Originally Posted By fkurucz >>and with 'traditional ' pensions going away more and more every year ( for major firms also - trust me I know ) - this number will continue to rise.<< My Fortune 50 employer (also a Dow Jones Industrial firm) does not provide pensions to new hires. They do offer a so-so 401K match, but that's it.
Originally Posted By fkurucz >>Also, assuming an annual return of 10% is part of the problem. The whole point of Social Security is that it's predictible and guaranteed.<< Historical averages are higher than 10%. Forinstance, small caps have averaged 17% return over the decades. And that's the point of retirement savings, its being done over the long term. So on a bad year you can lose 10%, but you will more than make up for that bad year. The idea is that you invest in volatile, higher risk investments when you are young, and slowly transition to more stable, lower return investments as you age. Then when you retire you can buy an annuity that guarantees monthly income until you pass away. But investing in something that provides a rate of return that is below the inflation rate is a sure fire path to low retirement income. From an investment perspective, SS is a very poor one. Its only better than keeping your money in a mattress (assuming it pays what it promises).
Originally Posted By fkurucz >>I may be wrong, but doesnt great britain have this already, and hasnt it been very successful there?<< Perhaps the biggest problem with personal retirement accounts is that many people are financially illiterate and don't know how to manage them. They either end up putting all their funds in something low risk/low yield and earn nothing, or get greedy and leave their nest egg in a high risk fund when they are approaching retirement.
Originally Posted By fkurucz >>There is NOTHING that says Social Security has to invest their funds in Treasury bonds paying 2-3%. If the government is so gosh darned convinced that people can do better in the market, why don't THEY invest in the market? I'll tell you why. It is because they are not convinced that investment in the market would provide the return necessary to proved promised benefits.<< Because it has been a captive source of cheap money to borrow that doesn't show up on the books? >>I've got to tell you... if the government isn't willing to bet on it I'm sure as hell not willing to bet on it.<< They could buy blue chip corporate bonds (IBM, HP, Coca-Cola, etc.) that pay twice the T-Bill's rate of return. These are consided almost as safe a T-Bills. It is very rare for these bonds to default, and with proper diversification the risk is mitigated.
Originally Posted By fkurucz >>They could buy blue chip corporate bonds (IBM, HP, Coca-Cola, etc.) that pay twice the T-Bill's rate of return. These are consided almost as safe a T-Bills. It is very rare for these bonds to default, and with proper diversification the risk is mitigated.<< And the way things are going I have lees faith in the Feds not defaulting than in IBM. And I am talking about AAA rates bonds, not junk rate debt like Ford's paper.
Originally Posted By fkurucz >>The thing is, too, it could be fixed. Medicare is actually the bigger problem, but the complexity is also greater and no one wants to touch it with a 39 and a half foot pole.<< This is going to be a real whammy. Healthcare insurance costs continue to signicantly outpace the rate of inflation (our policy goes up 10% every year it seems). Not only is Medicare going to become insolvent within 10 years or less, but the ranks of middle class uninsured will skyrocket as well. I actually know of middle class families who use the emergency room as their "family doctor" due to a lack of insurance. Where this will end I do not know. If people can't pay hospitals will go bankrupt. I am guessing that at some point it will get so bad that the public will demand a national health system, even though it will mean rationed healthcare.
Originally Posted By DouglasDubh <...and the Democrats proposed it in the 80's, and the Republicans shot it down.> I don't believe that's true.
Originally Posted By patrickegan Deny the socialized medicine the illegal aliens get, that you pay for!!!
Originally Posted By vbdad55 <>>and with 'traditional ' pensions going away more and more every year ( for major firms also - trust me I know ) - this number will continue to rise.<< My Fortune 50 employer (also a Dow Jones Industrial firm) does not provide pensions to new hires. They do offer a so-so 401K match, but that's it.< that is exactly right, and the matches are also coming down in % from most. The companies only want to 'use' employees for a 5 year life cycle and then have them move on --
Originally Posted By fkurucz ^^Oh, but that would be racist. They are entitled to it, right? After all, aren't we the world's HMO?
Originally Posted By alexbook >><...and the Democrats proposed it in the 80's, and the Republicans shot it down.> I don't believe that's true.<< For a truly sad picture of the politics of budgeting in the 1980's, check out David Stockman's book, "The Triumph of Politics." Face it, American voters love politicians who promise fiscal responsibility, but very few people actually in positions of power ever want to alienate potential voters by cutting government spending or raising taxes. Every President in my lifetime (including Jimmy Carter and Ronald Reagan) has promised to balance the budget "painlessly." It's just not possible.
Originally Posted By alexbook >>Deny the socialized medicine the illegal aliens get, that you pay for!!<< Illegal aliens pay taxes, too, you know. In fact, they're more likely to fail to collect tax returns and social services owed them than citizens.
Originally Posted By fkurucz >>Every President in my lifetime (including Jimmy Carter and Ronald Reagan) has promised to balance the budget "painlessly." It's just not possible.<< So true. But at some point our Asian lenders may no longer be willing to finance our deficits. If it comes to that I could see the union disolving and being replaced a bunch of new smaller countries, or perhaps merging with Mexico and Canada to form a new North American mega country.
Originally Posted By fkurucz >>Illegal aliens pay taxes, too, you know. In fact, they're more likely to fail to collect tax returns and social services owed them than citizens.<< In principal this is true if they are using phony papers (which many do). However, due to their low pay, they most likely have little to nothing withheld for federal income tax. Many even collect food stamps and live in section 8 housing. My sister is a bilingual teacher in NC, and says that this is the case for most of her Mexican pupils, most of whom are illegals from Guerrero state. My sister estimates that burden (public education, food stamps, housing assitance, etc.) that they place on NC taxpayers exceeds their incomes. The strangest thing is that many of these people were not paupers back in Mexico (some even own homes down there), but they themselves tell my sister that you would have to be crazy not to come to the US, that everything is handed to you on a silver platter.
Originally Posted By DouglasDubh <For a truly sad picture of the politics of budgeting in the 1980's, check out David Stockman's book, "The Triumph of Politics."> What does that have to do with your claim that Democrats tried to pass a law in the 80's that prohibited borrowing from Social Security, the way the Republicans did in the 90's?
Originally Posted By RoadTrip <<They could buy blue chip corporate bonds (IBM, HP, Coca-Cola, etc.) that pay twice the T-Bill's rate of return. These are consided almost as safe a T-Bills. It is very rare for these bonds to default, and with proper diversification the risk is mitigated.>> Why can't the government buy those stocks? My guess is that they already do, which makes the whole "people would do better with private accounts" just a bunch of hooey. The State of Minnesota certainly invests its retirement funds. I know... my father used to be the director of the Minnesota State Board of Investment. The state invests in both stocks and bonds. I believe their holdings are currently about 65% stocks and 35% bonds. They have always maintained a nice rate of return, and I'm sure the Federal government would too. One thing I can guarantee you... public employee fund managers make a WHOLE LOT LESS SALARY than fund managers in the private sector. This of course is what the individual account thing is all about in the first place... giving billions and billions of trading dollars to Bush’s rich buddies on Wall Street.
Originally Posted By alexbook >><For a truly sad picture of the politics of budgeting in the 1980's, check out David Stockman's book, "The Triumph of Politics."> What does that have to do with your claim that Democrats tried to pass a law in the 80's that prohibited borrowing from Social Security, the way the Republicans did in the 90's?<< I don't have the book in front of me to quote from, but Stockman (Reagan's budget director) discusses how he was essentially ordered to raid the Social Security trust fund, and anything else that wasn't nailed down, in order to pay for Reagan's defense build-up. When some Democrats called for "protecting Social Security," Stockman believed they were more interested in scoring points off Reagan than actually doing anything responsible.
Originally Posted By Jim in Merced CA <that is exactly right, and the matches are also coming down in % from most. The companies only want to 'use' employees for a 5 year life cycle and then have them move on --> Companies working in short-term cycles is no different than individuals doing the same thing. No different than shareholders of the same company demanding better returns on their investments. No different than individuals 'playing' on the stock market to get in and get out quickly to make a quick buck. [rememeber when investing in the stock market was considered a long-term thing] No different than people going into a new neighborhood and buying a house, leaving it empty, and then selling it 5 years down the road. And those same people wonder why there's no sense of 'communiity' and why the young people today seem so disenfranchised. Selfish. But that's good because being selfish means that you'll win elections. Or something...
