if these limits may, at any time, be passed by those intended to be restrained?"
-- Chief Justice John Marshall, Marbury v. Madison, 1803
Socialist Security
by Lee
I got my Social Security statement in the mail yesterday. They estimate that if I keep working until I am 70 I will be “entitled” to montly benefits roughly equal to what I currently earn in a week. So, even if there were no inflation, I have to keep working for another 35 years to generate benefits equal to 1/4 of what I am earning today. And this assumes that there won’t be any cuts in benefits, despite the fact that the form itself says in bold letters
*Your estimated benefits are based on current law. Congress has made changes to the law in the past and can do so at any time. The law governing benefit amounts may change because, by 2042, the payroll taxes collected will be enough to pay only about 73 percent of scheduled benefits.
This is the “safety net” the left keeps harping on about? That if I work my ass off for the rest of my life, I get a pittance from the government that isn’t even enough to live off today, let alone 35 years from now, assuming Congress doesn’t slash my benefits between now and then any way. So, can someone please tell me again how this system is better than me taking 4% of what I earn and putting it in a private account?
Comments
Not to mention that Social Security money, not being in Al Gore’s lockbox, is constantly being used to fund other stuff. So why not just flat-out call it a tax? And in the future we might give a little bit of it back to you.
Question: when they talk about “privatizing” s.s., do they mean that the govt invests your money or you get to pick what to invest in?
Just a few things to point out, not that I’m any bigger proponent of SSI than you, Lee, but:
1) You’re pretty young and have many years of work ahead of you. Your SSI figure is based on what you have contributed to date. It should increase with time as you contribute more.
2) I’d be surprised if your annual SSI contributions equal 1/4 of your salary, so it should not be a surprise that SSI benefits would be less than that.
3) Its a safety net, not a golden parachute. It’s supposed to help keep you out of a cardboard box on Hollywood Blvd., not buy you a place in Beverly Hills.
Dog food is getting pretty damn expensive...Soilent Green!
The problem is Democrats don’t believe that the majority of Americans are smart enough to invest and save for their own retirement. I would tend to believe that most Democrats aren’t smart enough, but most Americans are.
How hard is it to sign the payroll deduct form for your 401k? I take 10% off the top and jam it in the “dynamic” investment plan and fogehtaboutit...she adds up mighty fast. Too bad I couldn’t add the SS funds to that…
Too bad I couldn’t add the SS funds to that…
yes, that would be nice, but I’m sure the former employees of Enron are glad that they have that extra SS parachute now.
As someone had already pointed out. SS should only be a part of your retirement plan.
SS is not a ‘safety net’ it is more ‘investment insurance’.
2) I’d be surprised if your annual SSI contributions equal 1/4 of your salary, so it should not be a surprise that SSI benefits would be less than that.
Yes, but he won’t be living off of SS for as long as he will be contributing to SS. And what if he dies before he’s 65-70? All that money—a large chunk of his income—is stolen and he never gets it, and neither does his family. No one gets it. So he works and it gets stolen.
yes, that would be nice, but I’m sure the former employees of Enron are glad that they have that extra SS parachute now.
How, exactly, does this have the slightest thing to do with private SS accounts?
As someone had already pointed out. SS should only be a part of your retirement plan.
Considering the fact that it’s going bankrupt, and the Bush deficits are going to require more and more revenue to pay off, I think the prudent thing to do would be to not make SS part of your retirement plan at all.
2) I’d be surprised if your annual SSI contributions equal 1/4 of your salary, so it should not be a surprise that SSI benefits would be less than that.
Yeah, but you’re assuming there is no inflation or loss of benefits. Say I earn $2000 a week now. Just how much do you think $2000 a month is going to get me 35 years from now?
Its a safety net, not a golden parachute.
And that safety net works against your efforts to develop your own golden parachute.
We want people to save their money. Then, not trusting them to do so or hold them accountable if they don’t, force them to “save” it in SSI which does worse than if they managed it on their own. We wonder why few people actually stash anything away?
When the government produces statistics about how much or how little Americans save, is SSI counted as savings or not?
Just how much do you think $2000 a month is going to get me 35 years from now?
“That and a nickle will get you a nice hot cup of jack squat!” -Matt Foley
I have sent this letter to my congressmen several times, but they won’t respond:
I received a report from Social Security that shows the amounts of money I (and my employers) have contributed into this Ponzi scheme over the last 33 years of my working life. If that money had gone into a simple savings account and earned 5% interest, I could retire today at age 49, and have a larger monthly income (even with my NOT drawing down the principal) than what the system estimates I will receive when I retire, even though I will have to contribute for another 18 years to receive Social Security. And that assumes the system will even be around in another 18 years, which I highly doubt!
The greedy geezers of “The Greatest Generation” will bankrupt this nation! I would like to know what you are doing to keep the promise this government has made to those of us of my generation who will be the first to have paid into the system for OVER 50 YEARS, and yet will get screwed.
I get the feeling that you are hoping the issue will not blow up before you are dead, so that you don’t have to deal with it.
They are all a bunch of bony-assed old guys, so I know that they don’t give a shit one way or the other, because (1) they have their congressional retirement, and won’t have to worry about it, and (2) they will be TU before the waste material strikes the ventilator.
I was explaining why it is important to keep SS seperate from your 401K account
Considering the fact that it’s going bankrupt, and the Bush deficits are going to require more and more revenue to pay off, I think the prudent thing to do would be to not make SS part of your retirement plan at all.
That’s exactly my plan when I finish my MS next may. Graduate, plan on an aggressive investment plan, and work my ass off for the future.
Slightly OT: How important would some of you say an investment consultant would be?
Since Social Security is nothing more than an elaborate pyramid scheme, why can’t we all just “opt out?”
What galls (the libertarian in) me is that we are REQUIRED to pay so-called “social security tax” when it’s really a LOAN we’re giving the government that they may, or may not ever repay (it’s up to THEM of course).
I cannot even believe we haven’t had a fucking revolution about THIS ISSUE ALONE yet.
Drum, care to comment on this? I’d love to hear your take on it. Why don’t we just tell those who are currently collecting to get it from Uncle Sam who promised it to them--from what THEY paid into it (literally), not from the sweat of our brows!
Did you know the first recipient of SS only put like $24 into it over her lifetime, yet she took out of it in the tens of thousands? How is that fair?
Pyramid scheme, like I said. Out to be outlawed.
mech_e, I’d say NOT important. We used one and we only lost money. My Dad does it himself, and he’s making a killing. The trick is not to day trade. You have to pick a strategy and stick to it (Growth, Aggressive Growth or Income, that sort of thing). Then get yourself an account online that’s got good research (factual shit, not “analysts” crap) and start learning about the market. You can take a quick class on this too if you’re the classroom learner type.
The key is to KEEP as much of what you earn as you can. That means pay down any debt (like school loans) as fast as you can becaue any debt is likely to have a higher interest rate than what you’ll make investing (especially right out of the gate).
Also, don’t get sucked into mutual funds. Most of them are BS. Let’s face it, there are only so many stocks out there to buy, so how different can they be from each other after a point? Unless you’re one of those folks who is really keen to only invest in companies that hire lots of minorities or don’t harm the environment or crap like that, go out and research COMPANIES, and also look at commodities like OIL--my dad bought a bunch of that about 6 months ago because he figured (rightly so) that Chinese demand and a cold winter would drive prices up, and he made a killing.
Look for companies that pay dividends too--don’t shy away from them because their shares cost more--chances are it’s because they are Solid companies that are worth more.
Then, when you pick good companies that are well run enough to pay their investors dividends (even though their overall yields may be lower, they are lower risk, higher payoff long-term), you can sit tight and get on with your life for a little while.
What you don’t want to have to do is watch the market daily, unless you have time to kill (and who does?).
Investment advisors work best for people with HUGE MONEY and NO TIME. Their fees are too big when you’re a small fry, and they have conflicted interests. They will also try to sell you a bunch of shit you don’t want or need (like variable annuities--which are nearly impossible to understand, but from which the advisor makes big money in commissions).
Also, buy some gold. Seriously. If Drum is right and we have that revolution in 20 odd years, your stocks won’t be worth much unless you hold just exactly the right stuff, and who can predict what that will be (most likely GUN companies). Also, the stock market is not a sure thing. Having some gold around is a good idea because it’s not paper--it’s always worth something to someone.
I did well during the rough spots by investing in companies that made liquor and basic drugs (like aspirin--J&J;kinda stuff). No matter how bad things get, people always need to booze it up and feel better enough to go to work the next day!
Finally, don’t be lured into the pharma companies except in tiny doses. I have a sneaking suspicion there will be more lawsuits to come and they will be the dot-bomb companies of the 21st century.
Yeah, but you’re assuming there is no inflation or loss of benefits. Say I earn $2000 a week now. Just how much do you think $2000 a month is going to get me 35 years from now?
This reminds me of a quote from Grady on Sanford the other night, he was getting an extra check from SS by mistake and he told Lamont he had it coming because “They took a buck out of my pay 40 years ago and now they give me that $1 back, but that $1 ain’t worth as much now as it was then, so i think i should get this check, my other check and two more checks!”.
my grandmother gets like $900 something a month from SS, it’s all she has, but that was never much to live on, the cost of living is a joke every year, so she cancelled medicare Part B to get an extra $50..15 years or so go by and she wants to reinstate it, only there is a penalty, instead of being $50 a month for it, it’s now like $150 or better...an old woman who was barely getting by and needed a few more bucks and when she wants back on, they make her pay through the nose, it’s insane.
OOps, I should have said credit card debt--aren’t school loan payments or interest deductible? Can’t remember…
That’s another thing, maximize your tax-free earnings, so use 401K plans, use cafeteria plans (or health savings accounts), anything where you can sock money away BEFORE taxes. Unless you’re old already, these are a good bet--just remember you’ll be paying the tax on that 401K money when you take it out, and they force you to take a certain amount once you’re over a certain age (can’t remember what that is). Roth IRAs tax you NOW, if you prefer, but I’m a big fan of deferring my tax payments as long as possible.
buy some gold
The gold people are always bringing up the point to “diversify assets” which makes perfect sense.
OOps, I should have said credit card debt--aren’t school loan payments or interest deductible? Can’t remember…
Yeah, student loans (interest, I believe) are deductible. Also, I have some pretty low interest rates on them.
Enron was criminal fraud - people need to die because of that.
Then again - only an idiot puts all of their funds into a single account.
Don’t buy mutual funds? Are you insane?
I’m getting massive returns on my mutual funds, far better than anything else that is available.
Yes buy gold, all of us major gold producers out here in the West thank you!
Well Lee,
socialism would work in this country if this country wasnt a complete and total fucking sham.Everything advertised to us is fucking lie and only idiots think that itis true.
Listening to the radio advertising is a perfect example. the beauty of the Bush admin is that he prefaced his policy with a fish logo and the opinion that he talked to ‘him.’
All of those fucktards that think the country works for you, go to Sweden or Norway.
If you want to get good dentistry go to the Ukraine and vacation at half the cost of a typical US dentist. Dont be stupid. USA dentist offer half the technology, at twice the price.
Lee: If you’re still renting a place when you’re 65 and retiring, you’re an idiot who deserves what he gets.
Social Security was a great idea at the time but it is now out moded and ot dated. The excess is already invested in the market and the market has consistantly gained ground over time.
I can guarantee the Dow will be higher in 30 years than it is now and, if it isn’t, we have a lot more to be concerned about than trivial government payments. We should be allowed to put half our money into private accounts.
All of those fucktards that think the country works for you, go to Sweden or Norway.
Nobody thinks the country “works for us”, and it shouldn’t. It shouldn’t be doing any of my work at all, ever. Period.
If you want to get good dentistry go to the Ukraine and vacation at half the cost of a typical US dentist. Dont be stupid. USA dentist offer half the technology, at twice the price.
Move to the Ukraine. And I mean it.
socialism would work in this country if this country wasnt a complete and total fucking sham
Socialism doesn’t work anywhere. It’s a system that is always on the brink of collapse.
deb, you’re pretty damn sharp. im graduating from college in a year, and its good to have some idea of how im gonna start investing my money
Well, I still wouldn’t take MY word for all of it. You’ve got to do your own research, find out what “fits” you in terms of investment strategy. That’s why I don’t dig on the investment managers--they have formulae, and they tend not to look at people (especially people with small sums to invest) as individuals (Morgan Stanley commercials aside). And let’s face it, they aren’t keen for you to LEARN how to really understand what they are doing, or you won’t need them anymore, right?
My new feeling is you should always be keenly aware of where your money is, how hard it’s working (how much do you have to spend to make your return--in fees, taxes, etc...) and how safe it is.
Of course to make big money you often have to take big risks, but if you are as young as you are, you can take a more aggressive stance because you have time for some ups and downs. Definitely diversify though. This is why people push mutual funds. The reason I’m not too keen on them is that you can’t know what the fund manager is putting into the fund and taking out of it daily/monthly, all you get are quarterly reports. And even so, would you really know the impact of the few shares of each of the dozens (or hundreds) of companies in each funds? Pretty hard for you to understand, and I’m big on understanding where my money is, you know? And the more the fund makes, the more stocks the fund manager has to buy to maintain the asset allocation he’s got. Eventually your small-cap fund has to buy some mid-cap stocks and so forth, and will you be on top of things when this happens? Will you know to care? Probably not. Most people put their 401K in mutual funds and walk away--barely paying attention to what those funds are doing from year to year. They figure “Hey, I’m making money” and assume they couldn’t do better on their own. Thing is, you probably can--if you pay a little bit of attention.
As an example, I was a fund junkie once too. Then I divested (disenchanted with all the creeping fees from my investment manager) and I bought three stocks (that’s all I could afford in any quantity. I bought Brown Forman (liquor and stuff) J&J;and Anheuser Busch. In the first three months, I made more money than I had in a year in the funds. Sure, it wasn’t as diverse a portfolio, but I took some of my earnings and bought some other stuff, and so on and so on. I started with companies I personally felt were well run, and moved on from there. I feel you can’t go wrong investing the old fashioned way--in companies that MAKE MONEY! :-)
The thing with Enron investors, even those who worked there, they couldn’t explain what that company did for a living. First rule: If you don’t understand or relate to or apprpove of or buy into the value proposition of a company, and you can’t even explain it, DON’T BUY IT.
Good luck!
aw, you’ll have all of your dachas paid off before you retire anyway. you won’t need to buy gas cuz cars will run on ambient static electricity. everything else will be done by robots. the demographic population tree will be nice and straight, no growth, long life, won’t have kids until you’re like 50 and if you die too soon, we’ll have you cloned. we got it all worked out, lee…
nastynate..
yes, that would be nice, but I’m sure the former employees of Enron are glad that they have that extra SS parachute now.
From that statement, I have to assume that you have no idea how a 401(k), which is what Wyznowski mentioned in the post you replied to, works. The people at Enron would not have had all their 401(k) money invested in Enron. Sure, options and any stock shares were suddenly worthless, but their 401(k), while taking a hit because of the whole market being down, wouldn’t suddenly be worthless too.
Miguelito, actually you are wrong. Enron had a policy where 401K funds HAD to be invested to a large degree in company stock. This practice has since been outlawed (as far as I understand it).
401K plans are optional, and companies can structure them any damn way they please. People invest in them because they are pre-tax dollars and because (often) they don’t realize they can divert money to an IRA pre-tax also. Enron probably had a generous matching program as well (likely all in company stock too which was probably also a big incentive).
Enron was USING its employees, thanks to their losses, other companies can’t do this anymore.
Social Security was never a good idea - it was a lie born out of the fear of the depression. Socialism is for idiots, anyone with the brains of a dog can tell its based on nothing but lies, illusion, and denial of human nature.
Europeans in general have shitty dental care - I think I’ll stick around here where all the cutting edge technology is for a cheap price.
Move to the Ukraine. And I mean it.
Aaron, FOAD. I know htat was the right thing to say because I spoke to ‘him’ before I said it.
Europeans in general have shitty dental care - I think I’ll stick around here where all the cutting edge technology is for a cheap price.
Spoken like a true untravelled idiot. On the bright side no one cares about your teeth in good ole Alabamy.
I received a report from Social Security that shows the amounts of money I (and my employers) have contributed into this Ponzi scheme over the last 33 years of my working life. If that money had gone into a simple savings account and earned 5% interest, I could retire today at age 49, and have a larger monthly income (even with my NOT drawing down the principal) than what the system estimates I will receive when I retire, even though I will have to contribute for another 18 years to receive Social Security. And that assumes the system will even be around in another 18 years, which I highly doubt!
Considering you think that there is such a thing as a ‘simple savings account’ that gives you 5% interest over the life of your investment, I have a feeling you aren’t saving much on your own ;) This is also probably why nobody is responding to your letter.
I think the biggest problem with the ‘private accounts’ system, is that nobody has given any numbers to show why it will be better overall. The Social Security system is not meant to be completely fair to everybody who puts into it. It’s supposed to benefit our society as a whole. Yeah, having more flexibility over your money sounds like a good thing, and I’m sure it gives the hardcore libertarians woodies just thinking about it, but that is entirely beside the point of what Social Security is about. In the ideal scenario, it’s supposed to be a supplement to your own retirement plans, not a substitute. In the “safety net” scenario, even if you completely screwed up your life, as long as you have been paying into Social Security, there is going to be money there for you to survive on, so that you dont become a burden on society living at the gas station, begging change. Homeless people affect more than just themselves.
I personally like the idea of private accounts, but I’m not sold, because nobody has shown me why it’s better, other than giving a few options for your investment that dont really mean much. It’s not like they’re going to give you a free run of the stock market, its a small number of low-risk, low-yield funds that you would get to choose from, which doesnt sound like it would make any significant impact on your final retirement money. And if there is a slight increase, I’m not sure that any additional return on investment would outweigh the administrative burden that such a system would add. Your options aren’t going to happen all by themselves, somebody is going to have to make them happen, and that somebody is going to have to be paid to do it, and tax dollars are going to have to be used to pay them.
More options does not equal a better plan. More money for your retirement equals a better plan. Options may be the way to do it, but it may not be, and until they come up with something that says ‘this is why private accounts are going to give you more money for your retirement’, or atleast ‘this is why private accounts are going to solve the Social Security insolvency problem’, it’s going to be a tough sell. Atleast to me.
Peace
Speaking of socialism --- think you love universal healthcare? You can get a dose of it from Los Angeles County if you’re really eager to try out the advance system of government funded medicine and treatment.
You can get a dose of it from Los Angeles County if you’re really eager to try out the advance system of government funded medicine and treatment.
Is that the fault of government or the fault of insurance?
How can you use a medical system’s failure as counter point to universal medical care when the failure is in its capitalist roots? Those hospitals are failing and in danger of closing because they serve people without insurancae and insurance companies aren’t paying out.
Not that I am for socialism in any way, shape, or form, but checktamone!
It’s a county (i.e. government run) hospital.
It’s a county (i.e. government run) hospital.
I am sick as shit right now, and I guess my fever is getting the best of me.
"I think the biggest problem with the ‘private accounts’ system, is that nobody has given any numbers to show why it will be better overall. The Social Security system is not meant to be completely fair to everybody who puts into it. It’s supposed to benefit our society as a whole. Yeah, having more flexibility over your money sounds like a good thing, and I’m sure it gives the hardcore libertarians woodies just thinking about it, but that is entirely beside the point of what Social Security is about.”
There are all kinds of numbers floating around about how much your private account could make for you, just by taking the standard S&P;Money Market funds and averageing them over the last 40 or 50 years, it comes out to be about 7%… (this is the conservative amount) and the fact that this is
yours and the government can’t take it away and spend it on other things. Let’s face it, if SS was optional and you could choose other investment options, how many people would choose SS with the low rate of return and the message that you might not get this much because the government might need more of your money and can change the rules at any time? While I make enought to invest money in addition to SS, there are a lot of working people that don’t. These people live paycheck to paycheck, trying to pay their mortgages, car payments, raise kids (we all know how expensive that is), etc. They are paying into a system that won’t even guarantee that it will still be solvent, or that you will get back as much as you put in. If the person dies before they retire, the family gets the $255 death benefit and that is it!!!!!
All of the money taken away from that worker and his family for 40+ years disappears and they don’t get a dime. This really puts them at a disadvantage, most people pass down wealth to their children, and it continues through the generations. This gives the younger generations a chance to go to college, start a business, pay off a mortgage, etc. The working poor never get this advantage because their wealth isn’t transferrable after death, with private accounts it would be. That portion in a private account would be ‘willed’ to his family, this would help their younger generations.
While they won’t give you free run of the stock market, you would have several options to choose from (aggressive, moderate, and safe). But the point of the whole thing is....that it belongs to you, it can’t be taken and spent by the government so they can buy votes with their pork projects.
“its a small number of low-risk, low-yield funds that you would get to choose from, which doesnt sound like it would make any significant impact on your final retirement money. And if there is a slight increase, I’m not sure that any additional return on investment would outweigh the administrative burden that such a system would add. Your options aren’t going to happen all by themselves, somebody is going to have to make them happen, and that somebody is going to have to be paid to do it, and tax dollars are going to have to be used to pay them.”
It would make a hugh impact on your final retirement money, especially for young workers that get to start off having private accounts. Then take the conservative Money Market returns averaged over 40 or 50 years (7%) and you could make more in retirement than in your working years. There are lots of benefits of private accounts:
* Higher Returns and Greater Benefits: Even the most conservative investors would accrue substantial assets during their lifetimes through privately invested accounts, yielding far more than Social Security promises in retirement income.
* Private Property: Individuals would own their personal retirement accounts. Accumulated assets could be used at retirement and/or passed on to family members.
* Creation of Wealth: Low-wage workers would become shareholders in the U.S. economy and, through private investment and participation in the market, accumulate wealth.
* Individual Empowerment: Individuals would control their retirement security, and they would see their accounts grow as a result of hard work.
* Improved Economy: Economists believe that the overall economy will benefit from an increase in savings and investment resulting from this system.
The Social Security portion would reduce payments by the same percentage that was diverted so in the long term it would be a wash as to the cost.
Excellent point, I was watching a AARP commercial the other day and wanted to put my foot through the screen, the morons just don’t get it.
Is that the fault of government or the fault of insurance?
It’s the fault of the corrupt hospital administrators who have been siphoning funds out of the hospital. Socialized medicine will just give them a system designed to enable this type of behavior.
There are all kinds of numbers floating around about how much your private account could make for you, just by taking the standard S&P;Money Market funds and averageing them over the last 40 or 50 years, it comes out to be about 7%…
Yeah, if you want to base your life on what the index did over the last 40-50 years, without being watered down by tens of trillions of dollars of additional government-run investments, and completely ignoring the fact that the S&P;funds have been in a steady decline over the last 15 years, and today are near the lowest returns they have been during that 40-50 year span. Most funds so far in 2005 are making less than 2%. Do you really expect me to believe that there is some guarantee that this is going to go back up to 7% over the next 40-50 years, with an addition 10-30 trillion watering down these funds from these ‘private accounts’?
I think the key to what you just said is what they ‘could’ make for you. Yeah, and investing all of your money in the stock market COULD make you a millionaire. Or, it COULD make you broke. The point of Social Security is what you WILL have, not what you COULD have.
What happens if, say, 5 years before your retirement, there is a major crash in the index, and you’ve made all kinds of plans on how to spend your retirement? Welp, you’re shit out of luck. While it is true that the current Social Security system does not guarantee anything at the time you start paying into it, the closer you get to retirement, the better the guarantee becomes. By the time you reach 55, if you have been paying in for atleast 30 years, your guarantee is all but set in stone on what your minimum social security check is going to be. Are you going to get that kind of guarantee when you’re 55 from a private money market account? Not likely.
The fact that your beneficiaries will be able to inherit your private accounts is, I think, one of the most appealing aspects of it. But again, Social Security is about making sure that the elderly/retired people in the world’s largest economic power don’t have to scavenge in garbage cans to find their dinner. It’s not about putting your kids through college. There are other programs designed to help with that.
What the administration is going to have to show to sell this plan is not that it COULD make you more money for your retirment. What they need to show is that the likelihood of it making more money for your retirement is great enough to outweigh the risks, and trillions of dollars in short-term government spending required to cut over to this plan. I think the public is solidly sold on the fact that Social Security needs help. They, and I, are just not sold that this is necessarily the best way to go about doing it, though it does sound tempting in some regards. I think at a minimum, we need other options to be laid out, and a good, solid comparison of those options with strong financial data backing them.
As a businessman myself, I would never go into a major endeavor without being presented with only a single option. And I wouldn’t expect the people of this country as a whole to do so either.
Peace
Obviously that should read ‘without being presented with more than a single option’.
It’s still our money, and we have a right to expect the government to do something sensible with it. Since they haven’t shown they can do so, We should be able to do so ourselves. I’m 28. If I took the money I’ve already paid into social security and stuck it in a low risk, low yield investment plan, I’ve pretty much got my retirement taken care of. What’s so damn complicated about that?
Somehow I doubt you’ve paid in enough money to Social Security to take care of your retirement at age 28 if you stuck it in a fund that would have made you on average over tyhat period of time about a 3-4% return on your investment. Unless you’re making a shitload of money, or only plan to live for a few years after you retire. If you make 50k per year since you were 16, you would have paid about 38k into social security by now. Your employer would have paid another 38k. Even if you somehow managed to get your boss to give you a 6.25% raise in lieu of his matching SS contributions, and you invested all of that, it would be 76k + about a 4-5% yeild on your investment over the last 12 years, which would bring it up to about 80k if you are lucky. How long are you going to live on 80k? Certainly not 20 years.
The other problem is that the reason Social Security was implemented in the first place has not gone away. It’s fine and dandy and sounds good to say that the average American is smart enough to invest their own money for their retirement. But the facts of the matter are quite different. Statistics have repeatedly shown that if people kept all of their money, the majority of them would not invest anything for their retirement. And we get back to them becoming a major burden on society when they get too old to work, and cant afford to house and feed themselves.
Most funds so far in 2005 are making less than 2%.
Bullshit. Link?
Statistics have repeatedly shown that if people kept all of their money, the majority of them would not invest anything for their retirement.
Again, bullshit. 50% of Americans ARE invested in the stock market. Social Security funds only make up a total of 6% of all retirement funds in the US.
What happens if, say, 5 years before your retirement, there is a major crash in the index, and you’ve made all kinds of plans on how to spend your retirement? Welp, you’re shit out of luck. While it is true that the current Social
Security system does not guarantee anything at the time you start paying into it, the closer you get to retirement, the better the guarantee becomes. By the time you reach 55, if you have been paying in for atleast 30 years, your guarantee is all but set in stone on what your minimum social security check is going to be. Are you going to get that kind of guarantee when you’re 55 from a private money market account? Not likely.
Actually, Yes part of the proposal was you would get at least a standard SS check if your account happened to tank.
And since SS could up and disappear at any time according to the will of congress, in 30 yrs when I hit 65, I’M NOT GAURANTEED ANYTHING.
http://www.imoneynet.com/iMoneyNet/displayAlerts?listProduct=6
It’s hard to find good public links that give the average yield for money market funds for this year. This particular article was right after the time of the last fed rate change, which helped to increase the average yield above 2.0% for the first time since 2001. But it has decreased a little bit since then. Unless you have a Merril Lynch or John Hancock account, I’m probably not going to be able to give you a link that you can follow with more recent information. As that article suggests, some expect that the average money market fund yield will increase to as much as 4% by the end of the year, but again, this stuff is going to be riding on the Fed rate hike, and unless they’re going to continue raising the rate year after year, it’s not likely to be sustained.
Now, I call bullshit on 50% of Americans investing in the stock market. Link?
You’re talking Monrey markets G-funk, they are LOW Yeild, MUTUAL funds on the other hand are much better returns.
Actually, Yes part of the proposal was you would get at least a standard SS check if your account happened to tank.
That guarantee only comes from the part of the SS that remains in the current system, it has nothing to do with the private accounts. And that is assuming that they dont eventually move everything over to the private accounts.
And since SS could up and disappear at any time according to the will of congress, in 30 yrs when I hit 65, I’M NOT GAURANTEED ANYTHING.
True, you’re not guaranteed anything at this point.
However, the will of Congress is still the will of the people, and not going with private accounts doesn’t mean that there will be no social security. What most people who arent eager to jump on the private account ship are looking for is a way to improve the current social security system so that you will still get your social security when you are 65. If you go to a private account, and the private accoutns tank, and Congress then exercises that feared will to do away with the standard social security, you’re still left with zilch.
I’d rather take my chances in the Market than risk the will of 534 elected officials.
BKAY, they are money market mutual funds, and yeah, thats what I was talking about because thats what debsay was talking about. And that’s what you’re most likely to have as your choices in any private retirement accounts as a part of the Bush administration’s proposed plans. Atleast until much later. I do believe that there was some provision that said after you have invested a certain amount of money, over a certain number of years, you will be able to begin investing into more risky funds. But for the majority of Americans, the money market funds are going to be the only options.
Other mutual funds have higher yields, but they also have higher risks.
However, the will of Congress is still the will of the people, and not going with private accounts doesn’t mean that there will be no social security.
It doesn’t mean that there will be either, I’m at the age where every financial decison I make effects my retirement. If I could I’d be investing the max allowed to my 401K, and yes it’s market driven, because the odds and historical rates of return are better there than SS has ever offered.
G-Funk the private acounts are modeled after a current government retirement plan that has more than just money market funds, it has standard stock mutual funds availible also, so
But for the majority of Americans, the money market funds are going to be the only options.
is pure BS and a very ineffective scare tactic.
The risks are also higher than they have ever been under Social Security. Which is the point. Despite the fearmongering about how Social Security will go broke (which will only happen if a realistic solution is not put in place to fix it), it’s still the closest thing to a guaranteed retirement fund that you’re going to get. And it’s not meant to cover the entirety of your retirement. As keeps being hammered time and time again, it’s a safety net, period. At best it is meant to supplement your own private investments, at worse, it is there to make sure you’re not going to be eating out of a garbage can. No mutual fund is going to give you the same level of guarantee as the current social security system, even considering the financial woes that it are currently being predicted. If Congress does absolutely jack squat about it over the next 40 years, then yeah, you’ll probably be shit out of luck. But I’m one of those less cynical people who still has just a tad bit of faith in the elected government of the best country on the planet.
G-Funk the private acounts are modeled after a current government retirement plan that has more than just money market funds, it has standard stock mutual funds availible also, so
Have you even read the proposals? They say it is similar to the Thrift plan, in some of their rhetoric, but it’s not that similar.
Now, I call bullshit on 50% of Americans investing in the stock market. Link?
Actually, it’s not 50%, it’s 61% of all households.
Oh, and money market funds are very short term (often overnight) investments that tend to be very safe, so they are expected to earn a lower return. These are not mutual funds. Learn the terminology.
I know the terminology quite well, thank you. I was responding to this:
just by taking the standard S&P;Money Market funds and averageing them over the last 40 or 50 years, it comes out to be about 7%..
And yes, the nullMoney Market funds ARE mutual funds. They are specialized mutual funds that are supposed to be low-risk, and low-yield. Which is mostly what you are going to get to choose from.
I could also go and dig up all the statistics that show how mutual funds could put you in the hole as well as they could put you ahead. But I do have a life, so maybe we’ll continue this later.
I guess arguing over this is going to be pointless, because the millions of Americans who own about $250 worth of company stock I guess falls under Americans being smart enough to invest wisely for their retirement.
Either way, it falls back to the administration having to show hard data to support how these private accounts are going to save social security.
Just saying ‘you’ll have the right to choose!’ isnt going to convince too many people.
wow, bad link there
Now, I call bullshit on 50% of Americans investing in the stock market. Link?
As a rule, the people who never bothered to invest usually don’t believe that anyone else did, either.
” Somehow I doubt you’ve paid in enough money to Social Security to take care of your retirement at age 28 if you stuck it in a fund that would have made you on average over tyhat period of time about a 3-4% return on your investment. Unless you’re making a shitload of money, or only plan to live for a few years after you retire. If you make 50k per year since you were 16, you would have paid about 38k into social security by now. Your employer would have paid another 38k. Even if you somehow managed to get your boss to give you a 6.25% raise in lieu of his matching SS contributions, and you invested all of that, it would be 76k + about a 4-5% yeild on your investment over the last 12 years, which would bring it up to about 80k if you are lucky. How long are you going to live on 80k? Certainly not 20 years.”
Oh come on geefunk, you would continue to invest all through your working years just like Social Security. What would make you think that he is going to quit investing now?
“The other problem is that the reason Social Security was implemented in the first place has not gone away. It’s fine and dandy and sounds good to say that the average American is smart enough to invest their own money for their retirement. But the facts of the matter are quite different. Statistics have repeatedly shown that if people kept all of their money, the majority of them would not invest anything for their retirement. And we get back to them becoming a major burden on society when they get too old to work, and cant afford to house and feed themselves. “
That’s why they don’t get to keep it all, they have to choose an investment or keep it in Social Security....
“But I’m one of those less cynical people who still has just a tad bit of faith in the elected government of the best country on the planet.”
Yes and they have certainly earned it, haven’t they? You know - the responsible way that they have taken care of all of the ‘surplus’ Social Security Money that has been collected over the years.
Well, the beauty of the private accounts is - you can opt to stay right where you are, you don’t have to remove the money from SS if you don’t want to....I’m more than comfortable with investing my money. As to the arguement that there aren’t any guarantees with the private accounts - it could be set up to be aggressive/moderate/safe depending on where you are in your life. You can have the more aggressive funds while you are a young worker and switch to the safest investments as you get closer to retirement age.
The argument that Soc Sec is “safe” or “guaranteed” hinges on the assumption that the government won’t decide some dark night to either sharply curtail it or kill it entirely.
Knowing my luck, it would happen just in time to screw me out of what I’m entitled to. I’d much rather have the guarantee of my own personal account. That way, at least, I’ve got something they can’t take away on a whim any time they want to finance the latest white elephant or boondoggle.
geefunk: I went to the link that you gave and the money market funds that you listed consisted of very short term (cash reserves) and short term government securities, or exactly what I said before. You might notice that these are listed in the Fixed Income section of their website. In other words, they are not invested in the stock market AT ALL. Fixed income securities are debt securities and do not include stocks. So your statistics do not apply to the privatization debate.
Geefunk;
One last thing, your one example of non-stock money market funds which all earn over 2% (I get more than that on my FDIC insured CDs) certainly does not give any evidence to your point that:
Most funds so far in 2005 are making less than 2%.
How important would some of you say an investment consultant would be?
Mech_e, while Lee will probably call me crazy, I think the best investment consultant you can find is yourself. Investment consultants get paid a whole lot of money --- your money --- to guess. You can do the same thing they do by opening up an ING Orange account, while sticking your nose in a few Jim Cramer books, and reading Larry Kudlow’s blog. Invest for the long haul, and not the short term, and you’ll be just fine. Not only will you learn a thing or two, but you’ll have some fun.
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If I remember correctly, the benefits are designed to last you the last 6 months of your life as you live a miserable, squalid existance in a small room someplace with neighbors that hate you.
When the plan was first implemented you were to get something like $100/month - and 40 years later people were pretty much getting that, slightly adjusted for inflation. The whole thing is a scam from top to bottom - basically just another way the government milks cash out of you for next to nothing in return.
If you plan on “living” off of your SSI, then you better plan on a retirement that greatly resembles living under a bridge.
I shove massive amounts of cash into my own retirement account and invest in real estate.