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 Posted: Wed Jul 16, 2008 12:12 pm Post subject: Re: Why Does John McCain Hate Social Security? |
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On Jul 15, 9:25 pm, forbisga...@msn.com wrote:
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On Jul 15, 12:50 pm, jane.pla...@gmail.com wrote:
On Jul 15, 2:00 pm, retrogro...@comcast.net wrote:
On Tue, 15 Jul 2008 09:48:10 -0700 (PDT), jane.pla...@gmail.com wrote:
If you were a financial idiot and decided to depend on Social
Security, you would have to work 6 more years to collect a bit over
$1,000/month. Happy days; you get to live in poverty!
And if you retired in 2001 and were in index funds?
You and I are trying to prove the same thing. I am trying to prove
that DemocracyHigh can't use Enron to judge the entire private sector,
and you are trying to prove to me that I can't use Kroger to judge the
entire private sector.
If I use my example with your time frame, then things aren't quite as
good. Presuming that a person hit 60 in 2001, invested $2000 each
year in the DOW starting in his 29th year, he would have around a half
million; not enough for retirement.
However, if you want to do a real comparison of Social Security with
the private sector, then you should invest the same amounts, not just
$2,000/yr. I had a friend who did exactly that. He invested 13%/yr
in the private sector, turned 60 in 2001 and retired.
Everyone who is against private investment loves to point to the crash
of 2000. "What happens if you had to retire in 2001?" The fact that
we had a market crash in 2000 isn't the real issue. We also had a
market crash in 87 and a recession in 91. What matters is the
anuallized return. My friend retired in 2001 with over 2 million.
I once ran the numbers for the median income person who invested in
the private sector vs the SSA. Sorry, but I no longer know where that
analysis is. However, I do remember that it was far superior to what
you would have had under SSA.
Jane.
As with most things, anecdotal evidence is a bit suspect.
The problem is multi-fold.
1. SSI also covers people who are unable to work for one reason or
another.
2. SSI also covers dependent children.
3. Bad things happen to good people.
4. People make mistakes.
5. The more people putting money in when everyone else is putting
money
in the more expensive it is to buy.
6. The more people taking money out when everyone else is taking
money
out the less value it is to sell.
There's advantage in the big pool even as there is disadvantage in
particular
instances.
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A person just can't win. If I provide actual numbers and data, I get
response that say "the numbers are hypothetical, what about real
life?" If I provide a real-life example, people say that my
illustration is anecdotal. That is why I try to provide both.
HOWEVER, when I do provide both, I always get a response pointing out
the anecdotal issue.
As I said, I once ran the numbers of a hypothetical median income
person investing the actual SSA contributions into a balance index
fund with a retirement age of 60 in the year 2001. (the person in my
anecdotal story earned a bit more than median) I came up with
approximately $1 million. Investment advisers state that you can
safely retire with 4 to 5% withdrawal of the principal. That comes to
a yearly retirement income of $45,000/yr.; A Hell-of-A-Lot better than
the paltry $13,000/yr that your US congress will give you. If the
person actually waited until the SSA retirement age of 66, that median
person's retirement income would be even better.
Now, you raised some very valid issues. Let's look at your points #1&
2. SSA consists of three different insurances: Survivor's benefits,
Disability, and Old Age insurance.
Your point #2: SSI also covers dependent children.
Survivor's Benefits: I seem to recall that that SSA stated that the
average dependent child survivor benefit was $584/month; DEPLORABLE.
Try and raise a child on $584/month. Additionally, once the "child"
reaches that mystical birthday where the child is instantly
transformed into an adult, the survivor benefits stop. You would be
far better off buying a 20yr term life insurance. It is quite cheap
and provides far superior benefits.
Your point #1: SSI also covers people who are unable to work for one
reason or another.
SSA Disability Insurance: also DEPLORABLE. There is a one year
deductible period and then the benefits are inadequate and deplorable!
Read Himmelstein's report on bankruptcy. Himmelstein's report lists
disability as one of the causes of bankruptcy. The SSA disability
insurance is inadequate for protection against bankruptcy and
Himmelstein's report recommends private sector disability insurance. A
person would be better of with private sector disability and dropping
the SSA inadequate insurance.
Your issues 3 & 4: Yes bad things happen to people, some will make
bad investments, some people won't buy disability or term insurance
and we will then have to support these people. I am not suggesting
that we eliminate SSA completely. We need to keep it, but reduce it
down to a welfare program to protect those people in your #3 & 4
issues.
This country is moving in the right direction. People are investing
in 401Ks. People are investing in ROTHs. People could invest even
more if SSA were reduced down to a welfare program and people were
allowed to keep more of that 12.6% of their pay.
In today's environment, a person has to pay 12.6% to the SSA, and then
pay an ADDITIONAL 13% into a private sector retirement investment.
Jane. |
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| Posted: Wed Jul 16, 2008 12:32 pm Post subject: Re: Why Does John McCain Hate Social Security? |
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On Jul 15, 3:19 pm, alexy <nos...@asbry.net> wrote:
| Quote: |
retrogro...@comcast.net wrote:
On Tue, 15 Jul 2008 09:48:10 -0700 (PDT), jane.pla...@gmail.com wrote:
If you were a financial idiot and decided to depend on Social
Security, you would have to work 6 more years to collect a bit over
$1,000/month. Happy days; you get to live in poverty!
And if you retired in 2001 and were in index funds?
You'd still be way ahead in her absurd illustration. Trying to use a
case like that to argue for Social Security as an INVESTMENT is a
suckers play. Social Security is social insurance, not a retirement
program or investment. "Proving" that it is a good or bad investment
is pointless, and anyone trying to "prove" that it is a good
investment will lose nine times out of ten.
--
Alex -- Replace "nospam" with "mail" to reply by email. Checked infrequently.
|
If private investment is better "nine times out of ten", then why not
allow a person to keep 9 tenths of his 12.6% for his private
retirement? We could use that remaining one tenth of the 12.6% to
fund a SSA "welfare" program to assist that one time out of ten?
Jane. |
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| Posted: Wed Jul 16, 2008 4:00 pm Post subject: Re: Why Does John McCain Hate Social Security? |
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On Jul 16, 10:58 am, alexy <nos...@asbry.net> wrote:
| Quote: |
jane.pla...@gmail.com wrote:
On Jul 15, 3:19 pm, alexy <nos...@asbry.net> wrote:
retrogro...@comcast.net wrote:
On Tue, 15 Jul 2008 09:48:10 -0700 (PDT), jane.pla...@gmail.com wrote:
If you were a financial idiot and decided to depend on Social
Security, you would have to work 6 more years to collect a bit over
$1,000/month. Happy days; you get to live in poverty!
And if you retired in 2001 and were in index funds?
You'd still be way ahead in her absurd illustration. Trying to use a
case like that to argue for Social Security as an INVESTMENT is a
suckers play. Social Security is social insurance, not a retirement
program or investment. "Proving" that it is a good or bad investment
is pointless, and anyone trying to "prove" that it is a good
investment will lose nine times out of ten.
--
Alex -- Replace "nospam" with "mail" to reply by email. Checked infrequently.
If private investment is better "nine times out of ten", then why not
allow a person to keep 9 tenths of his 12.6% for his private
retirement? We could use that remaining one tenth of the 12.6% to
fund a SSA "welfare" program to assist that one time out of ten?
Jane.
Because the numbers won't work. You can't switch from a pay-as-you-go
social insurance program to an investment program without leaving some
folks out in the cold.
--
Alex -- Replace "nospam" with "mail" to reply by email. Checked infrequently.
|
Unfortunately you are right in that it is too late. It could have
been done in the early 80s rather than allowing congress to spend the
SSA surplus. At that time, it was a combined pay-as-you-go and an
investment plan.
Back in the early 80s, local governments were allowed to opt-out of
the federal SSA plan and create their own plans that were funded by
private sector investments. They were quite successful. Their
Benefit packages are far superior to what us "others" have to endure.
The feds tried to fix it back in the 90s when kerry introduced a
senate bill that would allow private sector investing, but it never
flew. Daschel endorsed private sector investing and Clinton proposed
it in a state of the union message. However, there was never any real
action behind the talk.
There are only two solutions for today's situation. One is to dump
the current plan altogether, dump FICA contributions, pay for
"promised" benefits to with income tax, and convert the SSA into a
welfare plan for those who are just entering the work force. It would
be do-able, but painful.
The other solution is to keep the program as is and raise the FICA
contributions to +14%. I don't remember the exact percentage, but it
is in the 2007 SSA report. The pain associated with this system is
that the worker would have even less money for his own private sector
401K and ROTH plans.
Jane. |
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alexy
Guest
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| Posted: Wed Jul 16, 2008 7:58 pm Post subject: Re: Why Does John McCain Hate Social Security? |
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jane.playne@gmail.com wrote:
| Quote: |
On Jul 15, 3:19 pm, alexy <nos...@asbry.net> wrote:
retrogro...@comcast.net wrote:
On Tue, 15 Jul 2008 09:48:10 -0700 (PDT), jane.pla...@gmail.com wrote:
If you were a financial idiot and decided to depend on Social
Security, you would have to work 6 more years to collect a bit over
$1,000/month. Happy days; you get to live in poverty!
And if you retired in 2001 and were in index funds?
You'd still be way ahead in her absurd illustration. Trying to use a
case like that to argue for Social Security as an INVESTMENT is a
suckers play. Social Security is social insurance, not a retirement
program or investment. "Proving" that it is a good or bad investment
is pointless, and anyone trying to "prove" that it is a good
investment will lose nine times out of ten.
--
Alex -- Replace "nospam" with "mail" to reply by email. Checked infrequently.
If private investment is better "nine times out of ten", then why not
allow a person to keep 9 tenths of his 12.6% for his private
retirement? We could use that remaining one tenth of the 12.6% to
fund a SSA "welfare" program to assist that one time out of ten?
Jane.
|
Because the numbers won't work. You can't switch from a pay-as-you-go
social insurance program to an investment program without leaving some
folks out in the cold.
--
Alex -- Replace "nospam" with "mail" to reply by email. Checked infrequently. |
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