Social Security - your thoughts?

[lawgator1]

I don't know whether you folks touting these vehicles understand the dynamics of rates of return over time, or are simply unwilling for political purposes to acknowledge the shortcomings.

Those funds will have some years where they make 2 %, some where they make 11%, and some where they lose 15%. An average rate of 7 % over thirty years is great if you have the full thirty years to recover from those -15% years. But not so great if you are 82 years old and won't have it long enough to recover to a point of getting 7%.

And if that occurs, for those people in that fund who now can;t pay rent or buy food or medicine, what are we going to do? Leave them be? Not help them, despite their having paid into the system for 50 years? All because they had the misfortune of needing that average return for a period of years when the fund lost money....

 

[McDad]

I don't know whether you folks touting these vehicles understand the dynamics of rates of return over time, or are simply unwilling for political purposes to acknowledge the shortcomings.

Those funds will have some years where they make 2 %, some where they make 11%, and some where they lose 15%. An average rate of 7 % over thirty years is great if you have the full thirty years to recover from those -15% years. But not so great if you are 82 years old and won't have it long enough to recover to a point of getting 7%.

And if that occurs, for those people in that fund who now can;t pay rent or buy food or medicine, what are we going to do? Leave them be? Not help them, despite their having paid into the system for 50 years? All because they had the misfortune of needing that average return for a period of years when the fund lost money....

I appreciate why you went to Law school.

You don't math so good.

 

[Orangeburst]

I appreciate why you went to Law school.

You don't math so good.

you seen that guy that promotes all math is wrong..

keeps saying 1x1 doesnt equal 1. gets a ton of views on utube.

 

[McDad]

Pick any point past 40 years where a person is very close to retiring and deduct 15% representing LG's "loss".

 

[utvolpj]

I don't know whether you folks touting these vehicles understand the dynamics of rates of return over time, or are simply unwilling for political purposes to acknowledge the shortcomings.

Those funds will have some years where they make 2 %, some where they make 11%, and some where they lose 15%. An average rate of 7 % over thirty years is great if you have the full thirty years to recover from those -15% years. But not so great if you are 82 years old and won't have it long enough to recover to a point of getting 7%.

And if that occurs, for those people in that fund who now can;t pay rent or buy food or medicine, what are we going to do? Leave them be? Not help them, despite their having paid into the system for 50 years? All because they had the misfortune of needing that average return for a period of years when the fund lost money....

50yrs of gains yet they can't buy food because of a short term drop?

 

[lawgator1]

50yrs of gains yet they can't buy food because of a short term drop?

Depends on how short a term, where it occurs in your lifetime, and how big a drop.

 

[McDad]

1. Depends on how short a term, 2. where it occurs in your lifetime, and 3. how big a drop.

1. Wrong (based on historical data)
2. Wrong
3. Correct.

 

[lawgator1]

1. Wrong (based on historical data)
2. Wrong
3. Correct.

You are saying it is not possible for one of those funds to lose an average of, say, 3 % per year, over a given three year period?

 

[utvolpj]

You are saying it is not possible for one of those funds to lose an average of, say, 3 % per year, over a given three year period?

Who starts investing and retires all in a 3yr span?

 

[SpaceCoastVol]

‘No one in the US should be retiring at 65’: Ben Shapiro said Social Security was not designed to provide retirement benefits for 20+ years — and those who expect that are ‘crazy’

I'm forced to. I don't want to retire.

 

[utvolpj]

‘No one in the US should be retiring at 65’: Ben Shapiro said Social Security was not designed to provide retirement benefits for 20+ years — and those who expect that are ‘crazy’

He shouldn't attempt to speak for everyone. I'll be living at the lake by 60 at the most (at least part time).

Now, if he wants to say that retirement is a dollar figure not an age then I would agree

 

[Jxn Vol]

I don't know whether you folks touting these vehicles understand the dynamics of rates of return over time, or are simply unwilling for political purposes to acknowledge the shortcomings.

Those funds will have some years where they make 2 %, some where they make 11%, and some where they lose 15%. An average rate of 7 % over thirty years is great if you have the full thirty years to recover from those -15% years. But not so great if you are 82 years old and won't have it long enough to recover to a point of getting 7%.

And if that occurs, for those people in that fund who now can;t pay rent or buy food or medicine, what are we going to do? Leave them be? Not help them, despite their having paid into the system for 50 years? All because they had the misfortune of needing that average return for a period of years when the fund lost money....

There’s the bleeding heart.

but what about the kids!?

 

[BigOrangeMojo]

The rate of return isn't as much of an issue as those making $30K are getting a completely different ROI than someone making $100K.

People making over $100K shouldn't be getting a negative ROI to subsidize the mid-single digit ROI for those making $30K...

 

[hog88]

I'm forced to. I don't want to retire.

I doubt that I ever fully retire, what the hell would I do every day?

 

[PEPPERJAX]

I doubt that I ever fully retire, what the hell would I do every day?

Politics

If you can't discuss politics without getting angry then this is not for you. All regular board rules apply. Please respect each others opinion.

www.volnation.com

 

[hog88]

Politics

If you can't discuss politics without getting angry then this is not for you. All regular board rules apply. Please respect each others opinion.

www.volnation.com

Went over my head.

 

[PEPPERJAX]

Went over my head.

You can devote all of your time to the PF if you fully retire.

 

[hog88]

You can devote all of your time to the PF if you fully retire.

Dude I get paid for this ish.

 

[SpaceCoastVol]

I doubt that I ever fully retire, what the hell would I do every day?

It's funny, but I have been asking my coworkers that for years. You get the usual, "I'm gonna play golf everyday" or "I'm going fishing everyday"... and when the reality is told, the vast majority are bored after about 6 months. In my job you always hear that guys drop dead within a few years of retirement because the job killed them when I think for many it is exactly the opposite.

All I know is that I have been researching how to make corn likker and studying to make real no kidding Japanese ramen. (not the stuff you buy in Walmart). What I really hope is that the UT flying job comes open again. I'm all in, and I'll let ya'll know where we are headed for recruiting. (not really. I'm sure they have to keep their mouths shut on that)

 

[SpaceCoastVol]

Dude I get paid for this ish.

LOL wut? How did you pull that off? Can you help a brother out?

 

[hog88]

It's funny, but I have been asking my coworkers that for years. You get the usual, "I'm gonna play golf everyday" or "I'm going fishing everyday"... and when the reality is told, the vast majority are bored after about 6 months. In my job you always hear that guys drop dead within a few years of retirement because the job killed them when I think for many it is exactly the opposite.

All I know is that I have been researching how to make corn likker and studying to make real no kidding Japanese ramen. (not the stuff you buy in Walmart). What I really hope is that the UT flying job comes open again. I'm all in, and I'll let ya'll know where we are headed for recruiting. (not really. I'm sure they have to keep their mouths shut on that)

My plan is to install my replacement in about 10 years and be a pain in his ass second guessing his every decision. You know, be a productive senior citizen.

 

[lawgator1]

Who starts investing and retires all in a 3yr span?

No doubt that for people entering the work force now the investment option is a better choice than for someone who is retired, or is about to retire. The corollary to the concept of dollar cost averaging, however, is that folks on the back end of that process take on a much higher risk of it not working well as a substitute for traditional SS.

Remember, the shortfall hits in about 2030.

I'm 60. If I retire at 67 that's right around then. And if the SSA tells me, well, your guaranteed SS amount is going to be lower, but X percent of your monthly check will be some portion of your assigned benefit being invested in securities which, even if low risk, are not fool proof....

I could weather it if that investment portion underperformed for a few years. But there are a lot of people my age who could not.

 

[midnight orange]

No doubt that for people entering the work force now the investment option is a better choice than for someone who is retired, or is about to retire. The corollary to the concept of dollar cost averaging, however, is that folks on the back end of that process take on a much higher risk of it not working well as a substitute for traditional SS.

Remember, the shortfall hits in about 2030.

I'm 60. If I retire at 67 that's right around then. And if the SSA tells me, well, your guaranteed SS amount is going to be lower, but X percent of your monthly check will be some portion of your assigned benefit being invested in securities which, even if low risk, are not fool proof....

I could weather it if that investment portion underperformed for a few years. But there are a lot of people my age who could not.

Buy T Bills or a treasury fund. That’s about as low risk as it gets at least for now. I’m not aware of any investment that is risk free.

 

[LouderVol]

I don't know whether you folks touting these vehicles understand the dynamics of rates of return over time, or are simply unwilling for political purposes to acknowledge the shortcomings.

Those funds will have some years where they make 2 %, some where they make 11%, and some where they lose 15%. An average rate of 7 % over thirty years is great if you have the full thirty years to recover from those -15% years. But not so great if you are 82 years old and won't have it long enough to recover to a point of getting 7%.

And if that occurs, for those people in that fund who now can;t pay rent or buy food or medicine, what are we going to do? Leave them be? Not help them, despite their having paid into the system for 50 years? All because they had the misfortune of needing that average return for a period of years when the fund lost money....

its pretty clear you don't.

Lets take McDad's 47 years, and use simple math. 1k invested a year.

at the end of 47 years you don't have 47k. you don't even have 47k times the going rate (2%, 11%, -15%). you have the relatively complex formula of something like: year 1 1k times year 1 rate, plus year 1 1k(plus interest) times year 2 rate, plus year 1 1k (Plus compounded interest) times year 3 rate. 47 times, for just the 1st year 1k. then you do year 2 for 46 years, year three for 45, and so on and so forth.

at the end of the day you end up with some pot of money that is far far bigger than 47k. so much so that even a -15% ROI at retirement doesn't even offset the first years investment.
that year 1 investment at an average of 7% turns into 24k over 47 years. at -15% you still have 21k invested. 21k (even after a -15% ROI) vs 1k you invested. you are far far far ahead of the game. and that doesn't even take into account the compounding nature of multiple years of investing.

Investment calculator: Realize the power of long-term savings

What’s the impact of saving over time? Enter an investment amount to see the power of long-term savings.

www.edwardjones.com

and there are also retirement plans out there with age specific criteria that move your money around from higher risk, higher gain investments, to much more stable but lower gain investments. so its not like there isn't a safety blanket built into the system to protect against the potential lulls.

 

[lawgator1]

its pretty clear you don't.

Lets take McDad's 47 years, and use simple math. 1k invested a year.

at the end of 47 years you don't have 47k. you don't even have 47k times the going rate (2%, 11%, -15%). you have the relatively complex formula of something like: year 1 1k times year 1 rate, plus year 1 1k(plus interest) times year 2 rate, plus year 1 1k (Plus compounded interest) times year 3 rate. 47 times, for just the 1st year 1k. then you do year 2 for 46 years, year three for 45, and so on and so forth.

at the end of the day you end up with some pot of money that is far far bigger than 47k. so much so that even a -15% ROI at retirement doesn't even offset the first years investment.
that year 1 investment at an average of 7% turns into 24k over 47 years. at -15% you still have 21k invested. 21k (even after a -15% ROI) vs 1k you invested. you are far far far ahead of the game. and that doesn't even take into account the compounding nature of multiple years of investing.

Investment calculator: Realize the power of long-term savings

What’s the impact of saving over time? Enter an investment amount to see the power of long-term savings.

www.edwardjones.com

and there are also retirement plans out there with age specific criteria that move your money around from higher risk, higher gain investments, to much more stable but lower gain investments. so its not like there isn't a safety blanket built into the system to protect against the potential lulls.

Sigh.

Do those funds deliver those returns EVERY SINGLE YEAR?

Do these funds GUARANTEE in an enforceable way, those returns for any given five year period?

No. They don't. They can't. And if you force people to invest a portion of their retirement savings (SS or otherwise) in such funds then yes, for may it will work out. Most, probably. and the earlier the better.

But it won't work for everyone. And if its a big enough downturn, for long enough, and at the right time, for many people it could be a disaster. Do we back those people up, like we did the banks?