have 5k in credit card debt.......
Logically, in 2015, I will have to cut back my budget to pay off the 5k, so that in 2016, I am back to my original formula (30k income, 27k outgo, 3 k savings). Meaning if I budget X for eating out and Y for vacation, I need to NOT eat out and use the X money to pay off debt, and NOT go on vacation and use the Y money towards debt?

Tell me why our government keeps going deeper in debt?
Is there nothing they can "cut" / get rid of?

ETA: I watched Wall Street: Money Never Sleeps (with michael douglas)......seems like cinema is closer to real life than we think!!


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## Deacon Mike (May 23, 2007)

Laura Zone 5 said:


> Help a 'dumb' girl out.......
> 
> We are not "cutting" spending


The sequester does cut spending


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## Laura Zone 5 (Jan 13, 2010)

Deacon Mike said:


> The sequester does cut spending


That is good news yes?
I mean, they are looking at all the 'programs' that are money furnaces and eliminating them?

Please forgive my ignorance, I have not watched or read ONE THING about this whole mess.


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## Deacon Mike (May 23, 2007)

Laura Zone 5 said:


> That is good news yes?
> I mean, they are looking at all the 'programs' that are money furnaces and eliminating them?
> 
> Please forgive my ignorance, I have not watched or read ONE THING about this whole mess.


No, it's not good news, it will damage the economy and slow growth. And the cuts are across the board, managers get no input on what to cut and what not to cut.


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## Wolf mom (Mar 8, 2005)

I think the Sequester cuts are a blip in the economic road for America - and another side issue. What we really need to be watching is the true costs of Obamacare and the far reaching huge impact/costs on everyone well past this administrations life. 

:Bawling:

And if you're not up to date on what's happening - Please read and learn - the truth is there and it WILL effect you!


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## TnAndy (Sep 15, 2005)

Wolf mom said:


> I'm so tired of the fear mongering created by the lies that are being told by this president - The list of things that will be cut immediately just are not true unless it's done like letting illegals out of jail which was a political move -
> 
> Man, I can't believe how gullible so many people are.


Amen.

Flip over to the website "Govt Debt to the Penny".

On March 1st, the federal debt was 80 billion more than on Feb 28th. *One day's worth of spending put us 80 billion more in the hole.* 
*
One dadgum day.*


They act like the world is coming to an end because it "might" cut 85 billion worth over the next year. About one day's worth of debt from 365.

It's ridiculous.


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## Deacon Mike (May 23, 2007)

TnAndy said:


> Amen.
> 
> Flip over to the website "Govt Debt to the Penny".
> 
> ...


No, that's not the case. Daily spending is not what changes the debt. What changes the debt is Treasury issuing and redeeming bills, note and bonds. On the 28th the Treasury had 6 auctions. They auctions 4 wk, 13 wk and 26 wk notes; 5 and 7 year bonds: and 30 year tips. That's why the debt changed.


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## Wolf mom (Mar 8, 2005)

But Deacon Mike, Isn't _our _Federal Reserve printing money to buy _our_ debt??
I heard that they were buying bonds in order to keep interest rates artificially low.

Please correct me if I'm wrong...but if it's true it sure sounds pretty cockeyed, although not new.


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## Deacon Mike (May 23, 2007)

Wolf mom said:


> But Deacon Mike, Isn't _our _Federal Reserve printing money to buy _our_ debt??
> I heard that they were buying bonds in order to keep interest rates artificially low.
> 
> Please correct me if I'm wrong...but if it's true it sure sounds pretty cockeyed, although not new.


Yes the FED is purchasing $85 billion/month of treasuries and mortgage backed securities. But I'm not really sure what your question is and how it relates to the sequester.


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## Laura Zone 5 (Jan 13, 2010)

Deacon Mike said:


> No, it's not good news, it will damage the economy and slow growth. And the cuts are across the board, managers get no input on what to cut and what not to cut.


Please forgive me, as I am profoundly ignorant of this topic, but I do wish to understand......

What is the problem?
How can we fix it?

And is what we are doing now (sequestor) making it worse, or better?


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## Nevada (Sep 9, 2004)

Laura Zone 5 said:


> What is the problem?
> How can we fix it?
> 
> And is what we are doing now (sequestor) making it worse, or better?


The problem is political. Congress will fix it. In the end things won't be better or worse because of the sequester, since it's all political theater.


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## Wolf mom (Mar 8, 2005)

You're right, DM - a thread drift.

I don't understand how our debt can change if we are buying our own debt. "Treasury issuing and redeeming..." from your post.

That sounds like accounting high jinks.


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## Nevada (Sep 9, 2004)

Wolf mom said:


> That sounds like accounting high jinks.


Just trying to get through a recession.


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## unregistered168043 (Sep 9, 2011)

My fear in regards to the sequester is that it doesn't go nearly far enough to do any good to the economy. They are NOT real cuts, they are reductions in the rate of increase. My fear is that the economy will go over the cliff due to massive spending, and the tiny, tinsy little insignificant sequester "cuts" will be blamed instead of the real culprit...too much government, and too much government spending.

I fear that even republicans have lost their way on this as I heard Mitt Romney respond 'it would have bad repercussions to take that much money OUT of the economy', when asked if he would cut a trillion off the budget. Government spending doesn't put money INTO the economy, it takes money OUT of the economy. When the government stops spending, they return resources back to the private sector. The government has to get the money from somewhere and wherever it is taking it undermines economic activity as government transfers those resources from the private sector, where they would be used productively, to the government where they are used unproductively.


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## newcolorado (Jan 31, 2012)

Now we have had this sequester are you seeing cuts? 

They talking of cutting medicare and hospital payments to Dr and hopital, cutting medicaid. Medicaid is not fair I have paid in all this these years. Then they just give medical care to some. And the talk is to cut the CPI they call it now. Other words figure the cost of living increase way different so be much lower. How they been figuring if you had say been buying steak to eat and you had to stop and buy hamburger instead at a cheaper cost you had no food increase. I would be glad for the hamburger to start with. (Although some steak is about no more than hamburger now. ) If they keep cutting payments to Drs, Drs will refuse to take medicare people. Some have. 

Still it all wait and see far as I can tell . I probably do not make sense anyway.


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## Nevada (Sep 9, 2004)

newcolorado said:


> If they keep cutting payments to Drs, Drs will refuse to take medicare people. Some have.


True, but you'll see less of that in the future. Doctors will need to design their business model for Medicare, Medicaid, and Obamacare. Those who don't will take a contract or salaried job at a clinic or hospital.


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