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Episode Transcript
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[kerry_h_pechter]: i’m accustomed to
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[ramsey_d_smith]: yeh yeah
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[kerry_h_pechter]: that
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[ramsey_d_smith]: yeah
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[paul_tyler]: all right high this is paul tyler
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[ramsey_d_smith]: yeah
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[paul_tyler]: and welcome to
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[ramsey_d_smith]: yeah
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[paul_tyler]: another episode of that annuity show
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[ramsey_d_smith]: a
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[paul_tyler]: ramsey good to see you
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[ramsey_d_smith]: a pleasure
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[paul_tyler]: and we’ve got another returning guest today
do you want to do the intro
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[ramsey_d_smith]: absolutely we’re delighted to have cary petto
rejoin us carry for those of you don’t
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[ramsey_d_smith]: know and i imagine like anybody was
on this call is probably either at least
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[ramsey_d_smith]: heard of carry or s publication the
retirement income journal a very important voice in
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[ramsey_d_smith]: the space a thoughtful and a critical
voice in in the life insurance space and
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[ramsey_d_smith]: we’re really lucky to have him here
a m there are lots of there are
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[ramsey_d_smith]: lots of topics in the retirement space
that that that cary can speak to and
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[ramsey_d_smith]: today we’re going to focus on social
security which is um i think we can
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[ramsey_d_smith]: never talk too much about it and
care brings a very unique and passionate perspective
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[ramsey_d_smith]: to it so with that cary tell
us
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[kerry_h_pechter]: oh
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[ramsey_d_smith]: tell us a little bit about the
retirement income journal its objectives your mission and
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[ramsey_d_smith]: then after that we can really start
hitting on what you think needs to change
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[ramsey_d_smith]: with respect to the discussion on social
security oh
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[kerry_h_pechter]: sure sure yeah i’m founder editor and
publisher
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[ramsey_d_smith]: oh
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[kerry_h_pechter]: of the retirement income journal it was
created in two thousand nine right in at
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[kerry_h_pechter]: the beginning of the recovery from the
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[ramsey_d_smith]: yeah
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[kerry_h_pechter]: financial crisis
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[ramsey_d_smith]: oh
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[kerry_h_pechter]: when the financial crisis bottomed and
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[ramsey_d_smith]: oh
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[kerry_h_pechter]: i set out to cover everything
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[ramsey_d_smith]: yeah
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[kerry_h_pechter]: involved with retirement income and that would
be everything from personal retirement income planning to
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[ramsey_d_smith]: ye
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[kerry_h_pechter]: all the products involved in that the
annuity products as well as
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[ramsey_d_smith]: ah
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[kerry_h_pechter]: bond ladders and and deferred annuities and
uh
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[ramsey_d_smith]: yeah
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[kerry_h_pechter]: and also not so much to find
benefit plans but the four o one case
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[kerry_h_pechter]: space the social security space the and
then
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[ramsey_d_smith]: ah
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[kerry_h_pechter]: comparative systems around the world to our
retirement system for the sake of comparison so
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[kerry_h_pechter]: i’ve sort of brought
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[ramsey_d_smith]: no
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[kerry_h_pechter]: in whatever seem to be interesting
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[ramsey_d_smith]: yeah
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[kerry_h_pechter]: at the time and that
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[ramsey_d_smith]: yeah
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[kerry_h_pechter]: i
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[ramsey_d_smith]: oh
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[kerry_h_pechter]: hoped people would give a wider perspective
because i thought that that the
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[ramsey_d_smith]: yeah
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[kerry_h_pechter]: people should people are buried pretty much
in their silos their sort of their gopher
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[kerry_h_pechter]: holes and and the best best thing
i could do to
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[ramsey_d_smith]: yeah
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[kerry_h_pechter]: to help them would be to give
them a kind of cross
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[ramsey_d_smith]: yeah
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[kerry_h_pechter]: silos look
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[paul_tyler]: all right
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[ramsey_d_smith]: well
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[kerry_h_pechter]: ah
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[paul_tyler]: i will
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[ramsey_d_smith]: that’s fantastic go ahead go ahead paul
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[paul_tyler]: no i’ll just roll a ball right
down the center
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[ramsey_d_smith]: m
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[paul_tyler]: lane here challenge the
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[ramsey_d_smith]: oh
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[paul_tyler]: question challenge the answer so
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[ramsey_d_smith]: yeah
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[kerry_h_pechter]: yeah
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[paul_tyler]: you know look i’ve got
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[ramsey_d_smith]: yeah
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[paul_tyler]: i’m not that far away from return
but it’s still got away as carry i
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[paul_tyler]: don’t
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[ramsey_d_smith]: oh
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[kerry_h_pechter]: yeah
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[paul_tyler]: think social security is going to be
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[ramsey_d_smith]: oh
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[paul_tyler]: there that safety net that
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[ramsey_d_smith]: oh
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[paul_tyler]: insurance program started
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[ramsey_d_smith]: oh
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[paul_tyler]: by the government it’s going broke
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[ramsey_d_smith]: m
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[paul_tyler]: what what
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[kerry_h_pechter]: m
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[paul_tyler]: help
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[ramsey_d_smith]: oh
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[paul_tyler]: how should i really be thinking about
this how should be framing
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[ramsey_d_smith]: yeah
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[paul_tyler]: this question what’s the real
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[ramsey_d_smith]: ah
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[paul_tyler]: what’s real what’s not
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[kerry_h_pechter]: well we have to understand that that
social security is important to everyone because you
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[kerry_h_pechter]: have to remember that even people who
whose main interest is in investing in the
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[kerry_h_pechter]: risky markets that that social
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[ramsey_d_smith]: yeah
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[kerry_h_pechter]: security acts as kind of a ballast
in their
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[ramsey_d_smith]: oh
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[kerry_h_pechter]: retirement income so that if sort
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[ramsey_d_smith]: yeah
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[kerry_h_pechter]: of you’re professional getting you know somewhere
or a couple getting somewhere between forty and
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[ramsey_d_smith]: oh
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[kerry_h_pechter]: eighty thousand dollars a year social
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[ramsey_d_smith]: oh
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[kerry_h_pechter]: security minus taxes and meta care
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[ramsey_d_smith]: yes
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[kerry_h_pechter]: that you know that’s giving you that’s
opening up a big
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[ramsey_d_smith]: he
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[kerry_h_pechter]: space for you to
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[ramsey_d_smith]: oh
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[kerry_h_pechter]: invest that much more money in equities
and not have to worry so you have
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[kerry_h_pechter]: to think of it in the context
of the entire uh uh everybody needs to
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[kerry_h_pechter]: think about
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[ramsey_d_smith]: yeah
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[kerry_h_pechter]: social security it’s not as though the
wealthy can can say
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[ramsey_d_smith]: oh
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[kerry_h_pechter]: i mean perhaps the very
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[ramsey_d_smith]: yeah
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[kerry_h_pechter]: very wealthy can say but
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[ramsey_d_smith]: yeah
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[kerry_h_pechter]: even
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[ramsey_d_smith]: yeah
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[kerry_h_pechter]: the affluent need to think about how
it works as a element in their portfolio
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[kerry_h_pechter]: so that’s that’s the way
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[paul_tyler]: yeah
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[kerry_h_pechter]: of establishing a larger audience for this
but but as far as the i wrote
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[kerry_h_pechter]: i’m called
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[paul_tyler]: oh
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[kerry_h_pechter]: social securities problems are more political than
financial
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[ramsey_d_smith]: yeah
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[kerry_h_pechter]: and i’m going to explain
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[ramsey_d_smith]: yeah
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[kerry_h_pechter]: basically why that’s true and also why
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[ramsey_d_smith]: yeah
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[kerry_h_pechter]: the financial the financing problems that have
are are easily are not as scary as
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[kerry_h_pechter]: they’ve been made out to be the
first thing i have t do is to
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[kerry_h_pechter]: acknowledge the economist
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[ramsey_d_smith]: m
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[kerry_h_pechter]: jeff brown at the university of illinois
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[ramsey_d_smith]: yeah
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[kerry_h_pechter]: for for help all of us in
the annuity industry see that the product and
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[kerry_h_pechter]: annuity and social security is an annuity
that the that the
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[ramsey_d_smith]: yeah
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[kerry_h_pechter]: product is insurance
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[ramsey_d_smith]: oh
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[kerry_h_pechter]: it’s not an investment and so that
and i say
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[ramsey_d_smith]: yah
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[kerry_h_pechter]: that so when people say to
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[ramsey_d_smith]: ah
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[kerry_h_pechter]: me you know i can invest my
own money better than the ah government can
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[kerry_h_pechter]: or an advisor tells me that they’ve
done the math and they’ve shown that anybody
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[kerry_h_pechter]: who’s making more than eighty thousand dollars
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[paul_tyler]: ah
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[kerry_h_pechter]: a year can do better
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[ramsey_d_smith]: m
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[kerry_h_pechter]: with the investments
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[ramsey_d_smith]: oh
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[kerry_h_pechter]: than they can over their lifetime with
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[ramsey_d_smith]: m
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[kerry_h_pechter]: social security i say well and in
you know in recalling jeff brown observation that
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[kerry_h_pechter]: it’s not an investment it’s insurance that
social
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[ramsey_d_smith]: yeah
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[kerry_h_pechter]: security is yes you can
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[ramsey_d_smith]: oh
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[kerry_h_pechter]: invest your own money better than
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[ramsey_d_smith]: yeah
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[kerry_h_pechter]: social security can the government
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[ramsey_d_smith]: m
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[kerry_h_pechter]: can but you can’t insure yourself against
the things that social security for insurance you
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[kerry_h_pechter]: need large numbers
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[ramsey_d_smith]: m
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[kerry_h_pechter]: and insurance s based on the law
of large numbers the risks and the costs
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[kerry_h_pechter]: are
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[ramsey_d_smith]: oh
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[kerry_h_pechter]: spread out over not we three
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[ramsey_d_smith]: a
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[kerry_h_pechter]: hundred you
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[ramsey_d_smith]: fish
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[kerry_h_pechter]: know two hundred million workers but also
the
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[ramsey_d_smith]: ye
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[kerry_h_pechter]: you know the long term
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[ramsey_d_smith]: yes
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[kerry_h_pechter]: infinite lifetime of the united
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[ramsey_d_smith]: yeah
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[kerry_h_pechter]: states more or less and so you
have an insure
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[ramsey_d_smith]: yeah
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[kerry_h_pechter]: you’re
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[ramsey_d_smith]: oh
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[kerry_h_pechter]: having insurance product and this insurance product
not only
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[ramsey_d_smith]: yeah much
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[kerry_h_pechter]: provides you with a return
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[paul_tyler]: yeah
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[kerry_h_pechter]: in fact return
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[ramsey_d_smith]: thank you
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[kerry_h_pechter]: is the wrong way to think about
what
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[ramsey_d_smith]: i
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[kerry_h_pechter]: you get from self security because you’re
not they get an income you get you
204
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[kerry_h_pechter]: get insurance from longevity risk the risk
of outliving your income you get insurance from
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[kerry_h_pechter]: market risk the risk of retiring in
it down turn
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[ramsey_d_smith]: oh
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[kerry_h_pechter]: also called sequence risk
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[ramsey_d_smith]: oh
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[kerry_h_pechter]: the you’re protected from inflation risk
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[ramsey_d_smith]: yeah
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[kerry_h_pechter]: and
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[ramsey_d_smith]: oh
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[kerry_h_pechter]: and a couple of other risks and
so to not under to think of social
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[kerry_h_pechter]: security in terms of average internal rate
of return is ex there the same
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00:07:02,736 –> 00:07:02,977
[ramsey_d_smith]: yes
216
00:07:02,897 –> 00:07:06,243
[kerry_h_pechter]: making the same mistake is when people
look at an income annuity
217
00:07:05,976 –> 00:07:07,086
[ramsey_d_smith]: yeah
218
00:07:06,443 –> 00:07:07,044
[kerry_h_pechter]: and try to
219
00:07:06,969 –> 00:07:06,990
[paul_tyler]: m
220
00:07:07,665 –> 00:07:08,226
[kerry_h_pechter]: compare
221
00:07:07,716 –> 00:07:07,939
[ramsey_d_smith]: yeah
222
00:07:08,647 –> 00:07:09,228
[kerry_h_pechter]: the internal
223
00:07:09,186 –> 00:07:09,954
[ramsey_d_smith]: yeah
224
00:07:09,288 –> 00:07:11,471
[kerry_h_pechter]: rate of return on average of the
income
225
00:07:11,406 –> 00:07:11,867
[ramsey_d_smith]: oh
226
00:07:11,531 –> 00:07:17,722
[kerry_h_pechter]: annuity to an investment and to the
average long term return to the markets so
227
00:07:18,082 –> 00:07:26,236
[kerry_h_pechter]: so we’re mixing apples and origins and
somehow the narrative about social security has alling
228
00:07:26,296 –> 00:07:36,434
[kerry_h_pechter]: into the hands of the investment folks
which is not altogether surprising but but it’s
229
00:07:36,734 –> 00:07:36,874
[kerry_h_pechter]: it’s
230
00:07:36,996 –> 00:07:37,198
[ramsey_d_smith]: yeah
231
00:07:37,295 –> 00:07:38,878
[kerry_h_pechter]: so it’s been miss it’s mis
232
00:07:38,826 –> 00:07:39,106
[ramsey_d_smith]: oh
233
00:07:38,978 –> 00:07:42,063
[kerry_h_pechter]: characterized it’s the ugly duck in rather
234
00:07:42,366 –> 00:07:42,628
[ramsey_d_smith]: yeah
235
00:07:42,504 –> 00:07:43,345
[kerry_h_pechter]: its portrayed as the
236
00:07:43,506 –> 00:07:43,806
[ramsey_d_smith]: oh
237
00:07:43,706 –> 00:07:48,575
[kerry_h_pechter]: duckling rather than the swan that it
is now that’s i’ve said a lot there
238
00:07:48,755 –> 00:07:52,542
[kerry_h_pechter]: and maybe i can if you still
have some questions about it maybe i can
239
00:07:52,926 –> 00:07:53,646
[ramsey_d_smith]: yeah
240
00:07:53,003 –> 00:07:53,765
[kerry_h_pechter]: unpack it a little
241
00:07:54,705 –> 00:07:58,988
[ramsey_d_smith]: m no i think that’s very clear
and
242
00:07:59,118 –> 00:07:59,261
[kerry_h_pechter]: yeah
243
00:07:59,268 –> 00:07:59,489
[ramsey_d_smith]: you know
244
00:07:59,910 –> 00:08:00,178
[paul_tyler]: oh
245
00:07:59,910 –> 00:08:06,581
[ramsey_d_smith]: i will say personally i agree with
everything you said about the the value proposition
246
00:08:06,921 –> 00:08:09,465
[ramsey_d_smith]: of social security v c v just
about any oth
247
00:08:10,311 –> 00:08:10,394
[kerry_h_pechter]: ah
248
00:08:10,327 –> 00:08:14,013
[ramsey_d_smith]: uh potential source for all the various
reasons that you mentioned now um
249
00:08:14,526 –> 00:08:15,126
[kerry_h_pechter]: oh
250
00:08:15,215 –> 00:08:18,300
[ramsey_d_smith]: one of the one of the the
elements of the
251
00:08:18,369 –> 00:08:18,390
[paul_tyler]: m
252
00:08:18,380 –> 00:08:22,748
[ramsey_d_smith]: current dialogue in the market about social
security as well yeah fine even if i
253
00:08:22,808 –> 00:08:23,570
[ramsey_d_smith]: agree it’s great
254
00:08:25,086 –> 00:08:25,327
[kerry_h_pechter]: yeah
255
00:08:26,716 –> 00:08:33,086
[ramsey_d_smith]: the average consumer is hearing frequently that
that it’s not going to be around i
256
00:08:33,186 –> 00:08:37,213
[ramsey_d_smith]: spoke to i spoke to somebody ho
was doing some work around my house recently
257
00:08:37,313 –> 00:08:38,175
[ramsey_d_smith]: and who mentioned
258
00:08:38,211 –> 00:08:38,374
[paul_tyler]: yeah
259
00:08:38,235 –> 00:08:41,059
[ramsey_d_smith]: that you know that she had just
started taking social security she was sixty two
260
00:08:41,100 –> 00:08:44,966
[ramsey_d_smith]: years old and i said well why
did you do that i mean borrowing a
261
00:08:45,006 –> 00:08:49,013
[ramsey_d_smith]: health reason i said you should do
everything you can she was still employed in
262
00:08:49,073 –> 00:08:51,998
[ramsey_d_smith]: some way you should do everything you
can do hanging on to your seventy and
263
00:08:52,058 –> 00:08:56,407
[ramsey_d_smith]: one of the first things she said
she was concerned about it not being around
264
00:08:56,487 –> 00:09:02,764
[ramsey_d_smith]: for her and she’s only she’s already
sixty two m so how do you think
265
00:09:02,804 –> 00:09:08,175
[ramsey_d_smith]: that perception was created and you know
what do you think we can do to
266
00:09:08,496 –> 00:09:14,263
[ramsey_d_smith]: to alleviate that perception to the people
actually use this this amazing benefit
267
00:09:14,010 –> 00:09:14,252
[paul_tyler]: yeah
268
00:09:14,404 –> 00:09:15,588
[ramsey_d_smith]: more optimately
269
00:09:17,326 –> 00:09:20,472
[kerry_h_pechter]: well it’s interesting that you know people
believe what they hear over
270
00:09:20,436 –> 00:09:20,718
[ramsey_d_smith]: oh
271
00:09:21,153 –> 00:09:24,139
[kerry_h_pechter]: the back fence more readily than they
believe say
272
00:09:24,051 –> 00:09:24,191
[ramsey_d_smith]: yeah
273
00:09:24,599 –> 00:09:27,365
[kerry_h_pechter]: steve goss the chief actuary of social
security
274
00:09:28,446 –> 00:09:28,707
[ramsey_d_smith]: oh
275
00:09:28,726 –> 00:09:32,472
[kerry_h_pechter]: who who’s not as far as i
know shouldn’t speak for him but from the
276
00:09:32,533 –> 00:09:33,574
[kerry_h_pechter]: time that i’ve talked to him
277
00:09:33,746 –> 00:09:33,988
[ramsey_d_smith]: yeah
278
00:09:34,436 –> 00:09:36,018
[kerry_h_pechter]: he’s not particularly concerned
279
00:09:35,616 –> 00:09:35,897
[ramsey_d_smith]: yeah
280
00:09:35,880 –> 00:09:36,484
[paul_tyler]: oh
281
00:09:36,539 –> 00:09:38,122
[kerry_h_pechter]: about so security but her
282
00:09:38,215 –> 00:09:38,457
[paul_tyler]: yes
283
00:09:38,543 –> 00:09:45,634
[kerry_h_pechter]: her she’s where her fear comes from
of course is the ms characterization
284
00:09:45,096 –> 00:09:45,498
[ramsey_d_smith]: oh
285
00:09:45,694 –> 00:09:49,441
[kerry_h_pechter]: is that she’s read but the mis
characterizations are rooted in this
286
00:09:49,296 –> 00:09:49,660
[ramsey_d_smith]: oh
287
00:09:49,601 –> 00:09:54,433
[kerry_h_pechter]: idea that the social security system is
going to he broke in twenty thirty four
288
00:09:55,416 –> 00:09:55,577
[kerry_h_pechter]: and
289
00:09:56,316 –> 00:09:56,537
[ramsey_d_smith]: yeah
290
00:09:56,982 –> 00:09:59,626
[kerry_h_pechter]: that’s ah complete
291
00:09:59,295 –> 00:10:00,576
[ramsey_d_smith]: yeah yeah
292
00:09:59,666 –> 00:10:00,668
[kerry_h_pechter]: mischaracterization
293
00:10:00,666 –> 00:10:00,686
[ramsey_d_smith]: m
294
00:10:00,870 –> 00:10:02,010
[paul_tyler]: yeah
295
00:10:01,369 –> 00:10:07,099
[kerry_h_pechter]: the let’s say that you were buying
a health insurance and the demographics of your
296
00:10:07,239 –> 00:10:15,633
[kerry_h_pechter]: pool changed and the uh insurance company
was no longer to maintain the same level
297
00:10:15,974 –> 00:10:17,877
[kerry_h_pechter]: of protections
298
00:10:17,376 –> 00:10:17,798
[ramsey_d_smith]: oh
299
00:10:18,358 –> 00:10:19,059
[kerry_h_pechter]: unless you went to
300
00:10:19,116 –> 00:10:19,377
[ramsey_d_smith]: yeah
301
00:10:19,139 –> 00:10:20,982
[kerry_h_pechter]: a cheaper unless same expense
302
00:10:20,646 –> 00:10:20,950
[ramsey_d_smith]: oh
303
00:10:21,122 –> 00:10:22,504
[kerry_h_pechter]: and level so you would have
304
00:10:22,446 –> 00:10:22,747
[ramsey_d_smith]: yeah
305
00:10:22,525 –> 00:10:24,267
[kerry_h_pechter]: to either pay higher premium to get
306
00:10:24,180 –> 00:10:24,382
[paul_tyler]: oh
307
00:10:24,648 –> 00:10:27,613
[kerry_h_pechter]: the coverage that you’re getting now or
you would have to
308
00:10:27,765 –> 00:10:27,786
[ramsey_d_smith]: m
309
00:10:28,755 –> 00:10:29,596
[kerry_h_pechter]: take lower benefits
310
00:10:29,256 –> 00:10:29,600
[ramsey_d_smith]: my
311
00:10:30,240 –> 00:10:31,350
[paul_tyler]: yeah
312
00:10:30,398 –> 00:10:33,944
[kerry_h_pechter]: and and the i guess implied there
would be that
313
00:10:33,756 –> 00:10:35,076
[ramsey_d_smith]: yeah
314
00:10:34,304 –> 00:10:38,638
[kerry_h_pechter]: well if the insurance and he does
not either raise you know if you
315
00:10:38,796 –> 00:10:39,606
[ramsey_d_smith]: yeah
316
00:10:39,199 –> 00:10:40,621
[kerry_h_pechter]: do not choose either higher
317
00:10:40,416 –> 00:10:41,256
[ramsey_d_smith]: yeah
318
00:10:40,962 –> 00:10:42,544
[kerry_h_pechter]: premiums or lower benefits
319
00:10:42,186 –> 00:10:42,386
[ramsey_d_smith]: yeah
320
00:10:43,186 –> 00:10:47,673
[kerry_h_pechter]: the insurance company will in effect go
out of business if that’s its only business
321
00:10:47,796 –> 00:10:48,062
[ramsey_d_smith]: yeah
322
00:10:48,414 –> 00:10:52,020
[kerry_h_pechter]: and so so but of course nobody
ever thinks
323
00:10:51,966 –> 00:10:52,288
[ramsey_d_smith]: yeah
324
00:10:52,381 –> 00:10:56,408
[kerry_h_pechter]: when they get a rate increase from
their insurance company or even from their electrical
325
00:10:56,488 –> 00:10:57,469
[kerry_h_pechter]: company they
326
00:10:57,360 –> 00:10:57,601
[paul_tyler]: yeah
327
00:10:57,549 –> 00:11:01,476
[kerry_h_pechter]: may not like it but it does
not mean that the insurance come he is
328
00:11:01,556 –> 00:11:02,558
[kerry_h_pechter]: going to go broke
329
00:11:02,826 –> 00:11:03,007
[ramsey_d_smith]: yeah
330
00:11:03,018 –> 00:11:08,497
[kerry_h_pechter]: in the insurentin the united states of
america is the biggest safest richest
331
00:11:09,126 –> 00:11:10,446
[ramsey_d_smith]: yeah
332
00:11:09,178 –> 00:11:12,884
[kerry_h_pechter]: most stable insurance company that has ever
existed in the
333
00:11:12,936 –> 00:11:13,836
[ramsey_d_smith]: oh
334
00:11:12,944 –> 00:11:18,794
[kerry_h_pechter]: history of the world and so to
say that social security is going to go
335
00:11:18,974 –> 00:11:19,896
[kerry_h_pechter]: broke is like saying
336
00:11:20,265 –> 00:11:20,286
[ramsey_d_smith]: m
337
00:11:20,517 –> 00:11:24,383
[kerry_h_pechter]: that the united states is going to
go broke and and unless you want to
338
00:11:24,423 –> 00:11:27,428
[kerry_h_pechter]: break in here i’ll i’ll go on
with with
339
00:11:27,876 –> 00:11:28,081
[ramsey_d_smith]: yeah
340
00:11:28,410 –> 00:11:31,034
[kerry_h_pechter]: i don’t want to go too much
into the history of social security and the
341
00:11:31,074 –> 00:11:34,358
[kerry_h_pechter]: political reasons why it was set up
the
342
00:11:34,275 –> 00:11:34,296
[ramsey_d_smith]: m
343
00:11:34,418 –> 00:11:36,940
[kerry_h_pechter]: way it was in order to look
something
344
00:11:36,606 –> 00:11:36,992
[ramsey_d_smith]: oh
345
00:11:37,081 –> 00:11:41,285
[kerry_h_pechter]: like a defined benefit pension and the
defined benefit pension can
346
00:11:41,046 –> 00:11:41,247
[ramsey_d_smith]: yeah
347
00:11:42,266 –> 00:11:42,346
[kerry_h_pechter]: you
348
00:11:42,276 –> 00:11:43,305
[ramsey_d_smith]: yeah
349
00:11:42,406 –> 00:11:46,330
[kerry_h_pechter]: know can default on its full
350
00:11:46,335 –> 00:11:46,356
[ramsey_d_smith]: m
351
00:11:46,410 –> 00:11:50,634
[kerry_h_pechter]: benefits but the social security system is
not and there is not
352
00:11:50,676 –> 00:11:50,976
[ramsey_d_smith]: oh
353
00:11:50,834 –> 00:11:51,515
[kerry_h_pechter]: going to be
354
00:11:51,999 –> 00:11:52,179
[ramsey_d_smith]: yeah
355
00:11:52,616 –> 00:11:56,186
[kerry_h_pechter]: a crisis unless you call the like
there’s goin to be no more of a
356
00:11:56,246 –> 00:11:57,891
[kerry_h_pechter]: crisis with so security
357
00:11:58,200 –> 00:11:58,444
[paul_tyler]: oh
358
00:11:58,553 –> 00:12:01,779
[kerry_h_pechter]: in in twenty thirty four then there
was going to be
359
00:12:01,746 –> 00:12:02,826
[ramsey_d_smith]: yeah
360
00:12:02,140 –> 00:12:02,961
[kerry_h_pechter]: a default
361
00:12:02,886 –> 00:12:03,048
[ramsey_d_smith]: oh
362
00:12:03,161 –> 00:12:05,565
[kerry_h_pechter]: of the united states debt in two
thousand eleven
363
00:12:05,877 –> 00:12:06,039
[ramsey_d_smith]: yeah
364
00:12:06,287 –> 00:12:07,308
[kerry_h_pechter]: when we had the
365
00:12:07,383 –> 00:12:07,545
[ramsey_d_smith]: yeah
366
00:12:07,469 –> 00:12:08,230
[kerry_h_pechter]: quote you know
367
00:12:08,346 –> 00:12:08,527
[ramsey_d_smith]: that’s
368
00:12:09,572 –> 00:12:10,654
[kerry_h_pechter]: temper tantrum over the
369
00:12:10,806 –> 00:12:11,066
[ramsey_d_smith]: oh
370
00:12:11,155 –> 00:12:13,479
[kerry_h_pechter]: debt the debt limit yet
371
00:12:13,355 –> 00:12:13,927
[ramsey_d_smith]: yeah oh
372
00:12:13,599 –> 00:12:14,781
[kerry_h_pechter]: we as we have debt limits
373
00:12:14,640 –> 00:12:15,360
[paul_tyler]: yeah
374
00:12:14,841 –> 00:12:21,332
[kerry_h_pechter]: they come and go and so securities
debt limit so to speak will come and
375
00:12:21,392 –> 00:12:28,023
[kerry_h_pechter]: go and but we don’t even we
won’t even necessarily notice it unless people make
376
00:12:28,063 –> 00:12:32,170
[kerry_h_pechter]: a big deal out of it because
social security is already coming
377
00:12:31,866 –> 00:12:32,329
[ramsey_d_smith]: oh
378
00:12:32,370 –> 00:12:35,295
[kerry_h_pechter]: out of part of socialsecurity benefits are
already
379
00:12:35,130 –> 00:12:35,212
[ramsey_d_smith]: ah
380
00:12:35,475 –> 00:12:35,796
[kerry_h_pechter]: kind ing
381
00:12:35,766 –> 00:12:36,027
[ramsey_d_smith]: oh
382
00:12:36,057 –> 00:12:39,179
[kerry_h_pechter]: out of the general fund of the
united states
383
00:12:39,496 –> 00:12:39,777
[ramsey_d_smith]: right so
384
00:12:39,802 –> 00:12:40,224
[kerry_h_pechter]: neiborhood
385
00:12:39,817 –> 00:12:39,957
[ramsey_d_smith]: let’s
386
00:12:39,960 –> 00:12:40,162
[paul_tyler]: yeah
387
00:12:40,117 –> 00:12:41,379
[ramsey_d_smith]: let’s let’s
388
00:12:41,538 –> 00:12:41,658
[kerry_h_pechter]: so
389
00:12:41,619 –> 00:12:41,780
[ramsey_d_smith]: let’s
390
00:12:42,200 –> 00:12:42,361
[kerry_h_pechter]: there
391
00:12:42,321 –> 00:12:42,421
[ramsey_d_smith]: can
392
00:12:42,421 –> 00:12:42,562
[kerry_h_pechter]: was
393
00:12:42,461 –> 00:12:42,841
[ramsey_d_smith]: we break it
394
00:12:42,863 –> 00:12:42,963
[kerry_h_pechter]: no
395
00:12:42,881 –> 00:12:43,442
[ramsey_d_smith]: down a little bit
396
00:12:44,308 –> 00:12:46,096
[kerry_h_pechter]: okay well let’s we need to break
that down
397
00:12:46,026 –> 00:12:46,366
[ramsey_d_smith]: yeah
398
00:12:46,216 –> 00:12:47,803
[kerry_h_pechter]: go ahead and maybe you can me
399
00:12:47,909 –> 00:12:51,535
[ramsey_d_smith]: i want to yeah so let’s because
there’s there’s a lot
400
00:12:51,450 –> 00:12:52,830
[paul_tyler]: yeah
401
00:12:51,615 –> 00:12:54,019
[ramsey_d_smith]: of here’s a lot of important elements
to what you’re
402
00:12:53,940 –> 00:12:53,960
[paul_tyler]: m
403
00:12:54,059 –> 00:12:58,486
[ramsey_d_smith]: saying so let’s first start with this
notion of the of the twenty thirty four
404
00:12:58,526 –> 00:13:03,575
[ramsey_d_smith]: dat moves around at twenty four five
every i don’t know periodically it gets updated
405
00:13:04,657 –> 00:13:07,642
[ramsey_d_smith]: but one is just to be clear
on what happens on that date it’s not
406
00:13:07,702 –> 00:13:12,009
[ramsey_d_smith]: that it’s not that social security does
not enough in flows to pay the outflows
407
00:13:12,670 –> 00:13:16,917
[ramsey_d_smith]: it just to pay any outflows is
just that the inflows
408
00:13:16,560 –> 00:13:16,781
[paul_tyler]: oh
409
00:13:16,957 –> 00:13:20,102
[ramsey_d_smith]: will only equal only equal eighty percent
of the outflows
410
00:13:20,100 –> 00:13:20,120
[paul_tyler]: m
411
00:13:20,162 –> 00:13:20,904
[ramsey_d_smith]: and the trust fund
412
00:13:21,356 –> 00:13:21,538
[kerry_h_pechter]: right
413
00:13:21,605 –> 00:13:23,933
[ramsey_d_smith]: the trust won’t be able to make
up the difference is that correct
414
00:13:24,849 –> 00:13:26,117
[kerry_h_pechter]: uh yes i think we’re
415
00:13:26,202 –> 00:13:26,262
[ramsey_d_smith]: is
416
00:13:26,278 –> 00:13:26,660
[kerry_h_pechter]: already
417
00:13:26,343 –> 00:13:26,384
[ramsey_d_smith]: it
418
00:13:27,926 –> 00:13:28,447
[kerry_h_pechter]: out of the
419
00:13:28,509 –> 00:13:28,530
[paul_tyler]: m
420
00:13:28,527 –> 00:13:33,095
[kerry_h_pechter]: interest on the trust fund or the
trust fund is already so
421
00:13:33,156 –> 00:13:33,378
[ramsey_d_smith]: yeah
422
00:13:33,175 –> 00:13:35,259
[kerry_h_pechter]: what is happening now is that the
general
423
00:13:35,014 –> 00:13:35,196
[ramsey_d_smith]: yeah
424
00:13:35,379 –> 00:13:35,680
[kerry_h_pechter]: fund
425
00:13:35,556 –> 00:13:35,817
[ramsey_d_smith]: oh
426
00:13:36,141 –> 00:13:38,325
[kerry_h_pechter]: is redeeming trust fund assets
427
00:13:38,976 –> 00:13:40,056
[ramsey_d_smith]: yeah
428
00:13:39,436 –> 00:13:41,119
[kerry_h_pechter]: in other words the government
429
00:13:41,137 –> 00:13:41,318
[ramsey_d_smith]: right
430
00:13:41,399 –> 00:13:44,244
[kerry_h_pechter]: is paying to redeem those it’s giving
431
00:13:44,079 –> 00:13:44,181
[ramsey_d_smith]: ah
432
00:13:44,344 –> 00:13:45,686
[kerry_h_pechter]: social security money from
433
00:13:45,756 –> 00:13:46,686
[ramsey_d_smith]: oh
434
00:13:45,767 –> 00:13:53,240
[kerry_h_pechter]: the general fund technically to redeem social
securities trust fund but it doesn’t really matter
435
00:13:53,280 –> 00:13:57,347
[kerry_h_pechter]: whether it’s redeeming the trust fund or
not the important thing is to know is
436
00:13:57,447 –> 00:14:03,000
[kerry_h_pechter]: that the money started coming out of
the common of the general fund of the
437
00:14:03,020 –> 00:14:09,277
[kerry_h_pechter]: united states and no one noticed it
it was a purely
438
00:14:09,413 –> 00:14:09,514
[paul_tyler]: ah
439
00:14:09,898 –> 00:14:10,499
[kerry_h_pechter]: technical
440
00:14:10,236 –> 00:14:10,539
[ramsey_d_smith]: oh
441
00:14:10,760 –> 00:14:16,550
[kerry_h_pechter]: event there was no crisis and this
is going to go on until twenty thirty
442
00:14:16,650 –> 00:14:19,314
[kerry_h_pechter]: four whereas in twenty thirty four there
will be a
443
00:14:19,485 –> 00:14:19,506
[ramsey_d_smith]: m
444
00:14:19,494 –> 00:14:20,476
[kerry_h_pechter]: technical limit
445
00:14:20,616 –> 00:14:20,897
[ramsey_d_smith]: oh
446
00:14:20,957 –> 00:14:22,139
[kerry_h_pechter]: to the amount of money
447
00:14:22,326 –> 00:14:22,668
[ramsey_d_smith]: oh
448
00:14:22,680 –> 00:14:24,543
[kerry_h_pechter]: that the general fund can continue
449
00:14:24,585 –> 00:14:24,606
[ramsey_d_smith]: m
450
00:14:24,623 –> 00:14:27,327
[kerry_h_pechter]: to supply to social security because
451
00:14:27,156 –> 00:14:27,176
[ramsey_d_smith]: m
452
00:14:27,648 –> 00:14:28,810
[kerry_h_pechter]: of a technical
453
00:14:28,536 –> 00:14:28,840
[ramsey_d_smith]: oh
454
00:14:29,431 –> 00:14:35,661
[kerry_h_pechter]: law there is nothing in the world
to stop the united states general fund from
455
00:14:35,762 –> 00:14:38,847
[kerry_h_pechter]: continuing to make up the short fall
in the social
456
00:14:38,850 –> 00:14:39,840
[paul_tyler]: oh
457
00:14:38,907 –> 00:14:39,788
[kerry_h_pechter]: security as
458
00:14:39,816 –> 00:14:40,596
[ramsey_d_smith]: oh
459
00:14:39,888 –> 00:14:43,675
[kerry_h_pechter]: they are doing now and there is
no reason for and
460
00:14:43,626 –> 00:14:43,889
[ramsey_d_smith]: oh
461
00:14:43,755 –> 00:14:44,476
[kerry_h_pechter]: to have this
462
00:14:44,406 –> 00:14:44,647
[ramsey_d_smith]: yah
463
00:14:44,977 –> 00:14:47,440
[kerry_h_pechter]: i’m going to get really excited to
hear and i don’t know if that’s a
464
00:14:47,480 –> 00:14:48,182
[kerry_h_pechter]: good thing or not
465
00:14:48,523 –> 00:14:48,543
[ramsey_d_smith]: h
466
00:14:48,822 –> 00:14:50,044
[kerry_h_pechter]: but there is
467
00:14:50,216 –> 00:14:51,018
[ramsey_d_smith]: before you do though
468
00:14:51,156 –> 00:14:53,286
[kerry_h_pechter]: yeah
469
00:14:51,218 –> 00:14:55,205
[ramsey_d_smith]: before you before you do i just
470
00:14:55,167 –> 00:14:55,309
[kerry_h_pechter]: yeah
471
00:14:55,225 –> 00:14:58,290
[ramsey_d_smith]: want to be i just want to
be clear on something because right just
472
00:14:58,566 –> 00:14:59,376
[kerry_h_pechter]: yeah
473
00:14:58,931 –> 00:15:03,561
[ramsey_d_smith]: so there there’s the general fund which
pays which pays the money that ends up
474
00:15:03,621 –> 00:15:04,784
[ramsey_d_smith]: in people’s mail box right
475
00:15:05,406 –> 00:15:05,646
[kerry_h_pechter]: there’s
476
00:15:05,606 –> 00:15:05,747
[ramsey_d_smith]: and
477
00:15:05,827 –> 00:15:06,147
[kerry_h_pechter]: general
478
00:15:06,048 –> 00:15:06,228
[ramsey_d_smith]: eighty
479
00:15:06,207 –> 00:15:06,468
[kerry_h_pechter]: fund
480
00:15:06,288 –> 00:15:06,730
[ramsey_d_smith]: percent of
481
00:15:07,189 –> 00:15:07,950
[kerry_h_pechter]: redeems
482
00:15:07,311 –> 00:15:07,773
[ramsey_d_smith]: i’m going to just
483
00:15:08,311 –> 00:15:13,980
[kerry_h_pechter]: redeems the trust fund assets and then
the social security takes the money
484
00:15:14,136 –> 00:15:16,086
[ramsey_d_smith]: yeah
485
00:15:14,521 –> 00:15:19,792
[kerry_h_pechter]: it gets from the redemption of the
trust fund ass and puts it into people’s
486
00:15:19,852 –> 00:15:21,964
[kerry_h_pechter]: mail boxes virtually
487
00:15:22,207 –> 00:15:28,037
[ramsey_d_smith]: agreed so when when the trust but
assets good to zero right on or around
488
00:15:28,117 –> 00:15:33,586
[ramsey_d_smith]: twenty thirty four then that twenty percent
if that’s the short whatever the show fall
489
00:15:33,686 –> 00:15:33,807
[ramsey_d_smith]: is
490
00:15:33,690 –> 00:15:33,931
[paul_tyler]: yeah
491
00:15:34,187 –> 00:15:35,249
[ramsey_d_smith]: it has to come from
492
00:15:35,319 –> 00:15:35,460
[paul_tyler]: yeah
493
00:15:35,329 –> 00:15:38,254
[ramsey_d_smith]: somewhere it can no longer come from
the trust fund so
494
00:15:38,199 –> 00:15:38,220
[paul_tyler]: m
495
00:15:38,334 –> 00:15:42,521
[ramsey_d_smith]: then some action will have to be
taken and we may agree that it’s likely
496
00:15:42,581 –> 00:15:47,250
[ramsey_d_smith]: that some political action will be taken
but some politica action somebody will have to
497
00:15:47,290 –> 00:15:50,658
[ramsey_d_smith]: do something somebody in the united states
government whether it’s the president our congress or
498
00:15:50,718 –> 00:15:55,908
[ramsey_d_smith]: somebody is gonna have to take some
action to source that money to make up
499
00:15:56,008 –> 00:15:57,790
[ramsey_d_smith]: that short fall that’s now being covered
500
00:15:57,720 –> 00:15:57,740
[paul_tyler]: m
501
00:15:57,810 –> 00:15:58,531
[ramsey_d_smith]: by the trust fund
502
00:15:58,847 –> 00:15:58,969
[kerry_h_pechter]: yea
503
00:15:59,172 –> 00:16:02,035
[ramsey_d_smith]: so how do we think about the
risk around that
504
00:16:03,316 –> 00:16:03,516
[kerry_h_pechter]: well
505
00:16:03,496 –> 00:16:03,958
[ramsey_d_smith]: potential
506
00:16:03,716 –> 00:16:03,917
[kerry_h_pechter]: well
507
00:16:04,199 –> 00:16:05,827
[ramsey_d_smith]: action or inaction in twenty thirty
508
00:16:05,720 –> 00:16:05,880
[kerry_h_pechter]: as i
509
00:16:05,867 –> 00:16:05,987
[ramsey_d_smith]: four
510
00:16:05,980 –> 00:16:10,327
[kerry_h_pechter]: said at the beginning we’re talking about
a political risk in the same sense that
511
00:16:10,407 –> 00:16:11,609
[kerry_h_pechter]: the debt sealing
512
00:16:11,347 –> 00:16:11,508
[ramsey_d_smith]: yeah
513
00:16:12,170 –> 00:16:17,066
[kerry_h_pechter]: involved a political risk it did not
solve it did not involved
514
00:16:16,866 –> 00:16:17,131
[ramsey_d_smith]: oh
515
00:16:17,147 –> 00:16:18,429
[kerry_h_pechter]: the inability
516
00:16:17,826 –> 00:16:18,086
[ramsey_d_smith]: oh
517
00:16:18,930 –> 00:16:20,793
[kerry_h_pechter]: of the united states to make good
518
00:16:21,197 –> 00:16:21,217
[ramsey_d_smith]: h
519
00:16:21,474 –> 00:16:23,878
[kerry_h_pechter]: on it on its promises
520
00:16:23,505 –> 00:16:24,377
[ramsey_d_smith]: h yah
521
00:16:24,339 –> 00:16:25,821
[kerry_h_pechter]: so money
522
00:16:25,889 –> 00:16:26,556
[ramsey_d_smith]: hm
523
00:16:25,901 –> 00:16:27,203
[kerry_h_pechter]: is coming out of the general fund
524
00:16:27,096 –> 00:16:27,439
[ramsey_d_smith]: oh
525
00:16:27,324 –> 00:16:29,728
[kerry_h_pechter]: now we will
526
00:16:29,736 –> 00:16:30,696
[ramsey_d_smith]: yeah
527
00:16:29,788 –> 00:16:31,170
[kerry_h_pechter]: reach a just like
528
00:16:31,200 –> 00:16:31,403
[paul_tyler]: oh
529
00:16:31,210 –> 00:16:31,511
[kerry_h_pechter]: the debt
530
00:16:31,515 –> 00:16:31,536
[ramsey_d_smith]: m
531
00:16:31,571 –> 00:16:32,252
[kerry_h_pechter]: limit we will
532
00:16:32,277 –> 00:16:32,400
[paul_tyler]: yeah
533
00:16:32,312 –> 00:16:33,093
[kerry_h_pechter]: reach a legal
534
00:16:33,162 –> 00:16:33,304
[ramsey_d_smith]: yes
535
00:16:33,173 –> 00:16:36,178
[kerry_h_pechter]: limit that the that more money
536
00:16:36,066 –> 00:16:36,247
[ramsey_d_smith]: yeah
537
00:16:36,319 –> 00:16:39,544
[kerry_h_pechter]: is now coming out of the general
fund than was intended
538
00:16:39,246 –> 00:16:39,547
[ramsey_d_smith]: oh
539
00:16:39,684 –> 00:16:41,487
[kerry_h_pechter]: by the original securities laws
540
00:16:41,395 –> 00:16:41,436
[ramsey_d_smith]: ah
541
00:16:41,948 –> 00:16:45,414
[kerry_h_pechter]: and then as i you know showed
in the analogy to the insurance
542
00:16:45,278 –> 00:16:45,380
[ramsey_d_smith]: ah
543
00:16:45,474 –> 00:16:47,958
[kerry_h_pechter]: company we can either raise premiums
544
00:16:47,676 –> 00:16:48,456
[ramsey_d_smith]: yeah
545
00:16:48,480 –> 00:16:48,500
[paul_tyler]: m
546
00:16:48,696 –> 00:16:49,686
[ramsey_d_smith]: yeah
547
00:16:48,779 –> 00:16:50,242
[kerry_h_pechter]: or we can cut benefits
548
00:16:50,526 –> 00:16:51,546
[ramsey_d_smith]: yeah
549
00:16:50,863 –> 00:16:51,704
[kerry_h_pechter]: and that will
550
00:16:51,666 –> 00:16:52,806
[ramsey_d_smith]: yeah
551
00:16:51,764 –> 00:16:54,708
[kerry_h_pechter]: be a pill litically incredibly ownerous
552
00:16:54,606 –> 00:16:55,596
[ramsey_d_smith]: yeah
553
00:16:54,848 –> 00:16:57,570
[kerry_h_pechter]: process because it’s going to you know
554
00:16:57,636 –> 00:16:57,860
[ramsey_d_smith]: oh
555
00:16:57,750 –> 00:17:02,435
[kerry_h_pechter]: change you know what’s mine and what’s
yours but but i want to establish
556
00:17:02,352 –> 00:17:03,640
[ramsey_d_smith]: hm ah
557
00:17:04,216 –> 00:17:07,401
[kerry_h_pechter]: and this goes back to what i
said before about the different risks that social
558
00:17:07,461 –> 00:17:08,683
[kerry_h_pechter]: security i
559
00:17:08,685 –> 00:17:08,706
[ramsey_d_smith]: m
560
00:17:08,743 –> 00:17:09,524
[kerry_h_pechter]: want to establish
561
00:17:09,189 –> 00:17:09,373
[ramsey_d_smith]: yeah
562
00:17:09,885 –> 00:17:12,830
[kerry_h_pechter]: that even if you’re paying more in
563
00:17:12,786 –> 00:17:13,066
[ramsey_d_smith]: oh
564
00:17:13,030 –> 00:17:17,197
[kerry_h_pechter]: premiums which is what we call the
pay roll tack is what the payroll tax
565
00:17:17,286 –> 00:17:17,946
[ramsey_d_smith]: oh
566
00:17:17,310 –> 00:17:17,553
[paul_tyler]: yeah
567
00:17:17,357 –> 00:17:18,580
[kerry_h_pechter]: is the more
568
00:17:18,906 –> 00:17:19,186
[ramsey_d_smith]: oh
569
00:17:19,802 –> 00:17:22,045
[kerry_h_pechter]: what you even if your premiums go
570
00:17:22,176 –> 00:17:22,845
[ramsey_d_smith]: yeah
571
00:17:22,326 –> 00:17:23,788
[kerry_h_pechter]: up and even if your benefits
572
00:17:23,556 –> 00:17:23,844
[ramsey_d_smith]: oh
573
00:17:23,888 –> 00:17:26,152
[kerry_h_pechter]: go down a little whichever way it
goes
574
00:17:25,956 –> 00:17:26,177
[ramsey_d_smith]: yeah
575
00:17:26,252 –> 00:17:30,097
[kerry_h_pechter]: for you that if it is still
576
00:17:29,663 –> 00:17:30,906
[ramsey_d_smith]: a my
577
00:17:30,658 –> 00:17:32,799
[kerry_h_pechter]: going to be worth it and it’s
going to be
578
00:17:32,916 –> 00:17:33,161
[ramsey_d_smith]: oh
579
00:17:32,920 –> 00:17:34,481
[kerry_h_pechter]: worth it measurably
580
00:17:34,446 –> 00:17:34,729
[ramsey_d_smith]: yeah
581
00:17:34,821 –> 00:17:36,843
[kerry_h_pechter]: in terms of what it would cost
you
582
00:17:37,086 –> 00:17:37,106
[ramsey_d_smith]: m
583
00:17:37,463 –> 00:17:40,376
[kerry_h_pechter]: to go into the private market or
584
00:17:40,356 –> 00:17:41,316
[ramsey_d_smith]: yeah
585
00:17:40,597 –> 00:17:43,141
[kerry_h_pechter]: into the investment market to either save
enough
586
00:17:43,056 –> 00:17:43,317
[ramsey_d_smith]: oh
587
00:17:43,481 –> 00:17:45,705
[kerry_h_pechter]: to insure yourself against those same risks
588
00:17:45,576 –> 00:17:45,596
[ramsey_d_smith]: m
589
00:17:46,246 –> 00:17:47,588
[kerry_h_pechter]: or to buy insurance
590
00:17:47,505 –> 00:17:47,526
[ramsey_d_smith]: m
591
00:17:47,648 –> 00:17:50,573
[kerry_h_pechter]: against those same risks from an insurance
company
592
00:17:50,466 –> 00:17:51,186
[ramsey_d_smith]: yeah
593
00:17:51,334 –> 00:17:54,240
[kerry_h_pechter]: no matter what the premiums go up
594
00:17:54,186 –> 00:17:54,655
[ramsey_d_smith]: oh
595
00:17:54,260 –> 00:17:56,265
[kerry_h_pechter]: we’re talking about a twenty percent gap
no matter
596
00:17:56,166 –> 00:17:56,448
[ramsey_d_smith]: oh
597
00:17:56,345 –> 00:18:01,806
[kerry_h_pechter]: what the premiums go up to or
how much the benefits go down that if
598
00:18:01,906 –> 00:18:03,288
[kerry_h_pechter]: it is still going
599
00:18:03,239 –> 00:18:05,316
[ramsey_d_smith]: ah
600
00:18:03,369 –> 00:18:06,334
[kerry_h_pechter]: to be an incredible value and
601
00:18:06,276 –> 00:18:06,537
[ramsey_d_smith]: yeah
602
00:18:06,834 –> 00:18:08,117
[kerry_h_pechter]: i’m it’s unfortunate
603
00:18:07,681 –> 00:18:07,821
[ramsey_d_smith]: yeah
604
00:18:08,157 –> 00:18:13,085
[kerry_h_pechter]: to me that it seems unfortunate to
me that even the pro social security crowd
605
00:18:13,726 –> 00:18:14,007
[kerry_h_pechter]: or say
606
00:18:14,526 –> 00:18:14,908
[ramsey_d_smith]: oh
607
00:18:14,770 –> 00:18:17,581
[kerry_h_pechter]: the bi partisan policy center that
608
00:18:18,546 –> 00:18:18,772
[ramsey_d_smith]: yeah
609
00:18:19,346 –> 00:18:19,486
[kerry_h_pechter]: that
610
00:18:19,509 –> 00:18:19,530
[paul_tyler]: m
611
00:18:19,846 –> 00:18:20,568
[kerry_h_pechter]: weighs in on this
612
00:18:20,556 –> 00:18:20,801
[ramsey_d_smith]: yes
613
00:18:20,728 –> 00:18:24,855
[kerry_h_pechter]: a lot of times with a lot
of credibility they have all adopted
614
00:18:24,546 –> 00:18:25,536
[ramsey_d_smith]: oh
615
00:18:25,556 –> 00:18:25,656
[kerry_h_pechter]: the
616
00:18:25,686 –> 00:18:26,052
[ramsey_d_smith]: oh
617
00:18:25,756 –> 00:18:27,519
[kerry_h_pechter]: investment view of social
618
00:18:27,516 –> 00:18:27,717
[ramsey_d_smith]: oh
619
00:18:27,539 –> 00:18:31,686
[kerry_h_pechter]: security and saying well it’s not that
much more expensive or
620
00:18:31,776 –> 00:18:33,844
[ramsey_d_smith]: oh
621
00:18:32,207 –> 00:18:37,194
[kerry_h_pechter]: maybe we should invest some of that
money in stocks and they are abandoning
622
00:18:36,936 –> 00:18:37,137
[ramsey_d_smith]: oh
623
00:18:38,646 –> 00:18:41,491
[kerry_h_pechter]: the real the true story
624
00:18:41,745 –> 00:18:41,766
[ramsey_d_smith]: m
625
00:18:41,751 –> 00:18:41,791
[kerry_h_pechter]: of
626
00:18:41,766 –> 00:18:42,636
[ramsey_d_smith]: yeah
627
00:18:42,072 –> 00:18:47,561
[kerry_h_pechter]: the true justification for sociacurity it’s insurance
it’s called social
628
00:18:47,756 –> 00:18:47,857
[ramsey_d_smith]: ah
629
00:18:47,841 –> 00:18:49,224
[kerry_h_pechter]: insurance for
630
00:18:49,084 –> 00:18:49,145
[ramsey_d_smith]: ye
631
00:18:49,384 –> 00:18:56,716
[kerry_h_pechter]: a reason it’s not an investment there
is no fund that’s generating returns an insurance
632
00:18:56,756 –> 00:19:02,085
[kerry_h_pechter]: company doesn’t give you back the money
that you put in it gives you a
633
00:19:02,205 –> 00:19:02,346
[kerry_h_pechter]: cur
634
00:19:02,286 –> 00:19:02,567
[ramsey_d_smith]: oh
635
00:19:02,446 –> 00:19:10,369
[kerry_h_pechter]: and it pays a claim if you
experience an insurable event insurance is not an
636
00:19:10,469 –> 00:19:17,801
[kerry_h_pechter]: investment it’s an offloading of risk and
that offloading of risk is extremely valuable and
637
00:19:18,162 –> 00:19:19,203
[kerry_h_pechter]: in in our investment
638
00:19:19,058 –> 00:19:19,219
[ramsey_d_smith]: is he
639
00:19:19,283 –> 00:19:19,684
[kerry_h_pechter]: world
640
00:19:19,299 –> 00:19:20,102
[ramsey_d_smith]: freezing up for you too
641
00:19:20,245 –> 00:19:25,474
[kerry_h_pechter]: which all attuned to you know because
of our involvement in for one k we
642
00:19:25,574 –> 00:19:26,716
[kerry_h_pechter]: have lost sight of
643
00:19:26,625 –> 00:19:26,646
[ramsey_d_smith]: m
644
00:19:27,397 –> 00:19:28,118
[kerry_h_pechter]: what the value
645
00:19:27,846 –> 00:19:27,966
[ramsey_d_smith]: ah
646
00:19:28,198 –> 00:19:32,465
[kerry_h_pechter]: of insurance is it’s easy to lose
sight of because it’s a call
647
00:19:32,314 –> 00:19:32,475
[ramsey_d_smith]: yes
648
00:19:33,006 –> 00:19:33,106
[kerry_h_pechter]: but
649
00:19:33,146 –> 00:19:33,327
[ramsey_d_smith]: yeah
650
00:19:33,147 –> 00:19:37,774
[kerry_h_pechter]: it’s very easy to lose sight of
the value of the coverage and yet
651
00:19:37,806 –> 00:19:38,067
[ramsey_d_smith]: yeah
652
00:19:37,814 –> 00:19:39,577
[kerry_h_pechter]: we all know what the value of
the coverage is
653
00:19:39,546 –> 00:19:40,536
[ramsey_d_smith]: yeah
654
00:19:39,637 –> 00:19:41,080
[kerry_h_pechter]: every time somebody rams
655
00:19:40,830 –> 00:19:41,092
[paul_tyler]: yeah
656
00:19:41,140 –> 00:19:41,821
[kerry_h_pechter]: into our car
657
00:19:42,178 –> 00:19:42,362
[ramsey_d_smith]: sir
658
00:19:42,602 –> 00:19:44,505
[kerry_h_pechter]: and or burns our hat
659
00:19:44,583 –> 00:19:44,764
[paul_tyler]: yeah
660
00:19:44,647 –> 00:19:44,871
[kerry_h_pechter]: down
661
00:19:44,866 –> 00:19:50,495
[ramsey_d_smith]: all right yeah so we’re going to
agree with you because we were sort of
662
00:19:51,537 –> 00:19:52,038
[ramsey_d_smith]: were focusing
663
00:19:51,870 –> 00:19:52,113
[paul_tyler]: oh
664
00:19:52,058 –> 00:19:58,330
[ramsey_d_smith]: the insurance industry and the the value
one of
665
00:19:58,320 –> 00:19:59,160
[paul_tyler]: oh
666
00:19:58,370 –> 00:20:02,382
[ramsey_d_smith]: the challenges the value of insurance is
sometimes very hard for
667
00:20:02,520 –> 00:20:02,843
[paul_tyler]: oh
668
00:20:03,976 –> 00:20:06,780
[ramsey_d_smith]: people to appreciate or perceive or the
value
669
00:20:06,450 –> 00:20:06,690
[paul_tyler]: oh
670
00:20:06,861 –> 00:20:12,510
[ramsey_d_smith]: of it to them in the first
order and in the second order the real
671
00:20:12,650 –> 00:20:16,677
[ramsey_d_smith]: cost of providing them with that value
i think it’s hard for peopl two to
672
00:20:16,737 –> 00:20:18,560
[ramsey_d_smith]: appreciate and so one of the challenges
673
00:20:18,330 –> 00:20:18,453
[paul_tyler]: ye
674
00:20:19,381 –> 00:20:21,846
[ramsey_d_smith]: carry that i think that the government
will have
675
00:20:22,137 –> 00:20:22,319
[kerry_h_pechter]: yes
676
00:20:22,927 –> 00:20:26,914
[ramsey_d_smith]: is the same one that that we
often have in this industry which is that
677
00:20:27,916 –> 00:20:33,225
[ramsey_d_smith]: um hat in fact this is more
valuable than perhaps you know you not you
678
00:20:33,385 –> 00:20:39,395
[ramsey_d_smith]: but like the sort of the persona
of the consumer can can necessarily sort of
679
00:20:39,455 –> 00:20:45,149
[ramsey_d_smith]: quantify i appreciate and in fact in
a in a strange way you should want
680
00:20:45,269 –> 00:20:50,277
[ramsey_d_smith]: to you should want you should want
a you should want somebody to come to
681
00:20:50,317 –> 00:20:53,463
[ramsey_d_smith]: you and say you know it’s going
to cost you a bit more but it’s
682
00:20:53,523 –> 00:20:58,050
[ramsey_d_smith]: so valuable and i can help you
understand how valuable it is that that you
683
00:20:58,170 –> 00:21:02,257
[ramsey_d_smith]: want you want to be paying more
and you want everybody else in the society
684
00:21:02,297 –> 00:21:06,164
[ramsey_d_smith]: to pay more to maintain this very
sort of very valuable benefit but that is
685
00:21:06,284 –> 00:21:07,045
[ramsey_d_smith]: very hard to do
686
00:21:08,158 –> 00:21:08,339
[kerry_h_pechter]: well
687
00:21:08,236 –> 00:21:08,417
[ramsey_d_smith]: arry
688
00:21:08,560 –> 00:21:08,621
[kerry_h_pechter]: it
689
00:21:08,679 –> 00:21:08,799
[ramsey_d_smith]: it’s
690
00:21:08,721 –> 00:21:08,822
[kerry_h_pechter]: is
691
00:21:08,860 –> 00:21:09,021
[ramsey_d_smith]: very
692
00:21:08,940 –> 00:21:09,690
[paul_tyler]: oh
693
00:21:09,061 –> 00:21:11,616
[ramsey_d_smith]: hard and yeah
694
00:21:11,156 –> 00:21:12,879
[kerry_h_pechter]: it’s well it’s hard to do because
695
00:21:12,776 –> 00:21:12,997
[ramsey_d_smith]: go ahead
696
00:21:13,580 –> 00:21:15,503
[kerry_h_pechter]: for a simple reason social security
697
00:21:15,636 –> 00:21:15,919
[ramsey_d_smith]: oh
698
00:21:15,663 –> 00:21:20,792
[kerry_h_pechter]: you can’t look at social people people
want to look at it it’s very it’s
699
00:21:21,052 –> 00:21:21,793
[kerry_h_pechter]: almost impossible
700
00:21:21,576 –> 00:21:21,857
[ramsey_d_smith]: oh
701
00:21:21,853 –> 00:21:25,927
[kerry_h_pechter]: to look at insurance as an asset
it’s not priced
702
00:21:25,716 –> 00:21:25,958
[ramsey_d_smith]: oh
703
00:21:26,027 –> 00:21:27,389
[kerry_h_pechter]: as an asset it’s not
704
00:21:27,456 –> 00:21:27,738
[ramsey_d_smith]: oh
705
00:21:27,510 –> 00:21:30,715
[kerry_h_pechter]: traded as an asset it’s not inherited
as an asset
706
00:21:30,876 –> 00:21:31,956
[ramsey_d_smith]: oh
707
00:21:31,376 –> 00:21:36,444
[kerry_h_pechter]: it’s it’s and it only pays out
if an insurable event occurs which means you
708
00:21:36,505 –> 00:21:39,880
[kerry_h_pechter]: may never get your money but that
doesn’t
709
00:21:39,666 –> 00:21:39,946
[ramsey_d_smith]: oh
710
00:21:40,021 –> 00:21:43,819
[kerry_h_pechter]: make it less valuable while you have
it
711
00:21:44,106 –> 00:21:44,308
[ramsey_d_smith]: oh
712
00:21:44,160 –> 00:21:48,868
[kerry_h_pechter]: because it by taking certain kinds of
risk off your plate it allows you to
713
00:21:48,948 –> 00:21:52,374
[kerry_h_pechter]: take other risks like invest in
714
00:21:52,807 –> 00:21:53,009
[ramsey_d_smith]: sure
715
00:21:52,834 –> 00:21:57,803
[kerry_h_pechter]: if you you people don’t realize that
if social security went away they might have
716
00:21:57,863 –> 00:22:02,491
[kerry_h_pechter]: to in order to maintain their same
risk profile which everyone understands
717
00:22:02,106 –> 00:22:03,669
[ramsey_d_smith]: oh oh
718
00:22:03,432 –> 00:22:05,415
[kerry_h_pechter]: they would have to put more of
their money into bond
719
00:22:05,226 –> 00:22:06,036
[ramsey_d_smith]: yeah
720
00:22:05,616 –> 00:22:06,758
[kerry_h_pechter]: s because
721
00:22:06,546 –> 00:22:06,790
[ramsey_d_smith]: oh
722
00:22:06,838 –> 00:22:09,563
[kerry_h_pechter]: so security is a bond portfolio
723
00:22:09,456 –> 00:22:09,658
[ramsey_d_smith]: oh
724
00:22:10,365 –> 00:22:17,239
[kerry_h_pechter]: and and and i and i don’t
know why it’s it’s just very difficult to
725
00:22:17,299 –> 00:22:22,392
[kerry_h_pechter]: get this across and and i certainly
don’t want to be the only person saying
726
00:22:22,452 –> 00:22:23,154
[kerry_h_pechter]: this because
727
00:22:23,256 –> 00:22:23,536
[ramsey_d_smith]: oh
728
00:22:23,936 –> 00:22:27,644
[kerry_h_pechter]: i mean no one is going to
believe me alone even though i’m
729
00:22:28,545 –> 00:22:28,705
[ramsey_d_smith]: yeah
730
00:22:28,756 –> 00:22:30,225
[kerry_h_pechter]: right so
731
00:22:31,571 –> 00:22:32,232
[ramsey_d_smith]: and passionate
732
00:22:34,140 –> 00:22:34,830
[paul_tyler]: yeah
733
00:22:34,299 –> 00:22:34,940
[kerry_h_pechter]: and i can
734
00:22:34,986 –> 00:22:35,269
[ramsey_d_smith]: yeah
735
00:22:35,020 –> 00:22:36,763
[kerry_h_pechter]: marshal a lot of evidence for this
736
00:22:36,696 –> 00:22:37,596
[ramsey_d_smith]: oh
737
00:22:36,843 –> 00:22:37,925
[kerry_h_pechter]: and i can bring in people
738
00:22:37,706 –> 00:22:37,866
[ramsey_d_smith]: yeah
739
00:22:37,985 –> 00:22:38,866
[kerry_h_pechter]: who will who are
740
00:22:38,820 –> 00:22:39,046
[paul_tyler]: oh
741
00:22:38,946 –> 00:22:42,012
[kerry_h_pechter]: smarter than me and better qualified than
me to explain it in greater
742
00:22:41,817 –> 00:22:41,958
[ramsey_d_smith]: just
743
00:22:42,052 –> 00:22:47,020
[kerry_h_pechter]: detail but but i believe that the
problem is that social security and its defenders
744
00:22:47,100 –> 00:22:47,701
[kerry_h_pechter]: are playing
745
00:22:47,466 –> 00:22:47,667
[ramsey_d_smith]: oh
746
00:22:48,042 –> 00:22:51,107
[kerry_h_pechter]: the game they’re playing a running they’re
trying to play a running game done
747
00:22:51,006 –> 00:22:51,274
[ramsey_d_smith]: yeah
748
00:22:51,207 –> 00:22:55,194
[kerry_h_pechter]: game running gun game when their actual
game
749
00:22:55,116 –> 00:22:55,776
[ramsey_d_smith]: oh
750
00:22:55,374 –> 00:23:00,480
[kerry_h_pechter]: is a half court game and and
if they can’t if they have to play
751
00:23:00,980 –> 00:23:04,163
[kerry_h_pechter]: the running gun then they’re going to
lose that basketball game
752
00:23:04,746 –> 00:23:04,966
[ramsey_d_smith]: oh
753
00:23:05,264 –> 00:23:08,569
[kerry_h_pechter]: and and go celtic
754
00:23:08,526 –> 00:23:08,746
[ramsey_d_smith]: yeah
755
00:23:08,749 –> 00:23:11,697
[kerry_h_pechter]: because i’m from philadelphia and it might
756
00:23:11,559 –> 00:23:11,580
[paul_tyler]: m
757
00:23:11,737 –> 00:23:14,023
[kerry_h_pechter]: as well be the celtic rather than
the
758
00:23:13,956 –> 00:23:14,296
[ramsey_d_smith]: oh
759
00:23:15,056 –> 00:23:15,761
[kerry_h_pechter]: west coasters
760
00:23:16,552 –> 00:23:19,535
[paul_tyler]: well well you know argue
761
00:23:19,326 –> 00:23:19,587
[ramsey_d_smith]: oh
762
00:23:19,675 –> 00:23:22,117
[paul_tyler]: we’ve already seen those reductions you know
carry and
763
00:23:22,326 –> 00:23:23,406
[ramsey_d_smith]: yeah
764
00:23:22,598 –> 00:23:27,374
[paul_tyler]: tell me how if you think i’m
how you re frame or disagree with my
765
00:23:27,475 –> 00:23:32,523
[paul_tyler]: perspective on this you mentioned cut benefits
we know how popular that is okay
766
00:23:32,526 –> 00:23:32,546
[ramsey_d_smith]: m
767
00:23:32,583 –> 00:23:34,506
[paul_tyler]: we can raise premiums where
768
00:23:35,166 –> 00:23:35,607
[ramsey_d_smith]: oh
769
00:23:35,728 –> 00:23:40,937
[paul_tyler]: we’re kind of getting to and with
that today the third is need base testing
770
00:23:41,157 –> 00:23:41,418
[paul_tyler]: you know
771
00:23:42,216 –> 00:23:42,318
[ramsey_d_smith]: ye
772
00:23:42,660 –> 00:23:46,787
[paul_tyler]: now we saw that the full retirement
age start to creep out that that arguable
773
00:23:46,847 –> 00:23:50,535
[paul_tyler]: was a take away that was a
reduction social security benefits do you think we’ll
774
00:23:50,575 –> 00:23:50,695
[paul_tyler]: see
775
00:23:50,637 –> 00:23:50,801
[kerry_h_pechter]: right
776
00:23:50,776 –> 00:23:55,448
[paul_tyler]: need space is needs base testing an
effective way to make the numbers work better
777
00:23:55,360 –> 00:23:55,441
[ramsey_d_smith]: ah
778
00:23:57,157 –> 00:24:04,183
[kerry_h_pechter]: you have to remember needs base testing
uh would would go along with a complete
779
00:24:04,344 –> 00:24:08,833
[kerry_h_pechter]: overhaul now if you’re in a country
overseas that like
780
00:24:10,146 –> 00:24:10,450
[ramsey_d_smith]: oh
781
00:24:10,326 –> 00:24:12,108
[kerry_h_pechter]: i don’t know spain or
782
00:24:12,396 –> 00:24:12,577
[ramsey_d_smith]: oh
783
00:24:12,709 –> 00:24:13,591
[kerry_h_pechter]: other countries that have
784
00:24:13,716 –> 00:24:14,856
[ramsey_d_smith]: my
785
00:24:13,771 –> 00:24:18,339
[kerry_h_pechter]: gone from a pago system like we
have to a investment system once
786
00:24:18,306 –> 00:24:18,552
[ramsey_d_smith]: yes
787
00:24:18,419 –> 00:24:19,521
[kerry_h_pechter]: you if you have
788
00:24:19,416 –> 00:24:19,436
[ramsey_d_smith]: m
789
00:24:19,581 –> 00:24:23,868
[kerry_h_pechter]: an investment based system a workplace country
ibution system like our far one k
790
00:24:24,420 –> 00:24:25,470
[paul_tyler]: yeah
791
00:24:24,549 –> 00:24:29,397
[kerry_h_pechter]: then you have to think about having
a minimum benefit for people who don’t make
792
00:24:29,457 –> 00:24:32,703
[kerry_h_pechter]: enough money and pay enough in so
it’s it’s the
793
00:24:32,646 –> 00:24:33,169
[ramsey_d_smith]: oh
794
00:24:33,244 –> 00:24:34,105
[kerry_h_pechter]: the minimum
795
00:24:34,296 –> 00:24:35,076
[ramsey_d_smith]: oh
796
00:24:34,346 –> 00:24:34,806
[kerry_h_pechter]: benefit
797
00:24:35,076 –> 00:24:35,558
[ramsey_d_smith]: oh
798
00:24:35,608 –> 00:24:36,970
[kerry_h_pechter]: the means tested benefit
799
00:24:37,056 –> 00:24:39,323
[ramsey_d_smith]: yeah
800
00:24:37,771 –> 00:24:40,215
[kerry_h_pechter]: that is an artifact that is
801
00:24:40,356 –> 00:24:40,641
[ramsey_d_smith]: yeah
802
00:24:40,516 –> 00:24:41,638
[kerry_h_pechter]: a functionality
803
00:24:41,646 –> 00:24:42,014
[ramsey_d_smith]: oh
804
00:24:42,239 –> 00:24:44,963
[kerry_h_pechter]: of a different kind of retirement system
805
00:24:45,495 –> 00:24:45,516
[ramsey_d_smith]: m
806
00:24:45,785 –> 00:24:49,130
[kerry_h_pechter]: and so we i think it would
probably
807
00:24:49,065 –> 00:24:49,086
[ramsey_d_smith]: m
808
00:24:49,230 –> 00:24:50,352
[kerry_h_pechter]: be too expensive
809
00:24:50,256 –> 00:24:51,756
[ramsey_d_smith]: yeah
810
00:24:50,953 –> 00:24:56,723
[kerry_h_pechter]: to guarantee a certain level of you
know say twenty percent of retires who are
811
00:24:56,923 –> 00:25:01,871
[kerry_h_pechter]: may not even qualify right now for
so security benefit if we guaranteed them eight
812
00:25:01,911 –> 00:25:04,315
[kerry_h_pechter]: hundred dollars a month with no on
a means
813
00:25:04,116 –> 00:25:04,356
[ramsey_d_smith]: yeah
814
00:25:04,416 –> 00:25:11,168
[kerry_h_pechter]: tested basis anyway that would that in
itself would would require jumping off of the
815
00:25:11,228 –> 00:25:11,889
[kerry_h_pechter]: pago system
816
00:25:11,646 –> 00:25:11,931
[ramsey_d_smith]: oh
817
00:25:12,872 –> 00:25:13,814
[kerry_h_pechter]: is that is that clear
818
00:25:13,979 –> 00:25:14,222
[ramsey_d_smith]: yes
819
00:25:14,157 –> 00:25:14,670
[paul_tyler]: hm
820
00:25:15,356 –> 00:25:15,757
[kerry_h_pechter]: it’s really
821
00:25:15,740 –> 00:25:15,925
[paul_tyler]: yes
822
00:25:15,817 –> 00:25:16,999
[kerry_h_pechter]: a facet of a different
823
00:25:16,950 –> 00:25:17,092
[paul_tyler]: yeah
824
00:25:17,200 –> 00:25:23,932
[kerry_h_pechter]: kind of financing of retirement so and
then i think that and that brings around
825
00:25:24,073 –> 00:25:26,087
[kerry_h_pechter]: another subject which
826
00:25:26,616 –> 00:25:26,636
[ramsey_d_smith]: m
827
00:25:26,969 –> 00:25:30,179
[kerry_h_pechter]: which we have to consider is that
switching from a pago
828
00:25:30,156 –> 00:25:33,096
[ramsey_d_smith]: yah
829
00:25:30,320 –> 00:25:37,723
[kerry_h_pechter]: system to four or one i mean
a bigger four or one case system with
830
00:25:37,863 –> 00:25:39,806
[kerry_h_pechter]: less risk in it and
831
00:25:39,876 –> 00:25:40,776
[ramsey_d_smith]: yeah
832
00:25:40,307 –> 00:25:42,530
[kerry_h_pechter]: and then bringing in a minimum benefit
833
00:25:42,993 –> 00:25:43,174
[ramsey_d_smith]: yeah
834
00:25:43,010 –> 00:25:48,016
[kerry_h_pechter]: wow the negotiations and the design i
835
00:25:48,015 –> 00:25:48,036
[ramsey_d_smith]: m
836
00:25:48,056 –> 00:25:54,947
[kerry_h_pechter]: mean the amount of work politically and
economic and actuarial and investment and market and
837
00:25:55,545 –> 00:25:55,566
[ramsey_d_smith]: m
838
00:25:55,608 –> 00:25:57,491
[kerry_h_pechter]: i mean the amount of work that
would have to
839
00:25:57,465 –> 00:25:57,486
[ramsey_d_smith]: m
840
00:25:57,551 –> 00:26:06,716
[kerry_h_pechter]: go into that kind of transition utterly
utterly dwarfs the amount of effort it’s going
841
00:26:06,796 –> 00:26:11,504
[kerry_h_pechter]: to take for us to tweak social
security so that there’s a non event
842
00:26:11,886 –> 00:26:12,189
[ramsey_d_smith]: yeah
843
00:26:11,904 –> 00:26:13,832
[kerry_h_pechter]: and that people can stop worrying
844
00:26:13,626 –> 00:26:14,030
[ramsey_d_smith]: oh
845
00:26:13,913 –> 00:26:19,391
[kerry_h_pechter]: about it and and ironically you know
all these people these younger people who aren’t
846
00:26:19,411 –> 00:26:19,772
[kerry_h_pechter]: collecting
847
00:26:19,800 –> 00:26:20,022
[paul_tyler]: yeah
848
00:26:19,832 –> 00:26:22,997
[kerry_h_pechter]: social security they are paying fifteen per
cent into
849
00:26:22,830 –> 00:26:22,850
[paul_tyler]: m
850
00:26:23,057 –> 00:26:26,944
[kerry_h_pechter]: their out of their pay checks and
thinking that they’re not getting
851
00:26:26,686 –> 00:26:26,787
[ramsey_d_smith]: ah
852
00:26:27,084 –> 00:26:28,887
[kerry_h_pechter]: anything when they reach how
853
00:26:28,896 –> 00:26:29,324
[ramsey_d_smith]: ye
854
00:26:29,448 –> 00:26:30,249
[kerry_h_pechter]: insane
855
00:26:30,186 –> 00:26:30,206
[ramsey_d_smith]: m
856
00:26:31,091 –> 00:26:32,974
[kerry_h_pechter]: is that that they’re they’re
857
00:26:33,036 –> 00:26:33,056
[ramsey_d_smith]: m
858
00:26:33,054 –> 00:26:37,561
[kerry_h_pechter]: giving up a sixth of their pay
for something that they don’t believe i mean
859
00:26:37,742 –> 00:26:39,645
[kerry_h_pechter]: why are they not rioting
860
00:26:39,387 –> 00:26:39,467
[ramsey_d_smith]: ah
861
00:26:40,206 –> 00:26:43,998
[kerry_h_pechter]: in the streets instead of paying fifteen
862
00:26:43,659 –> 00:26:43,680
[paul_tyler]: m
863
00:26:43,665 –> 00:26:43,686
[ramsey_d_smith]: m
864
00:26:44,039 –> 00:26:47,952
[kerry_h_pechter]: per cent it makes no sense so
on some level
865
00:26:47,955 –> 00:26:47,976
[ramsey_d_smith]: m
866
00:26:48,000 –> 00:26:48,344
[paul_tyler]: oh
867
00:26:48,052 –> 00:26:50,137
[kerry_h_pechter]: they must believe they’re
868
00:26:50,085 –> 00:26:50,106
[ramsey_d_smith]: m
869
00:26:50,197 –> 00:26:56,908
[kerry_h_pechter]: going to get that benefit or else
i mean i would tell my kids now
870
00:26:57,875 –> 00:27:01,441
[kerry_h_pechter]: it’s time to go to the streets
871
00:27:04,506 –> 00:27:04,686
[ramsey_d_smith]: yeah
872
00:27:04,544 –> 00:27:04,925
[paul_tyler]: time to go
873
00:27:04,926 –> 00:27:05,230
[kerry_h_pechter]: oh
874
00:27:04,966 –> 00:27:06,129
[paul_tyler]: to the streets ramsey
875
00:27:06,526 –> 00:27:06,966
[kerry_h_pechter]: i mean we’re
876
00:27:06,911 –> 00:27:07,052
[paul_tyler]: we’re
877
00:27:07,026 –> 00:27:07,286
[kerry_h_pechter]: talking
878
00:27:07,112 –> 00:27:07,313
[paul_tyler]: at the
879
00:27:07,346 –> 00:27:07,927
[kerry_h_pechter]: about fifteen
880
00:27:07,834 –> 00:27:08,055
[paul_tyler]: near
881
00:27:08,007 –> 00:27:08,327
[kerry_h_pechter]: per cent
882
00:27:08,195 –> 00:27:08,336
[paul_tyler]: near
883
00:27:08,387 –> 00:27:08,727
[kerry_h_pechter]: of pay
884
00:27:08,650 –> 00:27:08,831
[ramsey_d_smith]: yeah
885
00:27:09,268 –> 00:27:11,490
[kerry_h_pechter]: i mean what is more what is
more gut level
886
00:27:11,550 –> 00:27:12,630
[paul_tyler]: yeah
887
00:27:11,570 –> 00:27:13,431
[kerry_h_pechter]: than that i mean don’t take that
money
888
00:27:13,266 –> 00:27:13,428
[ramsey_d_smith]: oh
889
00:27:13,348 –> 00:27:13,531
[paul_tyler]: yeah
890
00:27:13,492 –> 00:27:16,054
[kerry_h_pechter]: from me if you’re if you’re not
going to that’s fraud
891
00:27:15,726 –> 00:27:16,029
[ramsey_d_smith]: oh
892
00:27:16,734 –> 00:27:17,555
[kerry_h_pechter]: okay and
893
00:27:17,506 –> 00:27:17,586
[ramsey_d_smith]: so
894
00:27:17,652 –> 00:27:17,835
[paul_tyler]: right
895
00:27:17,827 –> 00:27:20,412
[ramsey_d_smith]: well how are you getting to the
fifteen per cent that’s the that’s the pica
896
00:27:20,493 –> 00:27:24,522
[ramsey_d_smith]: that somebody sees in their w to
plus the employer contribution together is that how
897
00:27:24,582 –> 00:27:25,524
[ramsey_d_smith]: you get the fifteen per cent
898
00:27:26,767 –> 00:27:28,871
[kerry_h_pechter]: oh yeah because everyone all economists
899
00:27:28,746 –> 00:27:30,015
[ramsey_d_smith]: yeah
900
00:27:28,971 –> 00:27:34,380
[kerry_h_pechter]: agree and and i’m speaking now for
all economists the agree
901
00:27:34,086 –> 00:27:34,287
[ramsey_d_smith]: yes
902
00:27:34,500 –> 00:27:36,323
[kerry_h_pechter]: that that you know whether
903
00:27:36,390 –> 00:27:36,617
[paul_tyler]: yeah
904
00:27:37,285 –> 00:27:42,162
[kerry_h_pechter]: the employ it takes its share of
the pay roll tax out of its compensation
905
00:27:41,588 –> 00:27:41,608
[ramsey_d_smith]: i
906
00:27:42,322 –> 00:27:44,561
[kerry_h_pechter]: budget and so that
907
00:27:44,428 –> 00:27:44,591
[ramsey_d_smith]: sure
908
00:27:44,963 –> 00:27:46,932
[kerry_h_pechter]: whether it whether it would give you
that
909
00:27:47,895 –> 00:27:47,916
[ramsey_d_smith]: m
910
00:27:47,936 –> 00:27:48,477
[kerry_h_pechter]: they it would give
911
00:27:48,486 –> 00:27:48,506
[ramsey_d_smith]: m
912
00:27:48,537 –> 00:27:49,378
[kerry_h_pechter]: you that income
913
00:27:49,596 –> 00:27:49,940
[ramsey_d_smith]: oh
914
00:27:49,618 –> 00:27:54,146
[kerry_h_pechter]: that’s an interesting thought experiment of whether
you would you know you’d get the extra
915
00:27:54,767 –> 00:27:55,989
[kerry_h_pechter]: six percent if the
916
00:27:56,280 –> 00:27:57,270
[paul_tyler]: oh
917
00:27:56,570 –> 00:28:01,518
[kerry_h_pechter]: employer didn’t have to pay any payroll
tax but i’ll tell you believe me when
918
00:28:02,420 –> 00:28:07,128
[kerry_h_pechter]: a country that goes to a defined
defined contribution
919
00:28:07,176 –> 00:28:07,498
[ramsey_d_smith]: oh
920
00:28:07,208 –> 00:28:11,795
[kerry_h_pechter]: plan with minimum benefits those they have
mandatory
921
00:28:10,995 –> 00:28:12,416
[ramsey_d_smith]: m yeah m
922
00:28:12,976 –> 00:28:14,118
[kerry_h_pechter]: employer contributions
923
00:28:14,346 –> 00:28:14,547
[ramsey_d_smith]: yeah
924
00:28:14,779 –> 00:28:16,502
[kerry_h_pechter]: so get real if we’re
925
00:28:16,444 –> 00:28:16,566
[ramsey_d_smith]: yeah
926
00:28:16,622 –> 00:28:18,205
[kerry_h_pechter]: going away to an investment based
927
00:28:18,036 –> 00:28:18,445
[ramsey_d_smith]: oh
928
00:28:18,265 –> 00:28:21,631
[kerry_h_pechter]: system from sociasecurity we’re going to a
new kind
929
00:28:21,465 –> 00:28:21,486
[ramsey_d_smith]: m
930
00:28:21,711 –> 00:28:22,532
[kerry_h_pechter]: of mandatory
931
00:28:22,337 –> 00:28:22,641
[ramsey_d_smith]: yes
932
00:28:22,672 –> 00:28:25,788
[kerry_h_pechter]: it’s not going to be optional under
those circumstances
933
00:28:25,211 –> 00:28:25,293
[ramsey_d_smith]: ah
934
00:28:25,908 –> 00:28:28,052
[kerry_h_pechter]: for employes to benefit and an employe
935
00:28:28,056 –> 00:28:28,318
[ramsey_d_smith]: my
936
00:28:28,092 –> 00:28:35,556
[kerry_h_pechter]: contribution is in australia or israel or
cost erica that’s going to be bigger what
937
00:28:35,676 –> 00:28:39,883
[kerry_h_pechter]: people have to pay now and people
have an option now to whether to contribute
938
00:28:39,923 –> 00:28:42,768
[kerry_h_pechter]: to their social security they’re not going
to it’s going to be more than six
939
00:28:42,868 –> 00:28:47,556
[kerry_h_pechter]: per cent so that’s what i’m saying
when it’s this is just not going to
940
00:28:47,596 –> 00:28:51,262
[kerry_h_pechter]: be like throwing a lever and half
of your social security budget goes into the
941
00:28:51,282 –> 00:28:53,746
[kerry_h_pechter]: stock market no that’s not what’s going
to happen
942
00:28:54,126 –> 00:28:54,146
[ramsey_d_smith]: m
943
00:28:54,167 –> 00:28:55,269
[kerry_h_pechter]: i mean if it does then
944
00:28:55,322 –> 00:28:55,506
[paul_tyler]: yeah
945
00:28:56,130 –> 00:29:00,800
[kerry_h_pechter]: it’s just it’s just making kicking a
problem on the road because then when
946
00:29:00,697 –> 00:29:00,717
[ramsey_d_smith]: m
947
00:29:00,840 –> 00:29:01,061
[kerry_h_pechter]: people
948
00:29:00,960 –> 00:29:01,830
[paul_tyler]: yeah
949
00:29:01,141 –> 00:29:02,023
[kerry_h_pechter]: realize how much risk
950
00:29:01,950 –> 00:29:02,274
[paul_tyler]: oh
951
00:29:02,083 –> 00:29:07,106
[kerry_h_pechter]: they’re carrying that they didn’t use to
carry that they’re going to start either they’re
952
00:29:07,186 –> 00:29:07,687
[kerry_h_pechter]: completely
953
00:29:07,680 –> 00:29:07,700
[paul_tyler]: m
954
00:29:07,827 –> 00:29:12,295
[kerry_h_pechter]: financially illiterate or they’re just going to
start i mean they may absorb it the
955
00:29:12,315 –> 00:29:16,061
[kerry_h_pechter]: way people are now absorbing a fifteen
percent tax without thinking that they’re going to
956
00:29:16,101 –> 00:29:17,984
[kerry_h_pechter]: get anything for it i mean get
957
00:29:17,956 –> 00:29:18,076
[ramsey_d_smith]: well
958
00:29:18,024 –> 00:29:18,145
[kerry_h_pechter]: your
959
00:29:18,096 –> 00:29:21,960
[ramsey_d_smith]: they’re only because hey’re only seeing seven
or eight percent of it right even i
960
00:29:22,040 –> 00:29:25,944
[ramsey_d_smith]: agree with you with the the from
an comes perspective but i think that most
961
00:29:26,044 –> 00:29:30,583
[ramsey_d_smith]: people only see the you know the
face that shows up on their pay check
962
00:29:30,623 –> 00:29:31,546
[ramsey_d_smith]: and that’s painful enough
963
00:29:31,510 –> 00:29:31,691
[paul_tyler]: yeah
964
00:29:32,007 –> 00:29:32,127
[ramsey_d_smith]: so
965
00:29:32,335 –> 00:29:32,516
[paul_tyler]: yeah
966
00:29:32,516 –> 00:29:33,657
[kerry_h_pechter]: i don’t know if they even i
967
00:29:33,642 –> 00:29:33,742
[paul_tyler]: all
968
00:29:33,738 –> 00:29:33,898
[kerry_h_pechter]: don’t
969
00:29:33,803 –> 00:29:33,944
[paul_tyler]: right
970
00:29:33,938 –> 00:29:34,038
[kerry_h_pechter]: know
971
00:29:33,964 –> 00:29:34,125
[paul_tyler]: well
972
00:29:34,098 –> 00:29:37,945
[kerry_h_pechter]: if they even they even think about
it if you’re making enough money so that
973
00:29:37,985 –> 00:29:38,906
[kerry_h_pechter]: you’ve reached your pier
974
00:29:38,736 –> 00:29:40,085
[ramsey_d_smith]: yeah
975
00:29:38,946 –> 00:29:41,791
[kerry_h_pechter]: limit by the middle of february then
you know
976
00:29:41,660 –> 00:29:41,801
[ramsey_d_smith]: yeah
977
00:29:41,911 –> 00:29:42,692
[kerry_h_pechter]: all about pica
978
00:29:42,726 –> 00:29:43,007
[ramsey_d_smith]: yeah
979
00:29:42,773 –> 00:29:45,037
[kerry_h_pechter]: limits but other people you
980
00:29:45,059 –> 00:29:45,199
[ramsey_d_smith]: yeah
981
00:29:45,097 –> 00:29:48,384
[kerry_h_pechter]: know have they don’t even know what
ficus stands for
982
00:29:50,649 –> 00:29:53,582
[ramsey_d_smith]: yeah
983
00:29:51,522 –> 00:29:55,852
[paul_tyler]: all right so hey listen we are
right at time ramsey
984
00:29:56,046 –> 00:29:58,470
[ramsey_d_smith]: yuh
985
00:29:56,132 –> 00:29:58,317
[paul_tyler]: final thoughts questions for carry
986
00:29:58,930 –> 00:30:03,237
[ramsey_d_smith]: carry great having you back on um
and i love to have you on again
987
00:30:04,179 –> 00:30:08,206
[ramsey_d_smith]: to talk about i can think of
three or four things i was reminded your
988
00:30:08,266 –> 00:30:08,987
[ramsey_d_smith]: trip to israel
989
00:30:08,806 –> 00:30:08,826
[paul_tyler]: i
990
00:30:09,227 –> 00:30:11,571
[ramsey_d_smith]: and how enlightening you know the writings
991
00:30:11,280 –> 00:30:12,120
[paul_tyler]: yeah
992
00:30:11,672 –> 00:30:16,039
[ramsey_d_smith]: that came out of that were and
how it was interesting perspective for comparison purposes
993
00:30:16,119 –> 00:30:16,219
[ramsey_d_smith]: so
994
00:30:16,686 –> 00:30:17,436
[kerry_h_pechter]: oh
995
00:30:16,800 –> 00:30:18,242
[ramsey_d_smith]: between between alternative
996
00:30:18,195 –> 00:30:18,216
[kerry_h_pechter]: m
997
00:30:18,303 –> 00:30:18,803
[ramsey_d_smith]: system so
998
00:30:19,266 –> 00:30:19,286
[kerry_h_pechter]: m
999
00:30:19,625 –> 00:30:23,211
[ramsey_d_smith]: thanks for come ing on and and
talking to us about social security and we
1000
00:30:23,271 –> 00:30:28,020
[ramsey_d_smith]: should we should line up you know
some other topics to to go over in
1001
00:30:28,080 –> 00:30:30,464
[ramsey_d_smith]: the end as the year progresses
1002
00:30:30,981 –> 00:30:31,142
[paul_tyler]: yeah
1003
00:30:31,106 –> 00:30:31,767
[kerry_h_pechter]: well i’m blowing to
1004
00:30:31,825 –> 00:30:32,348
[paul_tyler]: absolutely
1005
00:30:31,868 –> 00:30:32,749
[kerry_h_pechter]: iceland in august
1006
00:30:32,469 –> 00:30:32,931
[paul_tyler]: care we’ll put
1007
00:30:32,950 –> 00:30:33,030
[kerry_h_pechter]: and
1008
00:30:32,952 –> 00:30:33,253
[paul_tyler]: the links
1009
00:30:33,090 –> 00:30:33,371
[kerry_h_pechter]: i’ll be
1010
00:30:33,334 –> 00:30:33,434
[paul_tyler]: to
1011
00:30:33,531 –> 00:30:33,912
[kerry_h_pechter]: meeting with
1012
00:30:33,796 –> 00:30:33,876
[paul_tyler]: you
1013
00:30:33,952 –> 00:30:36,818
[kerry_h_pechter]: people there about their system they have
a a
1014
00:30:37,365 –> 00:30:37,976
[ramsey_d_smith]: m oh
1015
00:30:37,900 –> 00:30:42,480
[kerry_h_pechter]: a collective d c that’s it’s going
to be interesting
1016
00:30:43,725 –> 00:30:43,926
[ramsey_d_smith]: yeah
1017
00:30:44,300 –> 00:30:44,983
[paul_tyler]: interesting all right
1018
00:30:44,867 –> 00:30:44,967
[ramsey_d_smith]: i’m
1019
00:30:45,004 –> 00:30:45,144
[paul_tyler]: we’ll
1020
00:30:45,007 –> 00:30:45,147
[ramsey_d_smith]: going
1021
00:30:45,184 –> 00:30:45,406
[paul_tyler]: carry
1022
00:30:45,187 –> 00:30:45,448
[ramsey_d_smith]: to send
1023
00:30:45,486 –> 00:30:45,667
[paul_tyler]: wilt
1024
00:30:45,488 –> 00:30:49,258
[ramsey_d_smith]: you my my last my last and
most successful linked in post in six months
1025
00:30:49,298 –> 00:30:51,243
[ramsey_d_smith]: was about iceland so i’m going to
send it to you
1026
00:30:51,456 –> 00:30:51,977
[kerry_h_pechter]: oh great
1027
00:30:51,853 –> 00:30:52,015
[paul_tyler]: yeah
1028
00:30:52,559 –> 00:30:54,063
[kerry_h_pechter]: great okay it’s always
1029
00:30:53,916 –> 00:30:54,019
[ramsey_d_smith]: ye
1030
00:30:54,103 –> 00:30:54,364
[kerry_h_pechter]: good to
1031
00:30:54,360 –> 00:30:54,542
[paul_tyler]: oh
1032
00:30:54,424 –> 00:30:55,287
[kerry_h_pechter]: talk with you guys
1033
00:30:55,746 –> 00:30:55,766
[ramsey_d_smith]: m
1034
00:30:55,969 –> 00:30:57,272
[kerry_h_pechter]: you give me a lot of leash
1035
00:30:57,096 –> 00:30:57,816
[ramsey_d_smith]: yeah
1036
00:30:57,433 –> 00:30:57,573
[kerry_h_pechter]: so
1037
00:30:57,737 –> 00:30:58,021
[paul_tyler]: okay
1038
00:30:58,686 –> 00:30:59,489
[kerry_h_pechter]: always appreciate it
1039
00:31:00,096 –> 00:31:00,638
[ramsey_d_smith]: uh
1040
00:31:01,757 –> 00:31:01,778
[kerry_h_pechter]: i
1041
00:31:01,880 –> 00:31:02,101
[paul_tyler]: right
1042
00:31:02,085 –> 00:31:02,106
[ramsey_d_smith]: h
1043
00:31:02,261 –> 00:31:04,526
[paul_tyler]: excellent all right well thank you carry
thank you ramsey
1044
00:31:04,266 –> 00:31:04,507
[ramsey_d_smith]: oh
1045
00:31:04,826 –> 00:31:06,610
[paul_tyler]: and thanks to all our listeners join
us again
1046
00:31:06,516 –> 00:31:06,536
[ramsey_d_smith]: m
1047
00:31:06,650 –> 00:31:10,598
[paul_tyler]: next week for another episode of that
annuity show thanks
1048
00:31:11,556 –> 00:31:11,777
[kerry_h_pechter]: oh
The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.
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