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Topic: Personal retirement accounts (Read 125 times)
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slightcrazed
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Personal retirement accounts
« on: May 04, 2005, 12:41:32 PM »
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I hate to bring up politics on this site (where I'm pretty sure I'm in the minority), but I would like everyone out there to consider a few things, and hopefully get people interested in what I think is a wonderful, and very misunderstood, idea.
Social Security is in trouble. This is universally agreed upon. Little has been done up until now to fix any of the fundamental flaws with social security, the main one being the number of retirees growing faster than the number of overall contributors. Social Security has always been a touchy subject with politicians, mainly because doing ANYTHING to social security would likely loose you a good portion of the senior vote.
Now, I know that most of you absolutely HATE President Bush. That is fine. I don't ask you to like the man. I don't see eye to eye with him on a lot of issues either, but on this one I do. Just about everyone that frequents CSR is below the age of 30, i.e. no where near retirement age. Some of us (most of us hopefully) have at least THOUGHT about retirement, and I hope that some of us have started planning for it by taking part in 401ks or IRAs and not spending every dollar that they earn. There is a proposal out there to 'privatize' part of Social Security. The basis of the idea is that money put into social security will soon not equal the benefits being paid out, and the best way to counter this is to allow people to take part of what they pay into social security and place it into retirement accounts, similar to putting some of your earnings into a 401k. This presents a 2 fold solution, because a. I now have a nest egg that is mine regardless of what happens to social security in the future and b. that nest egg should help to make me less dependant on social security and allow my benefits to be scaled back accordingly, thus allowing everyone to still take part in social security while reducing overall dependance and eliminating the need for higher social security taxes.
There have been many attempts to make this look like a bad idea, and many people have dismissed it simply because Bush propossed it. I would like people to stop and think about the idea for a minute and just ignore the fact that Bush proposed it. This is YOUR money that goes into Social Security (it's that little thing on your check marked FICA), how is allowing you to invest some of your money a bad idea? Some people have screamed about the stock market being volitile, and yes, it can be. But you wont be investing in individual stocks, you'll be investing in diversified mutual funds, bonds, and even low interest money markets. You don't like stocks? Fine, put all of it into 30 year bonds. Throw some into a guaranteed return money market. Spread it all out and diversify. If you don't want to use the personal retirement acounts at all, THEN DON'T. You don't have to. The point in the end is that, for once, someone in Washington wants to give me a bit of cntrol over MY TAX MONEY. They are providing me with a choice, as opposed to just doing a grab and spend.
So there you go. This is my plea to you guys to please think about this idea. Again, DON'T DISMISS IT SIMPLY BECAUSE BUSH SAID IT!!! To do so is to lock yourself into ignorance and to ignore what could be a very rare opportunity. I would love to be able to take even a small part of my FICA contribution out of Washington's hands and put it in my control. I hope that those of you out there who actually CARE about your retirement would see it the same way.
I'll get off my soap box now.
slight
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Terraji
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Re:Personal retirement accounts
« Reply #1 on: May 04, 2005, 01:40:49 PM »
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This really does not even concern me, since I live in a different country, but I would like to add my comments. This privatization of social security makes me uncomfortable. By privatizing, the 'security' of social security is reduced, because it is no longer guaranteed by the government.
The bonus of having choice that slight brings up is something that may be beneficial for some, but not all. This will help out the rich and educated citizens who are smart with their money and can tolerate high risk investements. The low income citizens who are living on small margins and are perhaps not so good with their money will be hurt. Smart idea? depends on your political affiliation.
Even if you choose the diversified mutual funds with low risk, the risk will still be higher than it is now . This is simply because the money is guaranteed by a stable government, and not some company that could take a downturn at any moment. Any business expert will tell you that.
I think that this plan is simply Bush's way of weaseling out of fixing the problem by taking the 'Every Man for Himself' approach.
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Skip
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Re:Personal retirement accounts
« Reply #2 on: May 04, 2005, 01:54:40 PM »
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I'm not counting at all on Social Security, I'm trying to plan to be comfortable with out it and therefore whatever I get will be gravy and not the meat and potatoes I need to live on.
That being said I agree with Terraji it is a good idea for someone like me that is educated and diversified already and understands the risks. Many people who are going to be dependent on SS for their support when they retire are not educated and would have little idea what to do with the flexibility a plan like Bush's would offer. Does it make sense for me? Possibly. Does it make sense for Joe six pack who is living paycheck to paycheck? I don't know.
I do wholeheartedly agree with Slight when he says to plan for your retirement now.
The sooner you start saving the better off you'll be.
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Surgeon General
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Re:Personal retirement accounts
« Reply #3 on: May 04, 2005, 01:54:54 PM »
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I think that this plan is simply Bush's way of weaseling out of fixing the problem by taking the 'Every Man for Himself' approach.
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Because you hear the Democrats taking responsiblity and shouting out alternate solutions all the time. 
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Terraji
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Re:Personal retirement accounts
« Reply #4 on: May 04, 2005, 02:03:57 PM »
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Because you hear the Democrats taking responsiblity and shouting out alternate solutions all the time.
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This isn't a technically hard problem to solve such as global warming. It can be boiled down to two words:
Spend Money
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slightcrazed
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Re:Personal retirement accounts
« Reply #5 on: May 04, 2005, 02:47:02 PM »
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This really does not even concern me, since I live in a different country, but I would like to add my comments. This privatization of social security makes me uncomfortable. By privatizing, the 'security' of social security is reduced, because it is no longer guaranteed by the government.
Even if you choose the diversified mutual funds with low risk, the risk will still be higher than it is now . This is simply because the money is guaranteed by a stable government, and not some company that could take a downturn at any moment. Any business expert will tell you that.
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Guaranteed by the government? You're kidding, right? Where is the guarantee that Social Security will not become completely insolvent and stop paying benefits all together? As long as washington has the final say there is no guarantee. And your quote about 'some company taking a downturn' shows me that you don't understand the principle of diversification to begin with. The whole reason that you choose a diversified fund is so that you're not tied into one company or market. Besides this, there ARE investment vehicles that are "guaranteed", such as such as low interest money markets.
Your's is the same argument that democrats have been making, and I just don't see it. No one will be forced to put there money into personal accounts, so how is giving us the choice a bad thing?
slight
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Terraji
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Re:Personal retirement accounts
« Reply #6 on: May 04, 2005, 04:22:04 PM »
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Guaranteed by the government? You're kidding, right? Where is the guarantee that Social Security will not become completely insolvent and stop paying benefits all together? As long as washington has the final say there is no guarantee. And your quote about 'some company taking a downturn' shows me that you don't understand the principle of diversification to begin with. The whole reason that you choose a diversified fund is so that you're not tied into one company or market. Besides this, there ARE investment vehicles that are "guaranteed", such as such as low interest money markets.
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First of all, there is no more diversified an investment than the existing social security program. It is already in a place where it is the least volitile. To go to a private company for mutual funds would be a step backwards. The World Bank sets interest rates based on the level of risk of the borrower. There isn't going to be many private companies that get the same rate that an industrialized nation will get.
Of course, there is no absolute guarantee's but the job of the government is to protect it's citizens. If they decide to not honor pensions they should be, in theory, voted out and replaced with someone who will. If it becomes "completely insolvent", that is your government failing to protect you.
Your's is the same argument that democrats have been making, and I just don't see it. No one will be forced to put there money into personal accounts, so how is giving us the choice a bad thing?
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The message Bush is sending is that "Social Security is not looking so hot, so get your money out" instead of "don't worry, you'll get your pension checks." All of the smart and wealthy people started investing more when Bush got voted in anyway, so its not a big difference for them, but what about the rest?
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TobY1KaNobY
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Re:Personal retirement accounts
« Reply #7 on: May 04, 2005, 06:17:18 PM »
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a quote from THE DONALD "you have to spend money to make money" its quite simple becaue hes talkin investments, and the 2 most important things to look at is a good education and the job, your job may provide a good retirement plan like mine or they may invest week by week for you, but its worth looking into when you do get that job.
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ToBy1
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Re:Personal retirement accounts
« Reply #8 on: May 05, 2005, 06:21:56 AM »
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My pension fund currently has about 57p in it, which at the current exchange rate works out at about $1530000 
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