StrangeSox

QUOTE (iamshack @ Feb 6, 2013 -> 07:48 PM) I'm not disputing that...but if the monies are going to current beneficiaries or into special treasuries, what is the real difference between my money going there or into a bank, where it is federally insured by that same US Gov't? Additionally, if the problem is the person who makes $50k and cannot afford to save, how is taking more money out of that person's paycheck going to help them? You aren't a current beneficiary relying on that income is the difference, your money isn't being loaned out for private profit with public risk, and you have a guaranteed income for your eventual retirement. Ss benefits could be raised in a variety of ways that wouldn't affect the median income earner, such as raising the cap.

Are you a sovereign nation that prints it's own currency and collects taxes? They're special treasuries created solely as somewhere to place the excess tax revenues. It's the government "investing" in its own treasuries, not sticking it in someone else's bank.

Not really. They are SS treasuries that can't be sold. They exist solely to hold the intentional overpayments to the system since the 1980's reform in anticipation of payroll tax shortfalls as the baby boomers retire. Remember Gore's "lockbox"? http://www.ssa.gov/oact/progdata/fundFAQ.html

QUOTE (bigruss22 @ Feb 6, 2013 -> 05:19 PM) Funny thing is, it's probably a lower return and higher fees than something like Vanguard's S&P 500 market fund (this is totally just a guess, Vanguard's fees are ridiculously low.). It's not really an investment, it doesn't have a rate-of-return.

QUOTE (iamshack @ Feb 6, 2013 -> 05:01 PM) They have a lower administration % perhaps, but how is that money invested? Where does it go? Does it just sit in an account somewhere? It goes to current beneficiaries or to buy special treasuries when there is a surplus. It's not invested anywhere.

Here's an old article circa 2000 that covers a lot of the issues of privatizing SS which apply just as well to its expansion http://www.epi.org/publication/issuebriefs_ib145/

QUOTE (iamshack @ Feb 6, 2013 -> 04:55 PM) My post was obviously in jest. That being said, which massive government programs are run particularly well? Social Security and Medicare, both of which have substantially lower overhead than their private-sector counterparts.

QUOTE (iamshack @ Feb 6, 2013 -> 04:50 PM) What you both are saying is that the only way people are capable of saving or will bother to save is if it is a mandated government program which removes the money from their paychecks prior to them getting it. The only way to ensure that everyone has adequate retirement funding is to do this, yeah. As the article I posted mentioned, there are fixes and tweaks you can make with the 401k system like making it opt-out instead of opt-in that will increase participation. Actually, my new plan more or less does this--everyone was signed up with a default 3% unless they said otherwise. It's increased automatically 1% annually to a cap of 7%. But that doesn't fix the immediate problem that an awful lot of people are approaching retirement with inadequate retirement savings for whatever reason.

Who will administer this program? The Social Security Administration. Increased SS benefits wouldn't be farmed out to wall street, much as they'd love to start siphoning off of that money. Also not sure you've followed what I've said about guns.

QUOTE (Balta1701 @ Feb 6, 2013 -> 04:42 PM) If I invested $1 in 1999, that $1 is now worth $.73 after adjusting for inflation and assuming no fees. What you really need is a little script that can compute exactly what you'd get investing y1% of a salary of $x1 in 1970, $x2 in 1971, etc. to see what someone who started working 43 years ago would have now.

QUOTE (Jenksismyb**** @ Feb 6, 2013 -> 04:40 PM) So screw the ratings and invest in index funds that are highly diversified and aren't nearly as volatile. When the market is up, you make money. When it's down, you lose. And historically, it's always gone up over the long term. These aren't difficult concepts and if anything this stuff has gotten easier even in the last 5 years or so since I started looking into this stuff as a poor law student with a $13/hr part time job. I have exactly one index fund available. It's not your typical S&P 500 or DJ index, it's fees are moderate and it's rating is 2-star. what if you're wrong? What if all of these investment options are s***? I won't really find out for years, and by then, I'm already in a big hole.

I'm younger than 30 and my concern here isn't for my own personal retirement fund. My allocation is going towards those better-rated funds, but again, now I'm relying on a ratings agency's experts to tell me what's good. They did a pretty s*** job recently.

QUOTE (Jenksismyb**** @ Feb 6, 2013 -> 04:28 PM) Since the 70's that fund has earned over a 10% return. That's not some modest gain if you're reinvesting your earnings and adding contributions. There are several funds just like it. Accounting for inflation and long periods of negative or zero growth?

QUOTE (Jenksismyb**** @ Feb 6, 2013 -> 04:23 PM) He did, my mistake. My point remains. Last I checked the ability to have a kid isn't a right. If you can't adequately provide for one, you shouldn't have one. That's one of the basic problems we have in this country that gets ignored because "don't worry, the Great Provider will help you if you can't!" Or, instead of depriving the majority of Americans of the right to have children or having harsh financial results for doing so, maybe we should look to see why our system is so f***ed that a couple earning the national median wage who has a couple of kids ends up with little retirement income after working 30-40 years.

QUOTE (Jenksismyb**** @ Feb 6, 2013 -> 04:25 PM) It's my understanding that the 401(k) is a big tax advantage for a company - the more people that participate, and the more money that gets invested, the more they can deduct. They can deduct wages as an expense as well. If there's even more tax incentives than that, then we're back to "why not redirect those resources to a risk-free system?" To a handful of pre-selected choices. My new 401(k) is pretty s***ty, the average morningstar rating is probably 2-1/2 stars, only one is 5 star and only two are four star, and those are all small-cap or international (read: high-risk).

QUOTE (Balta1701 @ Feb 6, 2013 -> 04:23 PM) And, as we've noted...that leaves me deficient in retirement. The S&P 500 is right where it was at in August 2000. Now take inflation and management fees into account.

QUOTE (Jenksismyb**** @ Feb 6, 2013 -> 04:18 PM) I'm 100% behind idea #1. As to #2, how about you start by not having 4 kids? This goes back to the personal finance skills and responsibility point I was making. 10000 years ago if you couldn't provide enough food for your family, you either didn't do it, or you died. You didn't look to your neighbors and say "hey boss, I had 2 more kids than I could feed. Can you and everyone else pitch in so my kids can eat?" 10,000 years ago, yeah, you probably did because you lived in a small, egalitarian tribe that was probably largely related to you in some manner and in which resources were often pooled and shared. You sure as hell didn't have individuals within a community going off and "earning a living" only for their immediate family and f*** everyone else. Many societies in agrarian cultures functioned similarly. The sort of individualism you see nowadays is a relatively recent philosophy. People also popped out babies like crazy back then because mortality rates were significantly higher.

QUOTE (Jenksismyb**** @ Feb 6, 2013 -> 04:14 PM) Not true: Meaning 80% do, and each one of those people get MORE out of doing so because they get free money from their company for participating, on top of any gains their investments make. Wages would arguably higher if this retirement benefit were not there, not every place matches, many have long vesting periods and that still doesn't show a net gain over time compared to an alternative higher payroll tax (or eliminating the cap) and increased SS benefits.

So if I really, truly can't pick a mutual fund because I suck at it, should I be forced to have a s*** retirement or to pay exorbitant fees for someone else to hopefully do a better job at picking? I'm still not seeing any good reason for that to be the system beyond "well-off people can make some more money." It's not a net benefit for a majority of people.

No, it really isn't. He's asking why we should make tax expenditures to subsidize 401k's and IRA's instead of just providing better SS benefits with that same money.

401(k)'s and IRA's are tax-advantaged plans.

Yeah, but I think we can assume, based on your success and background, that you're a pretty intelligent guy. Certainly above-average. What about the majority who isn't as smart or doesn't have innate investing and risk-management understanding?

QUOTE (iamshack @ Feb 6, 2013 -> 03:47 PM) Perhaps it could be something that you have the option to opt-in or out of? No, that'd result in an underfunded, unreliable system.

QUOTE (iamshack @ Feb 6, 2013 -> 03:43 PM) It is not a part-time job. It takes a few minutes a week, if that. Most of the things that affect the stock market and other markets are all over the news and are almost impossible to escape. If you're not willing to spend 10 minutes a week on your future financial health, when I know you spend hours a week posting on Soxtalk, then I honestly have no sympathy for you. You are literally involved in a trading market everyday, right? Doesn't that give you a decent advantage in understanding the risks and information associated with investment that a vast majority of people don't have?

QUOTE (Balta1701 @ Feb 6, 2013 -> 03:42 PM) When has anyone attempted to stop you from doing so? If we eliminated the 401k entirely tomorrow, you'd still be able to do that. If payroll taxes were increased to pay for larger benefits, he would have a few percentage less to invest.