New Retirement Plan (Possible)

militaryhorn

militaryhorn

Prediction Contest Manager
Here is an actual good idea from the Obama administration: myRA

I can get behind an idea like this. I don't neccessarily agree with how it should be ran but I think it is a great idea. They should start moving your FICA (Social Security) payments over to this new retirement system. A couple of reasons why that should be; one reason is that the government can't touch this money once it is in your retirement account, the second reason is that it is your money and you should be able to decide what happens to it (within the retirement account).

I participate in the TSP that is mentioned in the article and I have been real successful (my last 12 month performace was 28%). I think something like this can be done on a large scale and I think it should be done.
 
Too be honest, I am jaded by anything he says or our government proposes.

With that said, why in the heck would I invest in an entity so levered in debt? As well, what is a "decent" rate of return? It needs to be a long term return that far passes inflation for me to consider such a risky investment.

I will give him credit for at least proposing an idea as long as it is not designed to be another source of income for him to borrow from.
 
The devil is in the details, I give BO credit for tryng this
personally I would not want anymore of my money in gov't hands that is absolutely necessary

and this
"About half of all workers and 75 percent of part-time workers lack access to employer-sponsored retirement plans, the White House said."
might be true but so what?

Nothing has stopped anyone from establishing their own retirement account.

The gov't doesn't exist to wipe people's azz.
The deeper the reach into every aspect of our lives the less ambition people seem to have. The extension to 99 weeks for unemployment, the huge drop out of the labor force and the tripling of food stamps should teach us a lesson
 
Why can't people just start an IRA? I give him credit for wanting to move people towards saving their own money, but I just don't see the need for this. Save $500, walk into scottrade or get online, start an IRA or Roth IRA. Pretty damn simple.
 
I think it's an interesting idea, but it feels more like a money grab than anything else. Already having an IRA it wouldn't really impact me, and if it's useful for others and doesn't do any damage or put us farther into debt, it seems like it's worth exploring.

I do like that it automatically rolls into an IRA at 15k, and that it does have a low balance requirement and no penalties for early withdrawal. I'm not terribly clear how it's that different from savings account, though.
 
I think the low risk option is the way to go for people with little understanding of financial instruments. A lot of posters here seem to assume their own financial sophistication is somehow accessible to people with low intellect and ability to assess risk. I've been around them and typically they will go for an assured 2 percent return over an expected 10 percent annual return that carries a little risk. Or they may see that a lot of people are making a lot more in stock and finally be convinced to get back in the market when it's at the top of it's game. Then the market drops 5-10-20 percent they sell out, not willing to get back in until it is "safe" (after the recovery when the market is toppy again.) Financial "advisors" are only too happy to let them switch investments on a whim, getting fat commissions, percentage wise anyway, when the unsavvy investors gets nervous or greedy.

For some Social Security is by far the best managed of their financial portfolios. They have no understanding of "qualified money" and will not only dump stock when the market is down, but close the IRA and put the money in CDs. Having assets they can't get at to to buy bass boats or meth is the only way they can ever hope to retire in a nice singe wide somewhere. We should never do away with Social Security because it's the only thing that gives a lot of Americans any security at all.
 
So just have the government do everything for these people? I am sorry these people choose not to educate themselves or listen/follow simple advice.

Social Security is a ponzi scheme that cannot sustain itself long term without major changes. Those changes would include simply taxing people more and not allowing them to collect the benefits of those contributions. I know liberals think that is a good idea, but sooner or later wealth redistribution always fails.
 
Social Security has worked well and continues to work well since the great depression and is mostly self funded. One way or another the government is not going to let the majority of old people starve in the streets. We've failed as a society if we start telling old, sick, unsophisticated people to pull themselves up by their bootstraps.

Theii, I'm guess you grew up in a household with smart parents, went to school with smart kids and in your business deal with people who are mostly educated and were able to become educated because they have above average reasoning skills. Seldom do you have the issue of looking into the eyes of a person, explaining what you assume to be a simple concept and have them be completely uncomprehending. I've had jobs where that happens a lot. Some people just aren't smart and education on abstract (though it may not seem abstract to us) concepts isn't going to take.
 
I don't think saving money now for your retirement later is an 'abstract' concept to anyone.

It is sad to see people think the gov't is responsible for everything.
 
No question that people have a responsibility for their own comfortable retirement. Social Security is a safety net to prevent abject hardship and starvation. It's true in all Western Democracies and has been since at least the 1930s. Maybe you want to make a list of great countries with no social safety net?
 
I've read credible studies that Social Security is actuarily sound and I know that is based on Treasuries it holds, which are backed by the full faith and credit of the United States government. Despite your doubt in their viability Deez, Treasuries have long been the gold standard for bonds which is why Treasuries have such a low yield. Maybe you know more than the international investors who invest trillions and accept incredibly low yields on the securities?
Though they may not like it, the U.S. Taxpayer has additional capacity to pay taxes and if worse comes to worse the U.S government has trillions in real estate and other hard assets. It very much surprised me to learn that rural land in arid New Mexico or the high Rockies is selling for a lot more per acre than productive farm/timberland in East Texas or northern New York State, but in a world of growing population, the assets are real and really valuable.

I'm older than a lot of posters here and it gives me a different perspective. I've been hearing horror stories about the U.S. govt going broke and defaulting on Social Security obligations for a lot longer than I'm likely to remain alive. I'm old enough to have spent time with loving great grandparents who were early recipients of Social Security who moved off a farm ravaged by the Dust Bowl and worked tiown jobs long enough to receive Social Security and live decently into their 90s (decently for them, not for the folks posting on this board). Knowing the folks who preserved Democracy when there were geniunie worldwide threats to it, I haven't resented that I'm not getting as good a deal on Social Security as my great grandparents did..
 
Crockett, I'd love to see where you have seen that the funds in social security are actually invested. That would change some of my thoughts on social security. That being said I think you hit on a point that is correct and scary at the same time. The Gov't holds a lot of assets and at some very well may have to trade those in to pay off debt.

When Yellowstone is up for sale, who ends up with it, Disney or the Chinese?
 
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When Yellowstone is up for sale, who ends up with it, Disney or the Chinese?
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Good question. I'm betting on tech/communications company billionaires. Ted Turner has bought an incredible percentage of New Mexico's private lands. I've been a Texan so long that I mentally equate land values to the number of acres needed for a cow to graze. So obviously it will have to be someone with less practical than I.
Billionaires didn't get their idea of the value of money/land stacking hay in barns for a nickel a bale like I did.
 
By the way, I went to the Social
Security Administration website and it was amazing the arcane documents you have to look through. Basically what I gather is that with no changes in tax rate and calculation of benefit levels, the trust fund will be depleted by 2033, meaning it would have to operate on current revenues an pay obligations at about 77 percent of the current rate. Increasing retirement ages, lowering COLA, raising taxes or investing more profitably are all ways to make it solvent for a much longer term.
 
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I don't think saving money now for your retirement later is an 'abstract' concept to anyone.
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Setting aside enough of your earnings and investing it so as to provide perpetual income is actually pretty complicated,even for a lot of college educated folks. For low-intelligence, low income earners who struggle to keep a running vehicle and pay unexpectedly high utility bills, you're expecting a lot.
 
Actually both of my parents only had a high school education and both worked multiple jobs to make ends meet. I am not only familiar with the people you describe, I have family members who fit that description.

My parents lived within their means and saved every penny they could. They taught their kids the value of hard work and saving for a rainy day. Could be the result of being born during the Great Depression.

No doubt, my profession allows me to meet and work with highly educated people. However, I work with a few organizations solely dedicated to helping the indigent.

I am not expecting everyone to understand complicated finance or else face homelessness at retirement. However, when I see people buying a BMW or spending money on tattoos, cigarettes, manicures etc that have no money to save, I lose any tolerance for not understanding basic investment decisions.

Social Security is a noble program, but it cannot sustain itself without constantly taking more from the productive citizens. Eventually that well runs dry.
 
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I am not expecting everyone to understand complicated finance or else face homelessness at retirement. However, when I see people buying a BMW or spending money on tattoos, cigarettes, manicures etc that have no money to save, I lose any tolerance for not understanding basic investment decisions.
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It's hard to disagree. If they don't die young, those folks will know poverty and want. Living like my great grandparents did will be hell for them.
 
First off, SS was never meant to be an actual retirement for old citizens. It was designed to supplement any savings or investments that people should do during their lifetime.

Second, to answer someone's question about the SS fund in regards to investments. I found this:

Funds not withdrawn for current expenses (benefits, the financial interchange with the Railroad Retirement program, and administrative expenses) are invested in interest-bearing Federal securities, as required by law; the interest earned is also deposited in the trust fund.

Disability Insurance Trust Fund


Check this web page out: Trust Fund Data Social Security
 
Crock,

I don't doubt that Social Security is actuarily sound. If you blindly dump enough money into something, it's always going to be actuarily sound. (Hell, if we had written out a $200B check to Enron, I'm sure it would be a financial sound and thriving company today.) And so long as old people are the most active political demographic and so long as young people are stupid enough to value gay marriage, pot, condoms, and porn over their financial well-being, I'm sure we'll always come up with the money to fund Social Security.

However, that's not the same as saying the program "works well." It it worked well, then we wouldn't have had to almost quadruple the FICA tax rate in the last 60 years and look at having to raise the retirement age and sell off federal land to keep the program solvent. Having to liquidate assets to keep something going is a bad thing. What if we need that federal land for something? What if senior citizens won't tolerate cutting benefits or raising the retirement age? What if the money we'd raise through even higher FICA rates would be better spent elsewhere? Even if the program is kinda, sorta actuarily sound, it's a bad financial move. We'd be much better off having people invest their money privately and then raising taxes enough to fund a means tested welfare program for the elderly.

And spare me the treasury bond issue. The entities that are issuing and buying the bonds are the same in fact. Can't you see that for what it is? We're just pushing paper around to make it look like we have more assets than we do. The only reason that even works on paper is the government's taxing authority. Well, that's not very encouraging if your'e the one paying the tax.
 
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