Elon Musk would lose about 13.5 million Twitter followers, if he pushes through his plan to get rid of most spam accounts, according to data crunched by CodeClan, a Scottish digital skills academy.
The Tesla Inc. TSLA, -3.84%
CEO on Tuesday gave up a legal battle and agreed to pay $44 billion to take over the social-media company. Musk has said he wants less than 5% of Twitter TWTR, -2.35%
accounts to be spam.
But Musk’s losses pale in comparison with singer Justin Bieber, who would lose 27.6 million of his 114.2 million followers, according to the data.
Britney Spears would lose the highest percentage of fake followers out of the top 20 with some 48% of her 55.8 million followers being classified as fakes.
Former President Barack Obama would lose 19.3 million of his 131.9 million followers, the data shows.
Among other high profile names; Katy Perry has about 23.3 million fakes among her 108.9 million followers, or 21.4% of the total; Rihanna has about 26.5 million fakes, or 24.9% of her 106.5 million followers; Lady Gaga has 10.9 million fakes in her roster of 84.7 million followers, for 12.9% of the total; Kim Kardashian has about 14 million fakes, or 19.4% of her 72.4 million followers, and Ellen DeGeneres has about 24.4 million fakes, equal to 31.5% of her 77.5 million followers.
In the world of politics, Indian Prime Minister Narendra Modi has about 17.5 million fakes in his 78.8 million followers, equal to 22.2% of the total.
CNN Breaking News has about 7.7 million fakes, or 12.2% of its 63.1 million followers. Bill Gates has about 14.3 million fakes, or 24.2% of his 58.9 million followers. And NASA has some 14.7 million fakes, or 26.8% of its 57.1 million followers.
Twitter shares were slightly lower premarket, while Tesla was down 1.1%.
Shares of Digital World Acquisition Corp. DWAC, +0.03%,
the special-purpose acquisition company, or SPAC, buying the company behind former President Donald Trump’s Truth Social social-media company, was slightly higher premarket after falling more than 5% Tuesday in the wake of the Musk/Twitter news.
The SPAC has fallen 67% in the year to date, while the S&P 500 SPX, -1.28%
has fallen 20%.
The Tesla Inc. TSLA, +2.90%
CEO agreed to buy the social media company back in April for $44 billion, but in recent months said he wanted to terminate the deal, publicly citing concerns about bots on the platform. The two sides had been entrenched in a legal battle over the past few months, and a Delaware Chancery Court judge was scheduled to hear arguments on the case in October, a case Wedbush analyst Daniel Ives said Musk was “highly unlikely” to win.
Twitter users reacted to the news on Tuesday afternoon, many of them joking about a potential resolution to the seemingly never-ending Elon Musk Twitter saga.
One Twitter user said she believes Musk will look to reinstate the account of former President Donald Trump, which was banned shortly after the attack on the Capitol on Jan. 6, 2021. Trump has claimed he won’t return to Twitter even if the Musk deal is executed, and he’ll continue to post on his platform, Truth Social.
“We’re doing a big platform right now, so I probably wouldn’t have any interest,” the former president said.
Another user tweeted that supporters of the meme crypto dogecoin DOGEUSD, +1.11%
are excited by Musk’s move to proceed with the deal. Musk has touted dogecoin on several occasions in the past few years.
Similar to bitcoin, dogecoin is a peer-to-peer, open-source cryptocurrency. It trades under the ticker symbol “DOGE” and features the face of the shiba inu from the popular Doge meme as its logo. Dogecoin was up as much as 9.16% after the Bloomberg news was published.
Musk has not publicly commented on the report, but one Twitter user pointed out that he tweeted about his satellite internet project Starlink after the news broke, but did not mention Twitter in any way.
Shares of Tesla Inc. dipped after the news, and are now up just 1.31% during Tuesday’s trading. Shares of the EV maker were up as much as 5.65% on the day before the Musk news.
Most financial planners advise young people to start saving early — and often — for retirement so they can take advantage of the so-called eighth wonder of the world – the power of compound interest.
And many advisers routinely urge those entering the workforce to contribute to their 401(k), especially when their employer is matching some portion of the amount the worker is contributing. The matching contribution is – essentially – free money.
New research, however, indicates that many young people should not save for retirement.
The reason has to do with something called the life-cycle model, which suggests that rational individuals allocate resources over their lifetimes with the aim of avoiding sharp changes in their standard of living.
Put another way, individuals, according to the model which dates back to economists Franco Modigliani, a Nobel Prize winner, and Richard Brumberg in the early 1950s, seek to smooth what economists call their consumption, or what normal people call their spending.
According to the model, young workers with low income dissave; middle-aged workers save a lot; and retirees spend down their savings.
Source: Bogleheads.org
The just-published research examines the life-cycle model even further by looking at high- and low-income workers, as well as whether young workers should be automatically enrolled in 401(k) plans. What the researchers found is this:
1. High-income workers tend to experience wage growth over their careers. And that’s the primary reason why they should wait to save. “For these workers, maintaining as steady a standard of living as possible therefore requires spending all income while young and only starting to save for retirement during middle age,” wrote Jason Scott, the managing director of J.S. Retirement Consulting; John Shoven, an economics professor at Stanford University; Sita Slavov, a public policy professor at George Mason University; and John Watson, a lecturer in management at the Stanford Graduate School of Business.
2. Low-income workers, whose wage profiles tend to be flatter, receive high Social Security replacement rates, making optimal saving rates very low.
Middle-aged workers will need to save more later
In an interview, Scott discussed what some might view as a contrary-to-conventional wisdom approach to saving for retirement.
Why does one save for retirement? In essence, Scott said, it’s because you want to have the same standard of living when you’re not working as you did while you were working.
“The economic model would suggest ‘Hey, it’s not smart to live really high in the years when you’re working and really low when you’re retired,’” he said. “And so, you try to smooth that out. You want to save when you have relatively high income to support yourself when you have relatively low income. That’s really the core of the life-cycle model.”
But why would you spend all your income when you’re young and not save?
“In the life-cycle model, we are assuming you are getting the absolute most happiness you can out of income each year,” said Scott. “In other words, you are doing your best at age 25 with $25,000, and there is no way to live ‘cheaply’ and do better,” he said. “We also assume a given amount of money is more valuable to you when you are poor compared to when you are wealthy.” (Meaning $1,000 means a lot more at 25 than at 45.)
Scott also said that young workers might also consider securing a mortgage to buy a house rather than save for retirement. The reasons? You’re borrowing against future earnings to help that consumption, plus, you’re building equity that could be used to fund future consumption, he said.
Are young workers squandering the advantage of time?
Many institutions and advisers recommend just the opposite of what the life-cycle model suggests. They recommend that workers should have a certain amount of their salary salted away for retirement at certain ages in order to fund their desired standard of living in retirement. T. Rowe Price, for instance, suggests that a 30-year-old should have half their salary saved for retirement; a 40-year-old should have 1.5 times to 2 times their salary saved; a 50-year-old should have 3 times to 5.5 times their salary saved; and a 65-year-old should have 7 times to 13.5 times their salary saved.
Scott doesn’t disagree that workers should have savings benchmarks as a multiple of income. But he said a high-income worker who waits until middle age to save for retirement can easily reach the later-age benchmarks. “Savings for retirement probably is more in the zero range until 35 or so,” Scott said. “And then it is probably faster after that because you want to accumulate the same amount.”
Plus, he noted, the home equity a worker has could count toward the savings benchmark as well.
So, what about all the experts who say young people are best positioned to save because they have such a long timeline? Aren’t young workers just squandering that advantage?
Not necessarily, said Scott.
“First: saving earns interest, so you have more in the future,” he said. “However, in economics, we assume that people prefer money today compared to money in the future. Sometimes this is called a time discount. These effects offset each other, so it depends on the situation as to which is more significant. Given interest rates are so low, we generally think time discounts exceed interest rates.”
And second, Scott said, “early saving could have a benefit from the power of compounding, but the power of compounding is certainly irrelevant when after-inflation interest rates are 0% – as they have been for years.”
In essence, Scott said, the current environment makes a front-loaded lifetime spending profile optimal.
Low-income workers don’t need to save either
As for those with low income, say in the 25th percentile, Scott said it’s less about the “income ramp that really moves saving” and more that Social Security is extremely progressive; it replaces a large percentage of one’s preretirement income. “The natural need to save is not there when Social Security replaces 70, 80, 90% (of one’s preretirement income),” he said.
In essence, the more Social Security replaces of your preretirement income, the less you’ll need to save. The Social Security Administration and others are currently researching what percent of preretirement income Social Security replaces by income quintile, but previously published research from 2014 shows that Social Security represented nearly 84% of the lowest income quintile’s family income in retirement while it only represented about 16% of the highest income quintile’s family income in retirement.
Source: Social Security Administration
Is it worth auto-enrolling young workers in a 401(k) plan?
Scott and his co-authors also show that the “welfare costs” of automatically enrolling younger workers in defined-contribution plans—if they are passive savers who do not opt-out immediately—can be substantial, even with employer matching. “If saving is suboptimal, saving by default creates welfare costs; you’re doing the wrong thing for this population,” he said.
Welfare costs, according to Scott, are the costs of taking an action compared to the best possible action. “For example, suppose you wanted to go to restaurant A, but you were forced to go to restaurant B,” he said. “You would have suffered a welfare loss.”
In fact, Scott said young workers who are automatically enrolled into their 401(k) might consider when they’re in their early 30s taking the money out of their retirement plan, paying whatever penalty and taxes they might incur, and use the money to improve their standard of living.
“It’s optimal for them to take the money and use it to improve their spending,” said Scott. “It would be better if there weren’t penalties.”
Why is this so? “If I didn’t understand that I was being defaulted into a 401(k) plan, and I didn’t want to save, then I suffered a welfare loss,” said Scott. “We assume people figure out after five years that they were defaulted. At that point, they want their money out of the 401(k), and they are optimally willing to pay the 10% penalty to get their money out.”
Scott and his colleagues assessed welfare costs by figuring out how much they have to compensate young workers at that five-year point so that they are OK with having been inappropriately forced to save. Of course, the welfare costs would be lower if they didn’t have to pay the penalty to cash out their 401(k).
And what about workers who are automatically enrolled in a 401(k)? Are they not creating a savings habit?
Not necessarily. “The person who is confused and defaulted doesn’t really know it’s happening,” said Scott. “Maybe they’re getting a savings habit. They’re certainly living without the money.”
Scott also addressed the notion of giving up free money – the employer match — by not saving for retirement in an employer-sponsored retirement plan. For young workers, he said the match isn’t enough to overcome the cost of, say, five years of below-optimal spending. “If you think it’s for retirement, the match-improved benefit in retirement doesn’t overcome the cost of losing money when you’re poor,” said Scott. “I’m simply noting that if you are not consciously making the choice to save, it is hard to argue you are making a saving habit. You did figure out how to live on less, but in this case, you did not want to, nor do you intend to continue saving.”
The research raises questions and risks that must be addressed
There are plenty of questions the research raises. For instance, many experts say it’s a good idea to get in the habit of saving, to pay yourself first. Scott doesn’t disagree. For instance, a person might save to build an emergency fund or a down payment on a house.
As for the folks who might say you’re losing the power of compounding, Scott had this to say: “I think the power of compounding is challenged when real interest rates are 0%.” Of course, one could earn more than 0% real interest but that would mean taking on additional risk.
“The principle is about, ‘Should you save when you are relatively poor so you can have more when you are relatively rich?’ The life-cycle model says, ‘No way.’ This is independent of how you invest money between time periods,” Scott said. “For investing, our model does look at riskless interest rates. We argue that investment expected returns and risks are in equilibrium, so the core result is unlikely to change by introducing risky investments. However, it is definitely a limitation of our approach.”
Scott agreed there are risks to be acknowledged, as well. It’s possible, for instance, that Social Security, because of cuts to benefits, might not replace a low-income worker’s preretirement salary as much as it does now. And it’s possible that a worker might not experience high wage growth. What about people having to buy into the life-cycle model?
“You don’t have to buy into all of it,” said Scott. “You have to buy into this notion: You want to save when you’re relatively rich in order to spend when you’re relatively poor.”
So, isn’t this a big assumption to make about people’s career/pay trajectory?
“We consider relatively rich wage profiles and relatively poor wage profiles,” said Scott. “Both suggest young people should not save for retirement. I think the vast majority of median wage or higher workers experience a wage increase over their first 20 years of working. However, there is certainly risk in wages. I think you could rightly argue that young people might want to save some as a precaution against unexpected wage declines. However, this would not be saving for retirement.”
So, should you wait to save for retirement until you’re in your mid-30s? Well, if you subscribe to the life-cycle model, sure, why not? But if you subscribe to conventional wisdom, know that consumption might be lower in your younger years than it needs to be.
Money manager Matt Patsky stood at the window of his hotel on the Portuguese island of São Miguel in March last year, looking out over the Atlantic, and thought: I’m not sure we can retire here after all.
He told his husband, “I don’t know [if] we could live here. It looks like the people are crazy. There are people going in the water, swimming in the ocean. How crazy do you have to be to go swimming in the Atlantic in March?”
Patsky, 56, mentioned this to a local real-estate agent later that day. The man didn’t understand the issue. The water, he said, was probably no cooler than 65 degrees.
How these Americans save money in retirement: They live in Spain
As Boston-based Patsky adds: In New England you’re lucky if the water gets that warm in August.
It’s “one of the great selling points of the Azores,” he says. “It is rarely below 60. It is rarely above 80. And the water temperature tends to be steady between 65 and 75 degrees.”
Patsky says he and his husband, a retired businessman who’s 66, are “80%” sure they are going to live outside the United States when they retire. They are tired especially of the politics and the racial tensions.
The No. 1 thing that attracted them to the Azores — which lie barely more than twice as far from Boston as from Lisbon — wasn’t the weather. It was the emigration.
Portugal, they discovered, offers the all-round fastest, cheapest, easiest way to get a so-called golden visa, putting the recipient on a fast track to permanent residence and citizenship.
You have to have means, but this is not purely for Rockefellers. If you want to get Portuguese residency, and a passport, you need to buy a home in the country and generally to put at least some money into fixing it up, and spend at least seven days a year in the country for the next five years.
After six months, you get a residency card. After five years, a passport.
The threshold prices vary, depending on the type of home you buy and where you buy it, but they start at €280,000 (about $310,000).
As part of the deal, says Patsky, you have to buy the home with cash. You can’t take out a Portuguese mortgage. But you can always raise the cash by remortgaging a U.S. home. The money thresholds are lower than in many other countries. And the seven-day requirement lets Patsky continue his job in Boston, as the CEO of socially responsible investing company Trillium, during the five years.
Europe is by far the most popular destination by continent, with about a quarter of a million U.S. retirees, based on Social Security direct deposits. That includes nearly 13,000 in Portugal.
“Portugal has been so welcoming to the LGBT community, that you are seeing a huge number of LGBT couples looking at Portugal,” reports Patsky. On their trips to the Azores, Patsky says he and his husband have been bumping into other LGBT couples from the U.S. looking at golden visas as well.
On a recent trip they overheard four American women at the next table in a restaurant. It was “two lesbian couples from Philadelphia, looking at the ‘golden visa’ and looking at property in the Azores. We ended up sitting with them with my iPad open looking at property.”
You can see the islands’ attraction. There are regular flights from various North American and European cities, Patsky says. “It’s a 4½-hour flight from Boston, and, because of our large Azorean population [in New England], there are actually daily flights,” he says.
Pretty much everyone on the island speaks some English, which is taught in schools as a compulsory second language.
“It’s like living in a Portuguese fishing village,” Patsky says of Ponta Delgada, the main city on São Miguel. “It has a lot of the same feel as Provincetown [on Cape Cod], in terms of being a fishing village. It’s quaint.” The population is about 70,000. “It’s a good size, and it’s got a very vibrant economy.”
Thanks to some spectacular cliffs, São Miguel — one of the nine islands that the Azores comprise — has hosted the Red Bull World Cliff Diving World Series on several occasions, including last year.
Patsky and his husband love the island’s natural beauty. “January, we were swimming, we were at the hot springs. Incredible. This really is nice weather year round. There is no traffic. There is no rush hour.” The longest distance you could drive on the island, from one point to another, would take you an hour, he says.
And unlike in Boston, he adds with a laugh, you don’t see snow.
Both members of the couple are equally eager to retire abroad, Patsky says, in no small part to flee America’s rising racial tensions and poisonous politics. Last year Patsky’s husband, originally from the Philippines, was run over at a pedestrian crossing in Boston, Patsky recalls, and was left lying on the pavement with multiple fractures. When a policeman arrived at the scene, he asked the prone 65-year-old for his Social Security number to determine whether he was in the U.S. illegally, Patsky says.
“My husband and I want to make sure that our retirement is spent in a country that respects the dignity of every person,” Patsky says, “and that treats access to health care as a human right.” Portugal has a public health service, modeled after Britain’s National Health Service, which is available to all residents.
They are hardly alone in looking at the Azores. This is starting to turn into a well-trodden exit route. “There are hotel chains that are selling villas at exactly the price point you need to get the golden visa,” Patsky says. They’ll even rent the villa out for you to tourists, to generate income, and say they’ll buy it back after the five years are up.
Patsky says the couple won’t be moving for at least five years. Patsky’s remaining at the helm of Trillium following its takeover by Australia’s Perpetual Ltd. PPT, -1.13%.
He says one of the key appeals of Portugal’s visa program is that he can carry on working full time in the U.S. while at the same time completing the steps needed to get his Portuguese passport.
Naturally, there are forms to fill out. You’ll need the usual financial and employment records. You’ll also need an FBI report to prove you have a clean rap sheet. (Pro tip from Patsky: Don’t get your fingerprints done at the police station on card. Get them done electronically at the post office and apply online. It will save you weeks.)
As for that major retirement headache, health care, you will need to prove you have health insurance in your home country every year during the initial five years, Patsky says. Medicare counts.
And when you finally retire to the country full time? After your five-year period you’ll have a Portuguese passport. And that means an EU passport. And so you can move anywhere in the EU, including those places with the most lavish, generous public health insurance.
“You can pick wherever you want to retire because it’s the EU,” Patsky says.
