Breaking survivalist stereoptypes

by Rocky Mountain Stepmom

This article interested me because I have survivalist tendencies. I don’t have the proverbial snowball’s chance of ever actually surviving any natural or man-made disaster, but I look at the big tubs of freeze-dried food from Costco, and wonder vaguely about acquiring some more gold, and just generally spiral down into wondering if I should develop an arsenal and start making hundreds of pounds of jerky in my neglected dehydrator.

DOOMSDAY PREP FOR THE SUPER-RICH

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181 thoughts on “Breaking survivalist stereoptypes

  1. Oh! I love this topic. I travel in some circles where people have their year’s supply of food squirreled away (for religious or apocalyptic reasons). Recently, one of my co-workers got scammed when buying some gold coins – large company, went out of business before they could make the delivery.

    A fun little visit: the reviews for the super-packs of dehydrated food from Costco. https://www.costco.com/all-emergency-food.html

    “I wondered how I’d fit all this food in my Apartment but after getting rid of the couch and coffee table in the living room and swap a double bed for a single bed I was able to store all the food….My advice though is don’t get this if you live in a bachelor apartment and if you live in a 1 bedroom then only buy 1 of these at a time, I usually like to order 2 of everything I buy but I’m glad I only ordered 1.” Dude, if you live in a bachelor apartment, you may not need 31,000 servings of food.

    “We live on a road that the delivery truck could not deliver to, so we met the driver at a wide spot in the road near our house. The plan was to transfer the pallet to our trailer with the pallet jack. When the pallet of food arrived, the boxes had shifted due to only having a thin plastic wrap around it and was significantly listing to the side to the point that the pallet jack could not be used and we had to transfer all 63 boxes to the trailer by hand ~ so much for keeping the fact that you are receiving a food supply private!” Ummmm… you live on a road where the delivery truck can’t drive. Sounds pretty remote. And your worried about someone witnessing you loading food? Black helicopters?

  2. Honest question: Can someone describe a scenario where possession of gold coins saves you? I can imagine many different crazy end-of-the-world things (pandemic flu is #1 on my list). However, there would be a struggle for basic supplies, and that would be the currency – water, shelter, canned food. Perhaps technology – water filters, propane heaters, functioning vehicles would be the currency. If there is lawlessness, people are stealing things, taking with force, etc. and your gold isn’t going to buy you anything. If there is enough law and order to have a functioning economy, I highly doubt that gold is the answer – you need functioning scales and proof of purity.

  3. And your worried about someone witnessing you loading food? Black helicopters?

    It seems to come from the same place that conspiracy theorists come from – they like imagining a world that’s more exciting than it actually is. Also, it’s more fun and less of a threat to your ego to imagine the whole world collapsing rather than the more typical scenario where it’s just you*.

    * There is a PBS show about Alzheimers and dementia and that’s how the world is going to descend into chaos for many of us. The world itself will be fine but our link to it will chaotically disintegrate. But, it’s a lot more fun to think about escaping on your jet to New Zeeland or you camp in the mountains that the truth.

  4. Can someone describe a scenario where possession of gold coins saves you?

    People seem to think there can’t be gold inflation. If food for a week for your family is $125 (aka 1/10oz of gold) then they think that’s what the gold price will remain during the Apocalypse. But, it could be one oz or 10 oz of gold depending on supply and demand. And even then – will there be people willing to part with their food for even a KG of gold?

  5. And your worried…

    Shudder. And least I won’t have to worry about bad grammar in the post-apocalyptic world.

  6. @Ada – I have always wondered the same thing about gold. Is gold is worth something in a situation like Venezuela since you can supposedly sell it in Brazil if you can get out, cross the border, and sell it there for Brazilian currency and use it to buy a new life? How much gold would you need, and how much would that actually weigh?

  7. Ivy,

    And even in a Venezuela to Brazil scenario you’d be better off with euros or dollars or Swiss francs. One pound of gold is $17.5k one pound of CHF1000 notes is about half a million dollars.

  8. I have literally no interest in surviving if the only other people who survive are those whackos. I’d rather be dead than alone with them with no Netflix.

  9. “I have literally no interest in surviving if the only other people who survive are those whackos. I’d rather be dead than alone with them with no Netflix.”

    Ha! Agree. Or if I was stuck with eating dehydrated food for five years – and then what? How do you purify the radiated water? If we have nuclear meltdown, let me and my family be together and go in peace…preferably finishing off all of the melting ice cream and chocolate. I will have wished I had chosen the full fat ice cream. Die happy!

  10. Side tangent – can be anonymous.

    How much actual cash do you have on hand? Not in bank – physical cash at your house.

    My in-laws keep a couple thousand but neither uses ATM’s and they just go to the bank and get out cash for a period of time. I find this bizarre but maybe I am weird and it is wise. Now if a hurricane was coming, I might take out $1,000 but would go to several ATM’s before I stepped foot in a bank and talked to a person.

  11. LOL, Moxie. I’m sure you’re right.

    Gold — that’s a topic of debate among whackos. Some people seem to think that gold is a universal form of money. After the zombies have eaten the first several rounds of people, the survivors will need to have some form of currency. Hey, I don’t make the news, I just report it. I also tend to think that basics like food and fuel are more essential, but maybe it depends on your time horizon.

  12. “How much actual cash do you have on hand? ”

    Usually between $1-2,000. It comes in handy since I pay my housekeeper in cash and somehow I use it up on other things. I keep about $100 in my wallet. I hate to be low on cash and have to make a special ATM trip.

  13. My in-laws keep a couple thousand but neither uses ATM’s and they just go to the bank and get out cash for a period of time.

    That must have been what affluent people did in the old days. Remember in It’s A Wonderful Life the Bailey’s were about to leave on their honeymoon so they had a big pile of cash. I assume in those days you’d buy train, plain, boat tickets with cash, settle your hotels bills with cash, pay for dinner in cash, etc.

  14. I was interested in Ada’s worry about the flu. When I read about how flu epidemics work, and about “cytokine storms” and all, I went around drenching myself in hand sanitizer for a few days until I lost interest again.

    Which type of Zombie Apocalypse do you think is most likely? In California it’s highly likely to be a truly huge earthquake. I don’t know about Denver. Flu? Being invaded by Monaco? Hard to know.

  15. I agree with what Rhett said. I think it’s mostly an escape fantasy for the vast majority of survivalists. It flourishes particularly in times of technical innovation, when a lot of people grow wary about our ever-increasing dependence on both interconnected technology and civil government.

    It’s also a hobby, which is probably one of the main reasons why survivalists tend to focus their preparations on their existing areas of interest. Cooks think about storing dried beans and canning foods; hunters and gun enthusiasts buy a lot of bullets and semiautomatic rifles; centi-millionaires and billionaires acquire luxury real estate in fortified bunkers or in remote areas. How convenient for each that the most optimal means of disaster survival just so happens to be that in which they’re already interested and happen to enjoy.

    If we’re playing that game, I think water is a better escape medium than air travel. Give me a nice 50-foot sailboat with a lot of non-perishables, and I can probably get very far away from roving bandits for a good, long time. After a few weeks or months, I can go ashore somewhere and, if it’s totally remote, at least collect some firewood if I’ve grown tired of “sushi”; if not, I can check in with the locals to see if the dust has settled. I’ve never much liked fishing, but I could get over that. I’d also need to re-learn celestial navigation, in case the GPS satellites are down, but that’s just a textbook and a sextant.

    I’m not sure what the billionaires have in mind for their jet and helicopter pilots in that scenario — could any of them find the remote airstrip in Kansas or New Zealand without GPS? And have they really thought through the implications of turning over their wellbeing, security, and defense to their small army of security guards? During the apocalypse, exactly what motivation will these $35k/yr rent-a-cops have for abandoning their own families to man the sniper towers? The promise of a paycheck in two weeks, direct deposited to a non-existent bank in a nearly worthless currency? These people are worrying about their fireplace marble and LED window images, and they’re giving all the guns and ammunition to strangers with no less motivation to kill them than the same hordes they’re trying to escape. Maybe that’s their ultimate self-delusion: they’re so accustomed to the service people in their lives jumping at their beck and call that they can’t fathom, even during some apocalypse, how this wouldn’t continue. Of course their pilot will have the jet fueled and ready, the runway will be cleared, there will be a helo waiting when they land, this SWAT vehicle will be waiting at the landing pad ready to whisk them to their bunker, the guards will be happy to greet them and offer a crisp salute…

  16. We keep a decent amount of cash. This and bottled water is the extent of our doomsday planning.

  17. I should add that we keep a small store of food– not so much for an apocalypse but for power outages, etc. Once a year, we give the food to a food bank and replace it. At the end of the day, absent trouble, it ends up being a $100 donation to a worthy cause.

  18. During the apocalypse, exactly what motivation will these $35k/yr rent-a-cops have for abandoning their own families to man the sniper towers?

    You’re off by a factor of at ~10. The price of high end security is $500/$1000 per guard per day.

  19. have for abandoning their own families

    Why would you hire them for your doomsday squad if they had families?

  20. I had a contractor offer a significant discount if I wanted to pay a 5-digit bill in cash. It came partially from daily 1k ATM visits and occasional stops at the bank. I fell down the prepper rabbit hole when I did a bit of online research about how to obtain large amounts of cash and not be accused of structuring transactions.

  21. We keep no cash on hand which is probably dumb. We have friends who are not preppers per se, but they keep $10K around the house “just in case”. We have some Pellegrino/spring water/Mexican coke and a lot of frozen meat and and that’s it. I also have a lot of Haagen Daaz in the freezer.

  22. Rhett – I kind of doubt that’s what they’re getting in the woods outside Salina. But even if that’s true, what difference would it make? Or do all the security guards bring their families into the bunker, also? Let’s even assume they did…why would the billionaires even be in charge at that point?

    What it boils down to in gaming out these scenarios is that there’s an extremely narrow range of outcomes in which the disaster is so bad that it’s beneficial and necessary to have made such arrangements, yet not quite bad enough that the whole effort falls apart or is totally unfeasible to execute.

  23. Let’s even assume they did…why would the billionaires even be in charge at that point?

    For the same reason they have a billion dollars to begin with. They have a strain of brilliant hyper competitive ruthlessness that, outside maybe SoFlMom, doesn’t exist among totebaggers and certainly doesn’t exist among those making $35k/year.

  24. As Milo mentions we have backyard survivalists who have a shelter in the ground, supplies and guns. For these people it is a hobby of sorts. They also have land enough to grow food. DH’s friend is one. He is an army veteran so presumably has been through basic training on this sort of thing.
    If a real meltdown were to happen the wealthy survivalists would have to prepare themselves for a lot more than a trip to New Zealand.

  25. What it boils down to in gaming out these scenarios

    I think the analysis frequently fails because the folks doing the analysis are so fixated on an exciting outcome. Take the financial crisis – could it have all spiraled into catastrophe? Sure, but that was never the most likely outcome. The most likely outcome was TARP, forced mergers of the banks, a bailout of AIG, etc. and the Federal Reserve, BOJ, ECB etc. pumping trillions into the economy. But, in the end what were we left with? Meh, nothing too exciting.

  26. “They have a strain of brilliant hyper competitive ruthlessness”

    Yeah, I’m not convinced that the skills that make one a successful app developer will easily translate in this scenario. They’re not the ones with the guns, and they’re not the ones with the best knowledge of the bunker’s workings, layout, and surrounding terrain. Anyway, you’ve always been the one to make the argument that those who are most successful in any given period are the ones who were fortunate to have been born at just the right time with a very particular skill set. Throw Mark Zuckerberg into 18th-century France and he doesn’t automatically become Napoleon Bonaparte.

  27. Throw Mark Zuckerberg into 18th-century France and he doesn’t automatically become Napoleon Bonaparte.

    No, but a successful grain merchant or banker? Fairly likely.

  28. I have been watching Outlander with time travel and surviving in the 18th century. Quite well done.

  29. Rhett, how kind of you to think that people consider their body guards’ familial situation in hiring decisions.

    “People seem to think there can’t be gold inflation”
    What I really don’t get is how people wealthy enough to have followed/invested in gold over the years can ignore the fact that its price fluctuates just like anything else.

    There was a thing on these people on NPR this weekend. I didn’t listen that closely.
    I am reminded somewhat of an associate of my father’s who was terrified of Y2K. He pulled out of all his real estate investments, including partnerships. I think he closed all his bank accounts and kept the cash at home. He may have sold his Rolls Royce–not sure about that; maybe he just got a back-up car. He died in January 2000.

    “[Survivalism] flourishes particularly in times of technical innovation”
    A couple of months before we left Germany, we went on vacation for my son’s birthday. Almost went to Palmyra, but Portugal was cheaper. There were no indications that it might be our last chance to see the ancient sites in Syria while they were still standing, but for several years now people there have been living in the kind of hellscape survivalists imagine. Right now Germany, France, and other countries are simply shaking their heads at the POTUS, but now that the senior diplomats have all left, who knows how long it will be until somebody who intentionally hasn’t looked into protocol incites attacks on us? But taking that train of thought too far can’t be healthy.

  30. I will admit that I have gone to overweight cash in my investments- not intentional to start but I like investing in distress and I see that there could be disruptive opportunities in the near term. I wish I had invested a chunk right after Brexit but now things feel too expensive.

  31. cash – probably about $1000-$1500. I’ll save you time…most of it is in DW’s lingerie drawer from her mom slipping her $100 here and $100 there over time. Every once in a while DW will count how much it is and deposit some in the credit union. On a day-to-day basis usually carry between $0-200; DW is $100-200 because she always has an emergency Benjamin with her.

  32. I listened to an interview with the author of this article while driving home last week, and by the end of my drive, I was ready to slit my wrists from despair

  33. Milo,

    Did you ever watch the show Frontier House on PBS? Long story short they found volunteers families to live as 19th century pioneers. All of the families were trying to eek out a living farming but one dad, who was entrepreneur in real life, figured out he’d be better off building a still to make alcohol.

  34. The security guard will kill a grain merchant over a can of Busch’s baked beans.

    Or, more likely, after a few days in the bunker, the condo board disagrees with the security manager about whether to venture outside to survey the situation, or whether it’s imprudent to maintain the swimming pool filtration on the auxiliary generator, the security manager simply declares himself in charge.

  35. We keep emergency cash – enough for a few weeks of ordinary expenses. We don’t expect the zombie apocalypse but more a problem with the internet and financial systems.

    Rhett – I remember using cash on vacations and having a credit card for emergencies. We still like to tip with cash and I keep cash on me $ 100 to $ 150 for small purchases. I find it amusing with young people running a register that they will ask credit or debit and get a confused look on their face when I say cash.

  36. Milo,

    I see where you’re going with this. At the low end many are drawn to survivalism as they think it will involve the great being brought low and the meek inheriting the earth. I don’t think the reality would be so fair. The meek are meek for a reason.

  37. I go into the bank once a month and get 1000 to 1500 in 50s and 100s for various uses. I like to keep an additional 500 in smaller bills in the kitchen drawer. This is simply in case there is a power outage or financial Internet interruption. In a doomsday scenario, I will exit gracefully. I like to keep enough food for two weeks in case of travel disruption or being housebound for a short time. Propane for the grill. A case of bottled water That is not hard to do.

  38. I usually have $500 or so, but no extra. I think DH keeps around $2000 in his office, but not sure if he’s re-stocked that after the move (we were depleting it for a while). We always have plenty of seltzer on hand from Costco, but we don’t prep at all otherwise.

  39. S&M – if we are talking about fleeing war and civil unrest, some bit of planning goes a long way. Moving some money into a foreign account that is accessible, keeping a go bag, having alternative meeting point for your family would have measurable outcomes. When my family was fleeing Cuba on a “temporary” visit to the U.S., they had some cash in Florida accounts and they were wearing as many jewels as possible just in case they needed to raise quick cash. In a Zombie apocalypse, not sure that diamonds would have any value. Guns, ammo, and transportation probably have more value than gold or cash.

  40. “I see where you’re going with this. At the low end many are drawn to survivalism as they think it will involve the great being brought low and the meek inheriting the earth.”

    There are definitely a lot of people who see some sort of catastrophe as a means to reshuffle the deck. This was evident in the 2008 financial crisis, combined with the now-laughable idea about Peak Oil.

    I agree with you that, eventually, the players with whatever innate skills and characteristics you refer to are the ones who will end up with the most chips. But it could be a nasty process to get there, and I’m saying that the billionaires in the Kansas bunker, if things are really as bad as their preparations would indicate, are not necessarily well-positioned to remain on top long enough to stay at the table.

  41. Our focus is on the possibility of losing power and water for a week or more due to a bad hurricane hit. I have $200+ in cash somewhere in the house, but I haven’t been able to find it ever since I moved it. Originally it was in a drawer along with the field trip $ envelope (all those morning emergency requests for $7.50 or so), but the kids had cottoned on to where the field trip $ was and were getting into the drawer so I moved both, and tucked the hurricane cash into Packing for Mars (book). Then one morning when someone needed a book to read at school due to some weird assembly schedule I pulled that one and was handing it over when I noticed the envelope in there, so I decided I should put it someplace else. I did put it someplace else. Sadly, I can’t remember what that place was. I guess I should really start a new hurricane cash stash.

    We also have a modest supply of spam, canned corned beef, dried hash browns, and of course lots of rice, which we use as we go along but try to stay well-stocked on. And the propane for the gas grill, a solar charger, stuff like that. No generator because it would just get stolen.

  42. Which type of Zombie Apocalypse do you think is most likely?

    Coronal Mass Ejection directed at the Earth.

    On September 1–2, 1859, one of the largest recorded geomagnetic storms (as recorded by ground-based magnetometers) occurred. Auroras were seen around the world, those in the northern hemisphere as far south as the Caribbean; those over the Rocky Mountains in the U.S. were so bright that their glow awoke gold miners, who began preparing breakfast because they thought it was morning.[6] People in the northeastern United States could read a newspaper by the aurora’s light.[9] The aurora was visible as far from the poles as Sub-Saharan Africa (Senegal, Mauritania, perhaps Monrovia, Liberia), Monterrey and Tampico in Mexico, Queensland, Cuba, Hawaii,[10] and even at lower latitudes very close to the equator, such as in Colombia.[11] Estimates of the storm strength range from -800 nT to -1750 nT.[12]
    Telegraph systems all over Europe and North America failed, in some cases giving telegraph operators electric shocks.[13] Telegraph pylons threw sparks.[14] Some telegraph operators could continue to send and receive messages despite having disconnected their power supplies.[15]

    https://en.wikipedia.org/wiki/Solar_storm_of_1859

    If it happened today it could blow out the entire electrical grid. However, we have:

    https://sohowww.nascom.nasa.gov/spaceweather/

    So we’d have up to 13 hours of warning that it was coming. Worst case, the President would be on TV saying they’d have to shut down the electrical grid for a few days while the storm passed. People would panic but things would be fine in a week.

  43. “How much actual cash do you have on hand? Not in bank – physical cash at your house.”

    Very little. And I am lucky if I have $5 in my wallet. I don’t carry or use cash much at all. I get cash when I am going to need it. Someday I may regret this calculation, but I believe the chances of a burglar going into my lingerie drawer and stealing my cash is far more likely than some sudden natural disaster scenario where I both can use cash for things I need and can’t get any from the bank on the corner.

    I’m more with Milo – what is special about these tech billionaires wouldn’t necessarily translate to a apocalypse scenario, and there are factors that actually make them much less likely to be able to thrive. I think survival skills and social skills are going to be way more important.

    The entrepreneurs/management/”leadership” types almost always get voted out early on Survivor because they are so bossy and annoying, yet lack any practical skills for actually surviving on a tropical island. And that’s just a TV show where they are never in any actual danger. (I’m being a bit tongue-in-cheek, but seriously – they always stink at that show and they are usually reviled within days.)

  44. I personally believe that a flash, quickly fatal pandemic will be the population corrective – not exactly a full doomsday scenario. Something like a airborne or casual touch transmitted viral mutation that runs at lightning speed throughout densely populated areas and spreads through air travel to the interconnected world. Even quick development of a vaccine, given the problems of production and distribution, will still result in a 20 to 30 percent decrease in the worldwide population, something the planet might desire if it were a sentient being. Certain individuals or groups may have natural resistance. People in rural areas in the developed world and far from cities in the developing world may survive because of isolation, but they will also be last to receive the vaccine. A lot of the frail elderly will be wiped out, perhaps a return to natural consequences of aging and not a doomsday component at all. Many infants or small children will die, a real concern in a low birthrate world, but as long as the virus has no effect on the gonads or on fertility, that will correct itself at least worldwide in a few years. Europe will likely be hardest hit with a real risk of population falling below economic sustainability; Africa the least affected but also with the least infrastructure to take advantage the opportunity.

  45. “Honest question: Can someone describe a scenario where possession of gold coins saves you?”

    These people aren’t thinking “zombie apocalypse.” They are thinking “collapse of the US order,” which means “I need to get my person and assets somewhere where the former will be safe and the latter will be valuable.”

    I am of Milo’s thinking on this. These are guys who are used to being masters of the universe, looking at the possibility of a world in which their skillset no longer puts them on the top of the heap (and is in fact likely entirely irrelevant), and thus trying to figure out something to do to maintain their safety and status. If the shit really were to hit the fan, the guy who is really valuable is the guy who can hit a rabbit at 100 yards, or macgyver the oxygen generator when it goes down, or distinguish edible mushrooms from poisonous ones, or forge some weapons/replacement ammo, etc. etc. etc. You know, skills.

    The whole silo thing made me laugh: all this focus on the security, and the amenities, and
    “hey, we have two doctors and a dentist!” And all I could think was “gee, hope you’ve got some engineers on staff, and their immunizations are up-to-date.”

  46. I hope SOHO works because I do wonder how we’d survive in that type of solar event. Losing power for a week gave me a very slight taste of what that could be like.

  47. “Which type of Zombie Apocalypse do you think is most likely?”

    I don’t know – highly contagious yet deadly viral outbreak? Maybe that is just the type of dystopian movie that scares me the most!

  48. “The meek are meek for a reason.”

    Right. That reason being that their skillset doesn’t match what 21st century society values.

    Many of the meek would, in fact, continue to be meek, because they lack the skills to manage in both current society and doomsday scenarios. But many of the currently-meek would find their popularity increase dramatically as their skillset becomes relevant again — especially among people like me with no actual useful skills of their own.

    I’d actually flip it the other way around: it’s not whether the meek would stay meek, but whether the currently-powerful would stay powerful. I think the likelihood of that happening is inversely correlated with the severity of the disaster — if we’re all on the proverbial desert island, Mr. Techie Titan is the first one tossed in the ocean. Well, maybe after me. :-)

  49. And I have almost no cash on hand. In fact, I discovered Saturday I had zero cash on hand.

    Not only are my skills largely irrelevant, I am also a sucky prepper.

  50. In this book you meet a lot of the people whose skills and interests have not been the sort to lead to great success in our times, but who you’d want to have around in the various disaster scenarios:

    But surely some of the techie-success-stories are the sort of people who are just generally competent at whatever they turn their hands to, and would be quick to figure out the sort of skills they needed to pick up and where they could learn them. And what about the ones involved in the Maker movement? There’s a good source for your tinkerers.

  51. I heard a lecture about pandemic flu that scared me. Then I got busy buying houses and having babies that I stopped thinking about it.

    I read this recently (from a .gov website, no less!) “Stock a week’s worth of food, water, medications and other supplies for each family member. This is the minimum amount you will need. However, a flu pandemic could last for months and supplies from stores and other sources may be limited for much of that time. If you can store more than one week of supplies, we encourage you to do so. Remember your pets when stocking your supplies.” A little astonished to see the recommendations for “months” of supplies.

    I was on the front lines in the 2009 H1N1 outbreak. I spent some of my time working at a rural hospital. There wasn’t a system in place for triaging – the staff never had such an overwhelming influx of patients. It was a disaster. I tried to get a vaccine for myself or my infant but couldn’t for weeks – I’m fairly confident we both had the H1N1 illness before we were vaccinated. There was so much corruption in the stockpiling of tamiflu and the distribution of vaccines. We saw so many pregnant women dying.

    In the big picture, H1N1 wasn’t that bad – it was worse than we have seen in a few decades, but most healthy people survived just fine (as did the very old – there was some overlap with immunity to a flu from the 30s, I think).

    When Tamiflu comes off patent later this year, I will likely stockpile doses for the family. I don’t have a lot of faith in the medication (the research is super spotty) and haven’t taken it even when I have had flu, but it probably prevents some people from dying.

  52. A lot of the nurses and techs I work with are can-do kind of people – they rig the equipment when it won’t work, they build things at home, and they have a year’s supply of canned goods. They also are physically tough and competent with weapons. I would expect them to be leaders in a post-apocalyptic communities, even though they don’t qualify as tote baggers now.

  53. I disagree with Meme on where the biggest effects would be. I think China would be devastated because of extremely dense living conditions and susceptibility due to damage from high pollution and poor health in general. I also think Africa would be hit hard because people there also live in a lot of dense cities, and there is no supportive healthcare. Africa always seems to be hit hardest.

  54. One of the things that hit me when I heard the radio interview is that DH’s boss is likely one of these rich bozo survivalists. He is worth around 4 billion and already has stockpiled enough potassium iodide for all his employees because he is convinced Indian Point is going to meltdown. He is a very strange extreme environmentalist type.

  55. I hope I go quickly with my family in an apocalypse. I don’t have any useful skills and doubt my wizardry with Excel will do me much good. Not sure I’d want to survive an apocalypse anyway.

    I agree with others that a more likely scenario is a horrible virus wiping out the population. I’m probably screwed in that case too.

    I rarely have cash except when we need to pay the babysitter. I guess I’m well prepared to go quickly when the end comes.

  56. Not sure I’d want to survive an apocalypse anyway.

    I don’t know why so many people do. Better to be incinerated in the initial flash and be done with it.

    I wonder if the fear of death and the meek shall inherit the Earth have religious parallels. It seems a lot of the concerns and motivations are the same.

  57. I have no useful skills at all in a doomsday scenario – I am not so “mechanically inclined” as my grandmother liked to say, although I can garden a little bit. I like HM’s idea that Colonial Williamsburg will survive. I hadn’t really thought of that. And they have functional cannons and other weapons as well!

  58. For us, the biggest risks are earthquake and resulting services disruption. After an earthquake, I expect food to be available within a week, and we wouldn’t starve for a month. I agree with the pandemic risk. Given that diarrhea and fever are the worst aspects of most illnesses, I maybe should buy a new large bottle of acetaminophen and a Costco-size box of Imodium, but I probably won’t.

    Other than Ada’s techs, we are some of the best positioned to survive for a while. We’re geographically isolated and not the attack target of much of anyone, we’re on a hill so our house won’t flood or experience run off from disease-causing broken sewer pipes, our neighbors have wells and we could get water from a 6′ hand-dug well, given our water table, it’s never bitterly cold so we won’t die without heat and we will be in the last decile of people running out of ammunition.

  59. Today’s topic reminds me of Rhett Butler’s and Ashley Wilkes’s shared observation in _Gone With the Wind_ that they are witnessing a Götterdämmerung and their shared recognition that great wealth is built when civilization rises or falls, but more quickly when it falls.

  60. There’s this book series based on some event causing worldwide failure of all electrical, steam power, engine and firearm items. It started out as a fascinating look at a post-apocalyptic world, and was set in Central Oregon. The most successful individuals were the Society for Creative Anachronism types, DIYers of all types (weaving, sewing, farming, building) and gang leaders. Fits into the hobbies hypothesis!

    There were also some funny scenes with various fiefdoms getting into wars and alliances, and there was one group controlled by academics — one of their hallmarks was interminable discussion and debate. Quite hilarious. The Change series by S.M. Stirling. I remember the series got a bit weirder as it went on, but I quite enjoyed the first three of the series.

    This type of reading is unfortunately about the only place I get my “what to do in a terrible event” planning suggestions. Need to do more earthquake prep, because that’s at least more likely than a zombie apocalypse.

  61. PSA: Immodium won’t save you when the viral pandemic hits. I spend countless hours each year explaining why one should never take it. Just replace the fluid with pedialyte (which can be made at home). High volume fluid loss simply needs high volume fluid replacement.

    You can treat cholera this way with great success, and I believe matching output to input is the standard of care for field treatment.

    Other than that, I’m pretty sure WCE will be fine.

  62. Mia, I’m getting passports for my son and myself, in a country where most of my ancestors are from, and where I happen to know the language and feel comfortable living. One of the attorneys with CAIR recently posted that he is getting his kids Canadian passports.

    “the billionaires in the Kansas bunker, if things are really as bad as their preparations would indicate, are not necessarily well-positioned to remain on top long enough to stay at the table.”
    They might well be the target of resentment of those not so well-off. Just how many ducts does their air system have?

    “The entrepreneurs/management/”leadership” types almost always get voted out early on Survivor because they are so bossy and annoying, yet lack any practical skills for actually surviving” Unless they’re psychopaths and skilled at playing people off one another.

    I rarely have cash on hand.

  63. Dibs on Ada on my survival team!

    And this is the core allure of survivalist fantasies. Most of live in worlds where we don’t feel globally important and valuable (even doctors – many just feel like cogs in a big machine, arguing all day with patients about Immodium and antibiotics). It pleasant to imagine that the 30% mortality flu hits, and I am the most valuable person in the world (because of my Tamiflu stash, my canned goods, my weapons, etc.). I imagine this is even more so for someone who feels bullied at work, lacking socio-economic mobility, stuck in a useless job without options, etc.

  64. I’d want to survive an apocalypse as long as my son does. I cannot envision killing him. If something happened to him, I said during the self-harming and my fears that he’d kill himself, it would be the end of me. Same in end times.

    Besides Allie’s book series, a way to freak yourself out about a pandemic is playing the game Plague Inc.

    I usually check supplies, in a lackadaisical kind of way, at the start of hurricane season. I’d get more serious if there were a storm, meteorological or metaphoric, headed our way.

    MM, don’t most people in China have connections back to the land? I think people in African cities do. They could go back there if need be.

  65. Ada, that’s why it’s bizarre to see billionaires joining in. I wonder if the allure for them is that they either want to convince themselves they aren’t useless, or that they feel swallowed up by their investments.

  66. Ada, what’s bad about Imodium? I just gave some to DS1 a few months ago when he was hit with diarrhea just before a plane trip back from the Midwest.

  67. In China, even rural areas are densely populated if arable. People with land have small amounts of land. The Tibetans will survive, though

  68. I don’t have any useful skills and doubt my wizardry with Excel will do me much good.

    If we’re talking about reality vs. fiction – I don’t know about that.

    Take the Jews of Germany c 1933. There were 500k Jews when Hitler came to power and over the next 6 years 300k were able to emigrate. This was likely due to the fact that they tended to be educated, skilled and they had means and connections – very totebaggy.

  69. And in Africa, even if people have connections back to the land, all that means is that in a pandemic situation, the urban dwellers fleeing back to the country will bring the germs with them

  70. “Unless they’re psychopaths and skilled at playing people off one another.”

    That never seems to be the case. Overconfidence and lack of self-awareness when they are not actually in a position of power that was already granted them seems to be a downfall. The sales people and cops though – they tend to be better at playing people off one another.

  71. For infectious diarrhea, immodium can lead to overgrowth of toxin producing bacteria. Basically, if you stop movement through the intestines when they are filled with bad microbes, those bad microbes have fertile ground to multiply like crazy. This can cause “toxic megacolon” among other things.

    In more practical concerns, I find that people often have disabling abdominal cramping after taking immodium – parts of the intestines are paralyzed, but other parts are still trying to move things through.

    Immodium is a great solution for non-infectious diarrhea, but that’s a hard call to make at home.

  72. Ada, thanks for the explanation. Imodium did its thing during the plane ride and he didn’t stay on it after the plane ride so it solved the problem it needed to solve with no long-term damage to him.

  73. “Fluid replacement is a problem if the water is contaminated”

    So I keep a jug of bleach at home.

  74. “NoBikesInTheApocalypse”

    In the aftermath of the Loma Prieta quake, landlines were down and roads were clogged (and there were no cell towers). I wanted to make sure DW (then GF, not living with me) was OK, so I jumped on my bike and rode over to her place, whizzing by all the people in their cars stuck in traffic.

  75. “When Tamiflu comes off patent later this year, I will likely stockpile doses for the family.”

    Is that something that we who cannot write prescriptions can do for ourselves, or would it require a complicit MD?

  76. “DH’s boss is likely one of these rich bozo survivalists. He is worth around 4 billion and already has stockpiled enough potassium iodide for all his employees because he is convinced Indian Point is going to meltdown.”

    If he’s stockpiling it not just for himself and his family, that suggests he might not necessarily be your typical bozo survivalist.

  77. “We also have a modest supply of spam, canned corned beef, dried hash browns, and of course lots of rice, which we use as we go along but try to stay well-stocked on. And the propane for the gas grill, a solar charger, stuff like that.”

    No TP?

  78. “If he’s stockpiling it not just for himself and his family, that suggests he might not necessarily be your typical bozo survivalist.”

    Well, my guess is that he somehow imagines his hedge fund will survive with all the employees

  79. Cop/nurse – I am betting a lot of NYC cops have no idea how to hunt. They would be handy for defense though

  80. – I am betting a lot of NYC cops have no idea how to hunt.

    With the number of people in America who can hunt all the wildlife will be dead in a few months so hunting ability is going to be of minimal value. There are 30 million dear and 68 million pigs in the US, both aren’t going to last long.

  81. I follow Survival Tips on Twitter.  It’s more for entertainment, but they do seem to offer some useful ones.

    If you get stuck in riptide, remain calm and swim parallel to shore. Swimming to the shore will just tire you out faster.

    If your girlfriend catches you looking at another woman, turn to her and say “I’m glad you don’t dress like that.”

    Does this really work?

    If you swear at Apple’s automated customer service, it puts you through to a human.

  82. We always are somewhat prepared for a disruptive event. We always have enough food on hand to survive for at least a couple of weeks, I try to always have at least a month of two of medications.

    Our state has, within my lifetime, endured disruptive hurricanes, shipping strikes, and tsunami. The tsunami were mildly disruptive, but my parents’ generation experienced very disruptive tsunami.

    This experience has colored our preparation. The shipping strike experiences leads us to always keep a stock of toilet paper, rice, and spam on hand. The hurricane experiences additionally have us prepared to stock up on drinking water (lots of jugs and pitchers on hand) as well has the aforementioned bleach.

    We keep some cash on hand, somewhere between $1k and $2k. About $200 or so of that is a buffer for daily use, so we don’t need to make a special trip just because we spent what’s in our wallets. Another few hundred is very crisp bills, suitable for gifting. The rest is mainly for emergencies, e.g., a hurricane that brings down our local grid and leads to a temporary cash economy without being able to withdraw cash from financial institutions.

    A lot of the cash we keep is in small bills. While there are laws against price gouging, I’ve heard stories of people paying a lot for stuff in those situations because the sellers did not have change, so having small bills will mitigate against that.

  83. We are sort of prepared since 09/11 and Superstorm Sandy. We have some cash, water and enough Cheerios to survive for a week.

    Did anyone catch the story on 60 Minutes last night about the survivors of the avalanche in Italy? I can’t even begin to image what they were thinking int he cold and the dark for 50 – 60 hours until a rescuer reached them.

  84. “I was on the front lines in the 2009 H1N1 outbreak.”

    I remember prepping for that. We increased our stockpile of food and medicines, to put ourselves in a position where we could avoid contact with other humans for at least a few weeks to avoid catching it.

    DW’s and my offices both had plans in place to facilitate working from home, and our kids’ school had plans for online delivery and collection of homework, assignments, and lessons.

  85. Just reading the article now

    “A survey commissioned by National Geographic found that forty per cent of Americans believed that stocking up on supplies or building a bomb shelter was a wiser investment than a 401(k).”
    Holy crap!

    “The reëlection of Barack Obama was a boon for the prepping industry. Conservative devotees, who accused Obama of stoking racial tensions, restricting gun rights, and expanding the national debt, loaded up on the types of freeze-dried cottage cheese and beef stroganoff promoted by commentators like Glenn Beck and Sean Hannity. A network of “readiness” trade shows attracted conventioneers with classes on suturing (practiced on a pig trotter) ”
    I didn’t realize the bold lies and profiting from them had been so serious then. The national debt is lower than it’s been in decades, and anyone waiting for him to take their guns is still waiting. But funny that Ada might not be such a hot commodity after all. Sorry Ada!

    Looks like the author anticipated discussion here:

    “Anyone who’s in this community knows people who are worried that America is heading toward something like the Russian Revolution,” he told me recently.

    To manage that fear, Dugger said, he has seen two very different responses. “People know the only real answer is, Fix the problem,” he said. “It’s a reason most of them give a lot of money to good causes.” At the same time, though, they invest in the mechanics of escape. He recalled a dinner in New York City after 9/11 and the bursting of the dot-com bubble: “A group of centi-millionaires and a couple of billionaires were working through end-of-America scenarios and talking about what they’d do. Most said they’ll fire up their planes and take their families to Western ranches or homes in other countries.” One of the guests was skeptical, Dugger said. “He leaned forward and asked, ‘Are you taking your pilot’s family, too? And what about the maintenance guys? If revolutionaries are kicking in doors, how many of the people in your life will you have to take with you?’ The questioning continued. In the end, most agreed they couldn’t run.”

  86. When DH and I were both working we had leadership roles that were critical for Business continuity. We had war gamed out various situations of things affecting our two firms around the world and having to be there immediately and maybe work through several nights, etc. We often worried that we both had these kinds of jobs and what if the disaster was the kind that would also affect our home- who would go to the kids? Well we were “lucky” when 9/11 happened I was at home about to start a new job the following week. He had to stay downtown and man the operations for 5 days, sleeping in the firm’s “command center.” It was terrifying – people thought another attack was imminent, that all the particles in the air were dangerous to the lungs, etc. I had to pick up the kids at school early and children were being informed of their parent’s deaths. I was so glad to be home with them and talk to them!

  87. Also I have close relatives who lived through Katrina. In the aftermath it was complete lawlessness. My relatives- who are multi-generation New Orleans people said they were so ashamed of their town. (the opposite of the feelings New Yorkers had after 9/11) Anyway they tried to go back to their homes – after, these are pretty tough set of guys with big dogs, but they quickly realized that without guns it wasn’t a good idea, so they evacuated and didn’t come back for months.

  88. Ok Toxic Megacolon is the most frightening phrase ever. Can’t believe there isn’t a hard rock band with that name.

    I don’t worry so much about the flu as much as I do the antibiotic resistant superbug that is closer than I think we know.

    We used to live near a power plant and they handed out the iodine tablets and I was like “so I guess I don’t die of thyroid cancer so I can just die of another cancer.” never picked up the tablets.

  89. Mafalda’s comment about New Orleans after Katrina reminds me of the observations of the National Guard officer (from Pittsburgh) who was assigned to hurricane support after Katrina after New Orleans and in rural western Louisiana after another hurricane that same year. He was astounded by the differences in response to a disaster by urban vs. rural people and expectations of government responsiveness and thinks it’s a big part of the rural/urban political divide.

  90. SM, you have to cut off the ? and the stuff following it, so you end with the file extension (.png). I’m not sure whether .png files work anyway, but you’ll sometimes see the same thing with jpegs or gifs.

  91. Got it!
    I think it’s pretty great that this guy, Dale Earnhardt, and other not-usual-suspects are coming out for this. His clothes and the language on the sign are what I usually think of as preppers.

  92. Why is that guy a prepper? Because he has a POW patch? Or is he standing in front of a bunker filled with canned goods and gold?

  93. Also, I just put more Costco questions on yesterday’s post, if people want to help me out again.

  94. Ada, between the leather, jeans, tough guy look and fight-to-the-death message, he is much more in line with who I picture as a prepper than Silicon Valley millionaires. But you said you know a bunch of preppers irl. Do they have a “look” anything like this?

  95. “I didn’t realize the bold lies and profiting from them had been so serious then. The national debt is lower than it’s been in decades”

    Really?? No.

  96. “I think it’s pretty great that this guy, Dale Earnhardt”

    You mean Dale Earnhardt Jr.?

  97. I have an IRA question for those in the know. I made a contribution to my traditional IRA in December to try to reduce our tax bill. As I’m doing TurboTax, it says we can’t deduct my traditional contributions because our income is too high. Had I known that, I would have put it in my Roth. Can I transfer that amount from the traditional to the Roth without a penalty? Or will I take a tax hit and/or have some other cost to it?

  98. And as I’m talking to DW about this, I’m thinking back to our many conversations about how the “average” folks don’t have the bandwidth to understand all this stuff. I like to think I’m a reasonably intelligent and education person (I have two master’s degrees), and I had no idea there is an income limit on deducting contributions to an IRA.

  99. DD you can withdraw the nondeductible 2016 contributions to an IRA up to due date of the 2016 return in 2017 without penalty. You also have to withdraw the income earned thereon. I typing this on the phone so I don’t have access to the details of how you report tge contribution in 2016 and then calculate the amount of the withdrawal and how you have to input the info from the 2017 distribution form you are going to get from the bank or brokerage firm. PM me if you want me to look into it further for you. I dont think Roth recharacterization is likely to work.

  100. DD, there are also income limitations for Roth IRA contributions, so you should make sure you’re not exceeding those before you do anything else.

    If you’ve exceeded the Roth income limit, you might be able to recharacterize your contribution as a non-deductible characterization. I think you can mix deductible and non-deductible contributions in the same account.

  101. “I like to think I’m a reasonably intelligent and education person (I have two master’s degrees), and I had no idea there is an income limit on deducting contributions to an IRA.”

    Speaking from within my bubble, this surprises me. But maybe the “average” person’s ignorance would extend to the point where he would be unlikely even to consider contributing until he was advised by someone in the know. Just a theory based on what I’ve seen. Maybe you have too much self confidence about financial matters. ;)

  102. Meme, thanks. I think I’ll call vanguard and ask them what I need to do.

    Finn, I’m well under the limit. If I can, I’d rather just keep the cash on hand. I only made the contribution to help with our taxes since we have to pay this year.

    CoC, my guess is most of the “average” people don’t even have IRAs. I realize I’m not the most financially savvy, but I’ve never heard of the income limit. I’ve always heard you can contribute up to the annual limit and it’s tax deductible. Nobody ever said income makes a difference. And what’s the point of contributing to a traditional IRA if it’s not tax deductible?

  103. And what’s the point of contributing to a traditional IRA if it’s not tax deductible?

    1. It’s tax differed so as dividends and capital gains accumulate they won’t be taxed until you take the money out.
    2. An IRA is almost completely impervious to lawsuits and creditors.

  104. And what’s the point of contributing to a traditional IRA if it’s not tax deductible?

    The earnings grow tax-deferred, even though the initial contribution doesn’t cut your taxes. Also, the way it is (stupidly) set up now, you can do a non-deductible IRA and then recharacterize it as a Roth, even though you can’t do a Roth directly if your income is too high.

  105. Denver –
    http://www.fool.com/retirement/iras/2015/06/18/what-is-a-nondeductible-ira.aspx

    The money you put into each type of IRA grows tax free, meaning you don’t pay any taxes on the gains your investments make while they are in the account. And only after you start withdrawing the money in retirement — or after age 59 1/2 to avoid early withdrawal penalties — do you pay taxes on your gains at your ordinary income-tax rate at the time you withdraw the money.

    That said, I don’t really get it, either. Because if I’m starting with after-tax money, anyway, why would I want to defer all taxes on gains so that I can pay ordinary income tax rates on withdrawals down the road, when I can just invest wisely in a taxable brokerage account where I’ll pay the lower capital gains rate on qualified dividends annually, and pay only the lower capital gains rate if I ever sell appreciated shares?

  106. I agree with Rhett’s opinion of the average person regarding financial matters. I belong to a Dave Ramsey group on Facebook. Now that it is tax season I’m astounded at the basic questions people are asking. It is also eye-opening how many have medical debt or who struggle to pay $50-100 for Turbo Tax. I like reading the posts because it makes me aware of how much of a bubble I live in.

    I think DD is above average for even thinking about IRAS and trying to minimize taxes.

  107. Milo,

    Romney had $100 million in his so there must be a reason. Maybe the immunity to lawsuits, creditors and bankruptcy? Or does it matter if you never intend to sell the shares? They will either be inherited or given to charity?

  108. Rhett – Was Romney’s in a non-deductible? I could see immunity from lawsuits, etc. And while I was comparing it to my simple, tax-managed index fund that avoids any earnings that would be taxed at ordinary rates, I could imagine a portfolio where the earnings wouldn’t be qualified dividends but treated as ordinary income, in which case the deferral would be helpful.

    I don’t know about never intending to sell. I would think it’s still subject to RMD at 70.

  109. If I’m not getting a tax break break up front, why would I put money in a traditional IRA instead of a Roth? As Milo said, what’s the point of tying money up like that for no benefit?

  110. Yeah, I was wondering why anyone would do a non-deductible IRA and not convert it to a Roth, but this gives some insight:

    “If you convert only part of the money in your IRAs, the tax bill is based on the ratio of your nondeductible contributions to the total balance in all of your traditional IRAs. If, for example, you made $2,000 in nondeductible contributions and you have $10,000 in your traditional IRAs, then 20% of your conversion would be tax-free.”

    http://www.kiplinger.com/article/taxes/T046-C001-S003-converting-nondeductible-ira-contributions-to-roth.html

  111. Well, remember Denver, traditional non-deductible IRAs used to be the only other option than deductibles. And again — you can open a non-deductible IRA and immediately convert to Roth even if your income is too high to contribute to a Roth directly.

    And because the earnings grow tax-deferred. Do you not see that that is a benefit?

    Finally, the theory is that your income in retirement will be lower, so you’ll be in a lower tax bracket, and the taxes you pay on withdrawals will be lower.

  112. DD after you get the info (and the first line of call center may not have it), if you have further questions try me at memetotebag AT outlook DOT com. i have been a resource for other totebaggers in the past offline. Your subsequent comment has nailed down the details of your situation for a tax pro, so not much left in the privacy drawer. At the very least, you will have to make sure that the brokerage firm changes the box you checked when you submitted the contribution from deductible to non deductible. Then you can start the process of withdrawing the funds. Do not file your tax return until you have this nailed down completely, even if you have a state refund you would like to access.

    In the old days, before Roth, in high interest rate environment, and after 1986 reform but before cap gains preference was reinstated by Clinton, and rates further cut by Bush, it made sense to do non deductible IRA contributions. Everyone thought they would be in a 15% bracket at retirement and their current tax rate was much higher. The playing field has changed. It is also a PITA to deal with mixed deductible and non deductible contributions in an IRA.

    Romney contributed partnership ownership interests in Bain (I believe that was his firm) to IRAs when they had little value. This antedated Roth IRAs, so when he hits 70 1/2 the RMDs will be taxable. The limit on direct charitable deductions out of the IRA (to the Mormon Church in his case) is 100K per year. But he can still get a deduction of the rest of the RMD to the Church (up to 50% of his AGI). The real abuses arose after Roth, when founders of new companies would put founder’s shares with low value into a Roth IRA, no taxation on appreciation ever, and then it would turn into Google.

  113. So in order to do a backdoor Roth, you need to be converting a proportional amount of your existing deductible IRAs.

    But that doesn’t apply to funds held in a 401(k). So if you have a lot of existing IRAs that you don’t want to convert into a Roth, and if your employer’s 401(k) program accepts reverse rollovers, that you can put those IRAs into your 401(k), get that money out of the way, essentially, and it won’t be subject to the Roth conversion pro-rating.

    You can also start 401(k) distributions earlier, at 55, if you’re separated from your employer and want to retire a little earlier. I was glad to discover this portion just now.

  114. Rocky, how is that any different than a regular brokerage account? Either way you’re paying taxes on the earnings, and with a brokerage account you can take out money at any time.

  115. But that doesn’t apply to funds held in a 401(k). So if you have a lot of existing IRAs that you don’t want to convert into a Roth, and if your employer’s 401(k) program accepts reverse rollovers, that you can put those IRAs into your 401(k), get that money out of the way, essentially, and it won’t be subject to the Roth conversion pro-rating.

    And that is how Joe and Jane Six Pack are supposed to fund their retirement.

  116. Either way you’re paying taxes on the earnings, and with a brokerage account you can take out money at any time.

    But you’re paying taxes on those earnings as they are realized within the account. Inside an IRA, the taxes on all those gains are deferred perhaps decades into the future.

  117. Rocky, how is that any different than a regular brokerage account? Either way you’re paying taxes on the earnings, and with a brokerage account you can take out money at any time.

    I will certainly grant that you have more flexibility with a regular brokerage account. But here’s how it differs: Suppose I put $1,000 into a non-deductible IRA, and $1,000 into a regular, non-retirement account. Every year, each account earns interest and dividends and cap gains distributions. For the brokerage account, they send me a statement telling me those amounts and I report it to the IRS and pay taxes on it. For the retirement account, they send me the statement telling me how much I earned but I pay no taxes on it each year. So the IRA isn’t diminished every year by taxes, whereas the brokerage account is. (Of course I’m actually paying the taxes out of my checking account, but the point is, I’m paying them out of SOME of my assets every single year.)

  118. Rhett – There’s no reason that it has to be that complicated. This is just squeezing out the last couple drops of juice.

    Joe and Jane Sixpack probably aren’t affected by income limits for deductible contributions. And if they are, they’re ahead of the game already.

  119. This is just squeezing out the last couple drops of juice.

    So a giveaway to the cognitive elite?

  120. “So in order to do a backdoor Roth, you need to be converting a proportional amount of your existing deductible IRAs.

    But that doesn’t apply to funds held in a 401(k). So if you have a lot of existing IRAs that you don’t want to convert into a Roth, and if your employer’s 401(k) program accepts reverse rollovers, that you can put those IRAs into your 401(k), get that money out of the way, essentially, and it won’t be subject to the Roth conversion pro-rating.”

    Yep. That’s exactly what I did.

    “Rocky, how is that any different than a regular brokerage account? Either way you’re paying taxes on the earnings, and with a brokerage account you can take out money at any time.”

    The other factor that goes overlooked is that back in the day, capital gains were taxed at the same rates as ordinary income. So Option 1: invest in regular taxable account, pay taxes on annual CG/dividends at relatively high marginal tax rate, retire, sell, pay CGs at lower retirement tax rate. Vs. Option 2: Invest in nondeductible IRA, pay no taxes on annual CGs/dividends, retire, sell, pay CGs at lower retirement tax rate. When there is no difference between tax rates for income tax and investment income, the ability to defer paying those taxes until you are in a lower tax bracket in retirement is very desirable (not to mention that back then, many income tax brackets were higher, too).

    Now the changes in the tax system make the nondeductible IRA not so advantageous, because (i) CGs tax rates can be significantly lower than income tax rates, and (ii) there are many funds that focus on keeping annual CGs/distributions down (e.g., tax-managed funds). So you really have to do the math to see whether the tax-deferred growth is beneficial enough to offset the extra taxes of having everything at the end taxed at regular income tax rates.

  121. “So a giveaway to the cognitive elite?”

    If you’re looking for someone who’s going to defend complexity in government regulations and the tax code, I ain’t the one. This is what happens when technocrats like to solve everything by new programs and little tweaks.

  122. I’m in a ER doc group on Facebook, and this post came up a few weeks ago…

    “Tell me about Vanguard. What is it? Is it legit? Why isn’t everyone investing in it?”

    So, maybe ER docs aren’t a part of the cognitively elite…

  123. I regularly hear conversations at work along the lines of “I just don’t have the time to be analyzing different investments, when to buy and sell, and on and on, so if my guy charges 1 or 2% to keep on top of all the latest developments, it’s well worth it to me…”

  124. This is what happens when technocrats like to solve everything by new programs and little tweaks.

    How would you do it?

  125. “How would you do it?”

    I have no idea. But I’d start by eliminating the AMT. Then I’d get rid of most deductions, definitely starting with mortgage interest, probably charitable, too. It would also help to not be giving special tax treatment to preferred types of spending, such as daycare or healthcare.

    And this is all just dealing with earned income. Then there’s the gigantic question of how you treat capital gains. But I have to go now.

  126. Milo,

    There is a certain Dave Ramseyesque logic to it. The question for them isn’t Vanguard or 1% or 2% from a broker or financial adviser. It’s leaving it’s all in the default money market account getting 0.1% vs. getting 5% in a target dated fund minus 1-2% in fees.

  127. “So a giveaway to the cognitive elite?” Yes, exactly. Or at least the top X% who can afford accountants / lawyers who can answer the question of “what can we do to reduce my tax load and fund retirement?”

    For employee (w-2) couples with enough income and access to the various programs each person can annually set aside:
    – pre tax 401k/403b – or – post tax Roths $18,000 ($24,000 if > age 50)
    – post tax Roth/regular IRA $5500 ($6500 if > age 50)
    So that’s up to $61,000 that can grow tax-deferred.

    and if you have access to a Health Savings Account a family can set aside $6750 ($7750 if the owner is > 55). These contribs are pre-tax and can be used for current medical expenses or allowed to grow tax deferred ~forever and then used for medical expenses in retirement.

    Now we’re up to $68,750/year.

    Unless you’re into it, it’s easy to miss all the options you may have. And many people only have the personal IRA route to go because their employer does not offer a 401k or and HSA.

    Not even counting 457 plans and other deferred comp vehicles for people who make even more or often are in senior management positions. Also excluding provisions for the self-employed which are very generous.

  128. I really dislike the AMT and there has to be a better way to tax a group of people above a certain level without the AMT.

  129. “You can also start 401(k) distributions earlier, at 55, if you’re separated from your employer and want to retire a little earlier. I was glad to discover this portion just now.”

    You can? I have never seen/known that. Does it require backdoors and other annoying maneuvers? DH has a 457, which I know he can access as soon as he retires from his current job (even if he has a different one. He can also start his additional contribution for “old people” (technical term) earlier than 50. That account is part of our potential early retirement plan.

    The thing is – there are a lot of assumptions in all of these explanations about what tax changes may or may not be made and what parts of our income may or may not be taxed and at what rate, that none of this is really a slam dunk. Especially for a 40-ish person with ~25 years to “retirement age”. So there is a bit of a gamble in each assumption. I try not to think about maximizing every tax break too much & just sock away as much as possible in the available options that are pretty good & relatively simple. If I start to have Romney money (ha!), then I will pay someone to worry about squeezing blood from the orange.

  130. “there has to be a better way to tax a group of people above a certain level”

    Of course. On the personal side, just a simple sliding scale (I think progressive taxation, vs a flat tax, is a good thing) works for me. Get rid of all the social engineering we currently have with deductions, exemptions, taxing some income at preferred rates. Put it all in the pot and then look at the table (making this up):
    $0 – $20k tax $0
    $20+ – $50k tax = 10% on amount > $20K (my theory: almost everyone should have skin in the game)
    $50k+ – $100k tax = 15% on amount > $50k
    etc etc.

    Done right, I think it could actually lower tax rates overall. But the politics make it impossible. Real estate people, charities, religions, medical industry, etc etc all would fight to keep their break. Get rid of them all and see what really happens.

  131. $20+ – $50k tax = 10% on amount > $20K (my theory: almost everyone should have skin in the game)

    Then they’d get it all back and more via the EITC?

  132. Fred – ITA with your tax plan.

    We have never done an IRA because there isn’t a tax deduction. I’d much rather just plow it all into a taxable account and not have to worry about when I can get it out and paying 15% on dividends is not material. We have a very small amount in Roths because we phased out after a year or two, and although DH’s firm offers a Roth 401K I’d rather have the tax deduction now.

  133. I think that Susie Orman is annoying, but it sounds like it would be helpful for Susie or someone like her – Jean Chatzky? to do a primer on some of the basic stuff. The kids are able to find videos about how to do anything, and it sounds like we need simple you tube videos or a Khan academy of finance to answer some of these questions. I bet it isn’t easy for many people to understand their choices. My head starts to spin each time I read a question in a personal finance publication about when to start taking SS if their spouse is disabled, dead, divorced, remarried etc.

  134. I keep getting texts from DD and I couldn’t understand whey since they are not allowed to have their phones out of their lockers in MS. She said that most of he teachers already left because their kids needed to be picked up their schools since they had an early dismissal. So, our schools are still open because the snow is light and the phones are the babysitters today. great

  135. She said that most of he teachers already left because their kids needed to be picked up their schools since they had an early dismissal.

    !!!

  136. I need a job that lets you leave any time for any reason without consequences. Can you tell that I love tenure????

  137. Lauren – as long as there is enough staff on site, should be fine, I think. Early dismissal, late start, (hardly any snow) snow days, half days are PITA disruptions.

  138. Rhett – no, that’s (EITC) gone, too. So in reality, the “zero tax” line might need to be higher than $20k.

  139. Fred,

    So making less than 30k you wouldn’t pay FICA either but still be entitled to SS and Medicare?

  140. Milo, we can’t decide if tax policy is to raise revenue or if it has other purposes, like fairness and encouraging employment. Any tax policy should look at the impact of both payroll tax and income tax, and most analyses look solely at income tax. I would definitely support more deductibility for medical expenses/insurance you purchase yourself (one cousin had a severely disabled daughter who died; one cousin has a debilitating disease from which you usually die young). One of the best ways to encourage both parents to participate in the workforce would be to allow actual childcare expenses to be deducted, up to the income of the lower earning parent, or to tax incomes of married couples individually rather than jointly, as they do in much of Europe.

    Meme has made some compelling arguments for a VAT and I find them convincing but I want to reconfigure tax burden and I fear VAT tax would just increase it.

  141. Lauren, the way exams were handled in saac’s middle school was that two periods were two hours long and the rest were about seven, so they’d play on their phones for all those mini-periods. Lots of people dropped their kids off late/picked them up early for those non exam times. I’m so glad that in HS they do. exams then normal way–two a day, first thing in the morning, and then school is dismissed around 11:30. They are old enough to take care of themselves, so doesn’t need to

  142. “I’m so glad that in HS they do. exams then normal way–two a day, first thing in the morning, and then school is dismissed around 11:30.”

    I find it fascinating that there is such a widespread “normal” for something like this. It’s how it was when I was in high school, and it’s still true for our high school-aged babysitter. Across 50 states, and God knows how many counties and districts, who decided that high school students should take two exams per day then go home early, and why does everyone follow it? How long has this been going on for?

  143. Rhett – FICA/Medicare tax as a separate item is eliminated. Simplistically –

    Authorized Government Spending = Tax collected = $3.8Trillion
    Size of the economy = $17.9Trillion = taxable income from all sources
    Average tax rate = 21.2%
    – how this is shared among personal taxes, business taxes, estate taxes, user fees (e.g. national parks) etc., and the resulting required rates, I don’t know.

  144. Milo – my kids’ HS was 1 exam/day at 8am. Done by 10. Then go home. (Semester / Final exams only for Science, Math, History, Foreign Language. All other classes assumed to have final projects / papers due before finals week). Day 5 was the grading/makeup day.

  145. My kids’ HS does exams either during the regular period, or to get a longer block they have to come in over the weekend (rare, only for AP practice exams and chem labs that I’ve seen). My HS did exams only during the regular period. I didn’t see the 3+ hour final exam blocks till college.

  146. “I have no idea. But I’d start by eliminating the AMT. Then I’d get rid of most deductions, definitely starting with mortgage interest, probably charitable, too. It would also help to not be giving special tax treatment to preferred types of spending, such as daycare or healthcare.”

    So, you’d eliminate the AMT, and then replace it with the AMT? :-)

  147. There would be no deductions for anyone, LfB.

    Oh, I forgot to say earlier that there would be no deductions for state or local taxes. I fully admit that this requires a lot more thinking. Obviously, the whole point would be that the rates would be lower to offset this.

    The plan that was floated recently to make the married/jointly standard deduction something like $30k has a lot of the same effects without *technically* killing any benefits that homeowners hold so near and dear. I’ll be interested to see what happens. I don’t think we’d be itemizing any longer if that were to happen, so I’d probably be selling more on Craigslist and giving less crap to Goodwill.

  148. I am not generally a fan of stimulating decision on a personal level through tax policy because I find the tax code too complicated enough already. If I have multiple degrees in finance and work on structuring debt for a living and find it too complicated, I find it hard to believe your average American is going to change their decision making to optimize their tax credits or deductions. I do think simplifying the tax code overall and getting rid of a quarter of the IRS would be a start. I would not eliminate charitable deductions because I believe the donations fund a lot of programming that government does not. I would be ok with getting rid of the mortgage interest deduction for individuals but it would have a catastrophic effect on the commercial real estate market if this policy was instituted in the near term without a phase-in period.

    I think there would be better incentive to pay off your mortgage if mortgage interest were not deductible.

  149. MIa – In my mind, interest paid by a business would remain a business expense, as would depreciation. So business/corporate taxes would be different than personal income tax where I advocate for getting rid of all deductions, exemptions, including charity and mortgage interest. I think people would still donate to their causes. Then we don’t have to worry about the blurry lines of which part of the 501cX org am I giving money to because of political activity (lobbying) vs charitable work? if I believe in the NRA, or Planned Parenthood, or the United Way I can still give to them and they can do with the money what they think is best to achieve their goals.

  150. I too would love to see a “no-deductions, period” tax code for individuals.
    Even though I represented tax-exempt organizations back in the day. But as the manager of a small nonprofit, NOT having to send out those tax letters to donors by the end of today would be lovely. Most of our donors don’t itemize anyhow, but we still have to send them out.

  151. “too complicated enough already”

    Have you seen the movie Top Hat, with Astaire and Rogers? There’s a character in it who says things like this.

  152. “If I’m not getting a tax break break up front, why would I put money in a traditional IRA instead of a Roth?”

    DD, given your situation (too much income for deductible IRA, not enough to lose eligibility for Roth contributions), the Roth is, IMO, a no-brainer.

  153. “I really dislike the AMT and there has to be a better way to tax a group of people above a certain level without the AMT.”

    A consumption tax, e.g., national sales tax or national VAT, would do that. So would just printing money to pay federal expenses.

  154. “I keep getting texts from DD and I couldn’t understand whey”

    What Little Miss Muffet ate.

    Sorry, couldn’t resist.

  155. “One of the best ways to encourage both parents to participate in the workforce ”

    Should the government encourage this?

    ” tax incomes of married couples individually rather than jointly, as they do in much of Europe.”

    This is available as married filing separately. Are you suggesting getting rid of the option for married couples to file jointly?

    BTW, when I was first married, DW and I paid the marriage penalty. That was slowly phased out, but Obama reinstituted it, at least for high income couples.

  156. DD, given your situation (too much income for deductible IRA, not enough to lose eligibility for Roth contributions), the Roth is, IMO, a no-brainer.

    Of course. But I need t get the contribution back out first.

    Meme, thanks for the offer. I might take you up on it.

  157. Mia, yeah, I couldn’t resist. Sometimes typos or incomplete edits bring humorous images to my mind when read literally.

    And I know I’m not the only one who sees this. Yes Dell, I mean you. That was funny.

  158. So would just printing money to pay federal expenses.

    I am fascinated by your heterodox economic theories and wish to subscribe to your newsletter.

  159. It’s not really my theory. It was proposed by someone in another discussion many years ago, and I found it quite interesting.

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