bod312

Quick google search shows State Farm's advertising budget is >$1B each of the last few years. They also doubled exec pay from 2019 to 2020 and continued increasing it after 2020.

From my experience and talking to others most of these insurance companies seem to low ball their customers for claims and then ultimately pay 2x-3x once lawyers get involved (for legitimate claims). There is a lot of insurance fraud but there are also plenty of legit claims that get denied because of their incompetence or greed.

They should be allowed to run the company how they see fit but I sure wouldn't be defending them. Insurance in general seems to be a ripe market for fraud from either side (the company or the customer) and in all types of insurance.

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meansonny

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In a thread with a lot of bad replies this may be the worst, congrats. Nothing you typed is relevant to the actual situation in the OP.

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Only 6% down from what he paid is a VERY good offer considering the moment you drive the car off lot it's a used vehicle and typically plummets the value of it.

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If you bought a $35k new Subaru, drove it off lot, put it through 300 miles and a tank of gas in 2 weeks and decided you didnt like it...if you took it back to the dealer and said buy it back what do you think they would offer you?

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So many people in this thread don't understand the difference between the trade in value of your car versus what it costs to buy a replacement vehicle. I agree if you try to trade in a barely used car you will take a hit but the trade in value is irrelevant. The insurance is there to get you a replacement vehicle not give you the trade in value of your vehicle.

At the end of the day, they should be giving you the money to replace your vehicle with the exact same vehicle (same year, trim, model, options, miles, etc.) This number is not the same as the trade in of your 3 month old vehicle.

As for the comments regarding the value of a car plummets after you drive it off the lot doesn't really apply. If you try to buy a 1 day old car that has 10 miles on it, you aren't going to get it for a big discount. It is also important to remember it should include taxes as well.

Why is that more realistic? If I buy an index fund it is following the index and dropping the losers and adding the winners just as the index.

Why would the assumption be that you buy a single snapshot of the SP500 and it never changes?

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You have to answer the question, what is a pension worth?

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So, using my example above, if you figure out how much money I'd have to have in the bank with a year in and year out average for that investment (probably 1.5% / yr) and treat the $5200 / month as a dividend, the amount needed to provide that would be about $4.16 M.

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This estimation is pretty far off from reality and you are grossly overestimating the value of the pension. It would be more accurate to say the pension is worth $1.56M and even that is likely an overestimation (although this can't be accurately known until after the fact at which point who cares because you are dead anyways).

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you can never touch the principal

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You cannot because you have no principal really. When the benefit ends there is no principal left. It is more accurate to say you are actually completely depleting the principal down to $0 at the exact moment you die.

The big benefit of the pension is the lack of volatility and relatively known outcome. The other scenario where you are using retirement (IRA, 401k, etc.) and other investment accounts has a much larger spread of outcomes. A more accurate representation would be using the "4% rule" and assuming your yearly benefit is equal to 4% of the starting balance and then adjusted up for inflation (thus 25x your annual benefit for estimating the value). If you have no COLA in the pension then it is actually even lower than 25x.

One thing most people don't discuss are the wide possibility of outcomes. There is even a lot of discussion regarding the 4% rule being too high but in reality it may be too high for the worst case scenario but is actually too low for the vast majority of outcomes. The trinity study and the updated studies after showed that using 4% of the starting balance and then adjusting for inflation yielded like a 96% success rate (did not run out of money). The median case was that the ending balance was almost 3x your initial balance and the best case was like 12x the initial balance (maybe more I forgot the exact number).

Of course in the non-pension portfolio if you experience the worst case then estimating the pension worth based on 25x the annual benefit is an under estimation of the value. If you experience the median case meaning after 30 or so years the balance actually grew to 3x the initial balance even after you withdraw 4% per year and increased it with inflation. In that scenario then 25x is a large over estimation of value. In the best case scenario where your balance after 30 years is 12x the starting balance then the pension value is actually quite miniscule.

The whole point is that even using 25x the pension is still extremely likely to be an over estimation of the pension value but probably a fair assessment based on the general rule of thumbs. This also doesn't even take into account the probability the pension fund dissolves and you lose your benefit. For a government pension that is extremely unlikely but for a corporate pension it sure isn't 0%. You would likely want to discount the pension value based on some factor based on the health of the pension plan and probability of losing or lessened benefits in the future.

What is also missing is for people who do not qualify for SS due to their pension. We typically don't calculate our SS value in net worth. So if you are comparing 2 scenarios and using 25x your pension benefit (and don't get SS) and in the other scenario you value your SS benefit at $0, then you are likely way over estimating the pension scenario comparatively.

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You can never touch the principal, but that is the goal with a retirement nest egg as you hopefully can take distributions without touching the principal, or if you do, hoping it outlast you.

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I don't know why the goal is to never touch the principal. That is absolutely not the goal for most people. The goal is to not run out of money and to live the life you want to live. Some people may not want to touch the principal but unless your whole goal is to make sure your heirs receive a large inheritance that should not be your goal.

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What’s funny about these answers is that a lot of y’all think “stock picking” and timing the market work. Too much data and research to the contrary.

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Exactly in general over the long run they aren't going to beat the market (they even tell you that is not their job/goal).

A comprehensive tax strategy can be very beneficial. The other big benefit is convincing clients not to panic sell which is really an based solely on the individual.

My one piece of advice is to actually calculate how much that 1% fee impacts your plan. It sounds small but in reality it can add up to millions. Run some retirement or financial calculators and see how changing the rate of return by 1% impacts the numbers over a 30+ year investing life and even greater if you keep the advisor in retirement.

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And before anyone says I'm insane... what I have proposed is basically a more accountable form of TOPS.

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Meh, I don't necessarily think it should just be free if you basically graduate. It would likely also cause such high demand for the state schools that admission standards would get so high potentially causing other perceived problems.

My idea:

- interest fixed at 0%
- all repayments are done based on income
- 0 repayments when below a certain income (say <$50k and increases with inflation)
- just need to find the right % for those over the limit for paying back
- upon death the student loan balance is pulled from the estate and whatever is above the total estate amount is forgiven

In this scenario when someone is not making good money they don't have to pay back anything and the balance doesn't grow. If they become successful later in life well they have to pay back that money they borrowed. It doesn't transfer to heirs so it is never an undue burden on their heirs. Could put an exclusion criteria to fund a funeral before estate pays back the student loans.

Ultimately if you are successful then the taxpayers should not be on the hook for paying for the tools you used to make good money. We also should not be crippling people who are just trying to get by (crippling their current life or digging their hole so big that when they get their life together they can't get out). It is hard for me to think a secretary making $50k who pays taxes should be paying for a Doctor to receive his education to start making $400k after residency.

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Well, the day will come when when run out of oil.

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When do you think that will be happening? The government might make it extremely prohibitive but in reality we are a long long way from running out of oil. We do need to come up with a new technology but this isn't like a dire emergency.

EVs with current technology will have a place for in town commuting. There might be limitations for longer travel if we cannot develop new battery technology or faster recharge/battery swap technology. I think by the time oil is gone there will be plenty of options. Those options will not be ready in time for our government's arbitrary prescribed dates of getting rid of ICE vehicles.

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I absolutely do not count RSUs in my net worth calculations. It's figurative cash until it vests.

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You aren't wrong but a similar thought process could be applied to normal stocks. They are just numbers on a screen until you actually sell. Stocks can be very volatile and thus your NW attributed to those stocks could be way less when you actually go to sell.

Similar thoughts could go into NW calculation with pre and post tax accounts. A 401k with pre-tax accounts would not actually be worth the same as a roth account with the same balance.

In reality any calculated net worth doesn't really matter except for an internal measuring stick. It is good to have an understanding of your overall financial picture to understand the health of your finances.

I for one am not doing all the math for discounting pre-tax dollars. The math is easy if the tax rate is known but we have no idea the tax rates years in the future. I agree the most accurate instantaneous net worth calculation would not value RSUs at 100% but to value them at 0% may be more accurate for your instantaneous net worth figure it isn't the most accurate representation of your financial picture.

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At present, credit card debt in the US is up to Almost 1 trillion. Alltime high.

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This also includes the balances that are paid off in full every single month. Since this includes that "debt" which most here wouldn't even consider debt, the 20% interest rate doesn't apply to that full $1T. It would be nice to see how much is paid every month to see the amount of credit card debt subject to interest.

This is also completely meaningless unless it is in inflation adjusted values. I would be curious to see this based on income values as well as based on net worth values. All of this would be better than just nominal amount on credit cards. Would also be curious based only on the population of those who have credit card debt since that appears to be the $6k claim as the total population or total adult population would be well below $6k. I would imagine that might skew higher than overall average income.