DrewEckhardt 0 #26 August 12, 2012 QuoteQuote I'm noticing that the key difference indicated it that "Ponzi schemes have exponential growth but Social Security does not." "Social security only gives a 700% rate of return." I think it was kallend years ago mentioning that stat or something similar. 7% per year or something to that effect. Vastly in excess of market rate. Negative. The market has historically returned 10-12% and that's far, FAR better than SS. SS also has the new historic honor of paying out less than than what people put in ( http://moneyland.time.com/2012/08/07/social-security-now-takes-more-than-it-gives/ ) and it's only going to get worse from there. SS is not a good retirement plan, and it won't be long before its a complete wash. In 2005 I did the analysis and found that assuming the retirement age wasn't increased, FICA tax rates didn't increase, and social security benefits increase with inflation I'd need to outlast my statistically expected lifespan by five years to get a 0% inflation adjusted return on my "investment". Other investments which are just as safe do much better. Even 3 month T-bills yield 0.5% after inflation . 10 year T-notes have averaged 1.7% since 1900. Quote Share this post Link to post Share on other sites
winsor 236 #27 August 12, 2012 Quote So Bush was lying when he claimed the market would give retirees a better return than SS, in his attempt to justify privatizing it. Thanks for letting us know. Not necessarily - by privatizing SS, raiding the cookie jar would become illegal. This is to say that, if a private entity behaved like Congress, it would be a criminal offense. What the Legislature did with the "SS Trust Fund" was right out of Bernie Madoff's play book. Admittedly, Bernie Madoff robbed everyone blind as well, but at least we could lock his ass up when all was said and done. No such luck with the elected goniffs. Quote Share this post Link to post Share on other sites
jcd11235 0 #28 August 12, 2012 QuoteIn 2005 I did the analysis and found that assuming the retirement age wasn't increased, FICA tax rates didn't increase, and social security benefits increase with inflation I'd need to outlast my statistically expected lifespan by five years to get a 0% inflation adjusted return on my "investment". What did you use as your "statistically expected lifespan"? How old were you in 2005?Math tutoring available. Only $6! per hour! First lesson: Factorials! Quote Share this post Link to post Share on other sites
jcd11235 0 #29 August 12, 2012 QuoteThe market has historically returned 10-12% and that's far, FAR better than SS. It's important to compare SS to the historical returns of very low risk investments, not the market as a whole.Math tutoring available. Only $6! per hour! First lesson: Factorials! Quote Share this post Link to post Share on other sites
devildog 0 #30 August 12, 2012 QuoteQuoteThe market has historically returned 10-12% and that's far, FAR better than SS. It's important to compare SS to the historical returns of very low risk investments, not the market as a whole. it's important to compare your expected rate of return for the life time of the individual paying in. If 2 people pay in starting at 18 through say, 68, the person who branched into the market will be far better off than the one that just relied on SS -- even more so now that SS is bunk.You stop breathing for a few minutes and everyone jumps to conclusions. Quote Share this post Link to post Share on other sites
jcd11235 0 #31 August 12, 2012 QuoteQuoteQuoteThe market has historically returned 10-12% and that's far, FAR better than SS. It's important to compare SS to the historical returns of very low risk investments, not the market as a whole. it's important to compare your expected rate of return for the life time of the individual paying in. If 2 people pay in starting at 18 through say, 68, the person who branched into the market will be far better off than the one that just relied on SS -- even more so now that SS is bunk. SS isn't, nor was it ever, designed to be a retirement plan.Math tutoring available. Only $6! per hour! First lesson: Factorials! Quote Share this post Link to post Share on other sites
matthewcline 0 #32 August 12, 2012 QuoteQuoteQuoteQuoteThe market has historically returned 10-12% and that's far, FAR better than SS. It's important to compare SS to the historical returns of very low risk investments, not the market as a whole. it's important to compare your expected rate of return for the life time of the individual paying in. If 2 people pay in starting at 18 through say, 68, the person who branched into the market will be far better off than the one that just relied on SS -- even more so now that SS is bunk. SS isn't, nor was it ever, designed to be a retirement plan. But, sadly it is what some use it for. Even Politicians discuss it as such, hence the fact it is so big an election issue. MattAn Instructors first concern is student safety. So, start being safe, first!!! Quote Share this post Link to post Share on other sites
headoverheels 334 #33 August 12, 2012 QuoteNegative. The market has historically returned 10-12% The SP500 has averaged 7.8% annual return since I got out of school in 1977. In the last 12 years, the only ones I've had a 401k (nothing contributed by employers), the SP500 is actually down. What exact years are you talking about 10-12%? OTOH, since Obama took over, the SP500 has averaged 16.4%. Quote Share this post Link to post Share on other sites
kelpdiver 2 #34 August 12, 2012 Quote SS isn't, nor was it ever, designed to be a retirement plan. There's no point denying that it has in fact become exactly that for a significant portion of Americans. And you should address the lead-in to that citation from Time: "Social Security has reached another critical threshold: For the first time, a typical husband and wife retiring today can expect to collect less in benefits than it paid in payroll tax over the course of their life." I'm pretty sure that a negative return doesn't beat out much of anything. BTW, investing in "low risk investments" that don't even keep up with inflation is an example of a high risk retirement plan. No financial planner would recommend putting roughly half of your retirement savings (12.4% FICA versus 10-15% for 401k/IRA) into money market funds. Quote Share this post Link to post Share on other sites
jcd11235 0 #35 August 12, 2012 QuoteI'm pretty sure that a negative return doesn't beat out much of anything. It does. Lot's of people lose substantial portions of their investment principals when investing during bubbles or making otherwise high risk investments. QuoteBTW, investing in "low risk investments" that don't even keep up with inflation is an example of a high risk retirement plan. No financial planner would recommend putting roughly half of your retirement savings (12.4% FICA versus 10-15% for 401k/IRA) into money market funds. If you're going to compare SS to an investment vehicle, it most closely resembles a life annuity. It doesn't offer the best returns, but it's low risk and, more importantly, it provides guaranteed income.Math tutoring available. Only $6! per hour! First lesson: Factorials! Quote Share this post Link to post Share on other sites
kelpdiver 2 #36 August 13, 2012 Quote If you're going to compare SS to an investment vehicle, it most closely resembles a life annuity. It doesn't offer the best returns, but it's low risk and, more importantly, it provides guaranteed income. I don't believe I've seen a guarantee...in fact those annual reports have clearly stated the opposite. I'd be happy at this point just to get the negative rate of return. Quote Share this post Link to post Share on other sites
jcd11235 0 #37 August 13, 2012 QuoteQuote If you're going to compare SS to an investment vehicle, it most closely resembles a life annuity. It doesn't offer the best returns, but it's low risk and, more importantly, it provides guaranteed income. I don't believe I've seen a guarantee...in fact those annual reports have clearly stated the opposite. I'd be happy at this point just to get the negative rate of return. Even a life annuity is not guaranteed in the strictest sense of the word. But counterparty risk is minimized. Likewise, the SS trust fund is invested in government backed securities, which are considered very low risk. Being backed by the government is essentially the strongest, albeit still imperfect, guarantee available in an investment. I'm old, but not that old (I can't join POPs yet). Without any changes in tax rates (allowing the current payroll tax cut to expire on schedule) or benefits, I can expect about 75% benefits through my death if I live long enough to begin collecting.Math tutoring available. Only $6! per hour! First lesson: Factorials! Quote Share this post Link to post Share on other sites
kelpdiver 2 #38 August 13, 2012 QuoteQuoteQuote If you're going to compare SS to an investment vehicle, it most closely resembles a life annuity. It doesn't offer the best returns, but it's low risk and, more importantly, it provides guaranteed income. I don't believe I've seen a guarantee...in fact those annual reports have clearly stated the opposite. I'd be happy at this point just to get the negative rate of return. Even a life annuity is not guaranteed in the strictest sense of the word. But counterparty risk is minimized. Likewise, the SS trust fund is invested in government backed securities, which are considered very low risk. Being backed by the government is essentially the strongest, albeit still imperfect, guarantee available in an investment. I'm old, but not that old (I can't join POPs yet). Without any changes in tax rates (allowing the current payroll tax cut to expire on schedule) or benefits, I can expect about 75% benefits through my death if I live long enough to begin collecting. No, you can't. Means testing is already being seriously talked about...there's a decent chance that if you did any serious retirement investment that you will be excluded or taxed on the SS payments which are not guaranteed like a life annuity. Annuities can fail - but are backed by government insurance. That could also fail in a major crisis, but that's two levels of failure. Your SS payments can be altered with a single bill from Congress. And they'll have to be - the worker to retiree ratio continues to slip. Quote Share this post Link to post Share on other sites
jcd11235 0 #39 August 13, 2012 QuoteAnnuities can fail - but are backed by government insurance. Yes. Of course, that's what Social Security, i.e., Old-Age, Survivors, and Disability Insurance, is, government insurance.Math tutoring available. Only $6! per hour! First lesson: Factorials! Quote Share this post Link to post Share on other sites
rehmwa 2 #40 August 13, 2012 QuoteNo overactive imagination needed, it just requires removing the blinders. Libs do not want to reduce spending on almost anything besides defense, and our president says that increased taxes on the wealthy will pay for the investments in blah blah. It is clear that they think we can tax our way to a balanced budget. I've stopped trying: irate "We must cut military spending" other guy "I agree. While we're at it, we should cut everything" irate "WHAT? why won't you cut military spending?" other guy "I agreed with that, what are you talking about?" irate "You hate babies and old people, we need to cut military spending" other guy "I agree with cutting military, and suggest we go after every other budget too" irate "you are stupid and hate minorities, if you won't cut military spending, I can't educate you" this is just painful to read every week edit: and then it gets funny, and after a few more repeats, it get painful again, but then after even more, it's funny again ... Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants Quote Share this post Link to post Share on other sites
kelpdiver 2 #41 August 13, 2012 QuoteQuoteAnnuities can fail - but are backed by government insurance. Yes. Of course, that's what Social Security, i.e., Old-Age, Survivors, and Disability Insurance, is, government insurance. again, not remotely. An annuity has a specified payout and duration. If it cannot meet those terms because of financial failure, then the insurance provision would kick in. If you paid for it with pretax dollars then you pay taxes on this as income. If you used post tax dollars, it generally will be tax free. But the estimated payouts on SS are merely estimates. The government does not have to make good on them. It can alter the age at which you can file, it can alter the payments you receive and it can alter tax policy around the payments. And while financial companies selling annuities have requirements around cash reserves, the Feds have no such restrictions. Quote Share this post Link to post Share on other sites
jcd11235 0 #42 August 14, 2012 QuoteQuoteQuoteAnnuities can fail - but are backed by government insurance. Yes. Of course, that's what Social Security, i.e., Old-Age, Survivors, and Disability Insurance, is, government insurance. again, not remotely. An annuity has a specified payout and duration. Some do, others, such as a variable life annuity, specify neither concretely. Others specify one, but not the other. Still others partially specify payout and/or duration. QuoteIf it cannot meet those terms because of financial failure, then the insurance provision would kick in. If you paid for it with pretax dollars then you pay taxes on this as income. If you used post tax dollars, it generally will be tax free. But the estimated payouts on SS are merely estimates. The government does not have to make good on them. It can alter the age at which you can file, it can alter the payments you receive and it can alter tax policy around the payments. And while financial companies selling annuities have requirements around cash reserves, the Feds have no such restrictions. What part of most closely resembles do you not understand? Incidentally, the government could, in principle, not make good on their guarantees of other insurance programs. That possibility isn't exclusive to SS.Math tutoring available. Only $6! per hour! First lesson: Factorials! Quote Share this post Link to post Share on other sites
kelpdiver 2 #43 August 14, 2012 Quote What part of most closely resembles do you not understand? Incidentally, the government could, in principle, not make good on their guarantees of other insurance programs. That possibility isn't exclusive to SS. I didn't understand the parts "close" or "resemble." It's not in the ballpark. The government cannot dismiss its insurance guarantees unless it was completely incapable of doing so...the loss of faith would be devastating. It can, with the sign of a pen, do that with Social Security. And again, this would only come into play if the annuity owner already failed to start with. 2nd order versus 1st. Quote Share this post Link to post Share on other sites
jcd11235 0 #44 August 14, 2012 QuoteI didn't understand the parts "close" or "resemble." It's not in the ballpark. If you had a better understanding of the subject at hand, you would understand that a life annuity is, in fact, the investment vehicle that SS most closely resembles. That they are not exactly identical doesn't change that fact.Math tutoring available. Only $6! per hour! First lesson: Factorials! Quote Share this post Link to post Share on other sites
kelpdiver 2 #45 August 14, 2012 QuoteQuoteI didn't understand the parts "close" or "resemble." It's not in the ballpark. If you had a better understanding of the subject at hand, you would understand that a life annuity is, in fact, the investment vehicle that SS most closely resembles. That they are not exactly identical doesn't change that fact. it would work better if you'd admit the obvious - that SS is not guaranteed and subject to change in terms, neither of which describes an annuity. But then your house of cards falls apart, so no chance of it happening. Quote Share this post Link to post Share on other sites
Niki1 2 #46 August 15, 2012 QuoteQuote Not necessarily - by privatizing SS, raiding the cookie jar would become illegal. This is to say that, if a private entity behaved like Congress, it would be a criminal offense. What the Legislature did with the "SS Trust Fund" was right out of Bernie Madoff's play book. Admittedly, Bernie Madoff robbed everyone blind as well, but at least we could lock his ass up when all was said and done. No such luck with the elected goniffs. To para phrase Soutern Man, "We hang the petty criminals and ELECT the great ones to public office."Most of the things worth doing in the world had been declared impossilbe before they were done. Louis D Brandeis Where are we going and why are we in this basket? Quote Share this post Link to post Share on other sites Southern_Man 0 #47 August 15, 2012 I'm merely quoting Aesop. To quote a different, but still great poet "same as it ever was""What if there were no hypothetical questions?" Quote Share this post Link to post Share on other sites jcd11235 0 #48 August 15, 2012 QuoteQuoteQuoteI didn't understand the parts "close" or "resemble." It's not in the ballpark. If you had a better understanding of the subject at hand, you would understand that a life annuity is, in fact, the investment vehicle that SS most closely resembles. That they are not exactly identical doesn't change that fact. it would work better if you'd admit the obvious - that SS is not guaranteed and subject to change in terms, neither of which describes an annuity. But then your house of cards falls apart, so no chance of it happening. When you're ready to stop knocking down straw men and engage in honest, logical debate, let me know.Math tutoring available. Only $6! per hour! First lesson: Factorials! Quote Share this post Link to post Share on other sites kelpdiver 2 #49 August 15, 2012 QuoteQuote it would work better if you'd admit the obvious - that SS is not guaranteed and subject to change in terms, neither of which describes an annuity. But then your house of cards falls apart, so no chance of it happening. When you're ready to stop knocking down straw men and engage in honest, logical debate, let me know. sounds like we won't be having that conversation then. When you insist contracted, regular annuities are basically the same as social security, we're dead in the water. Quote Share this post Link to post Share on other sites jcd11235 0 #50 August 15, 2012 QuoteWhen you insist contracted, regular annuities are basically the same as social security, we're dead in the water. Like I said, you're building straw men.Math tutoring available. Only $6! per hour! First lesson: Factorials! Quote Share this post Link to post Share on other sites Prev 1 2 Next Page 2 of 2 Join the conversation You can post now and register later. If you have an account, sign in now to post with your account. Note: Your post will require moderator approval before it will be visible. Reply to this topic... × Pasted as rich text. Paste as plain text instead Only 75 emoji are allowed. × Your link has been automatically embedded. Display as a link instead × Your previous content has been restored. Clear editor × You cannot paste images directly. Upload or insert images from URL. Insert image from URL × Desktop Tablet Phone Submit Reply 0
Southern_Man 0 #47 August 15, 2012 I'm merely quoting Aesop. To quote a different, but still great poet "same as it ever was""What if there were no hypothetical questions?" Quote Share this post Link to post Share on other sites
jcd11235 0 #48 August 15, 2012 QuoteQuoteQuoteI didn't understand the parts "close" or "resemble." It's not in the ballpark. If you had a better understanding of the subject at hand, you would understand that a life annuity is, in fact, the investment vehicle that SS most closely resembles. That they are not exactly identical doesn't change that fact. it would work better if you'd admit the obvious - that SS is not guaranteed and subject to change in terms, neither of which describes an annuity. But then your house of cards falls apart, so no chance of it happening. When you're ready to stop knocking down straw men and engage in honest, logical debate, let me know.Math tutoring available. Only $6! per hour! First lesson: Factorials! Quote Share this post Link to post Share on other sites
kelpdiver 2 #49 August 15, 2012 QuoteQuote it would work better if you'd admit the obvious - that SS is not guaranteed and subject to change in terms, neither of which describes an annuity. But then your house of cards falls apart, so no chance of it happening. When you're ready to stop knocking down straw men and engage in honest, logical debate, let me know. sounds like we won't be having that conversation then. When you insist contracted, regular annuities are basically the same as social security, we're dead in the water. Quote Share this post Link to post Share on other sites
jcd11235 0 #50 August 15, 2012 QuoteWhen you insist contracted, regular annuities are basically the same as social security, we're dead in the water. Like I said, you're building straw men.Math tutoring available. Only $6! per hour! First lesson: Factorials! Quote Share this post Link to post Share on other sites
