The George Bush Lock Box Thread

[Beestie]

Originally Posted by Happy Monkey

Instead, we'll let 'em move some of their social security, currrently in treasury bonds, into the stock market, and tell them not to retire in a down year.

The social security fund is heavily invested in T-Bills and returns a paltry 2-3% annually. The stock market returns, on average, 11-12% per year (which includes down years, btw).

So, here is a chart of the two alternatives: A person who has $10,000 in his or her SS acct at age 30. Look what happens to that 10k (with NO additional money contributed) by the time the person is 65. Even if the stock market took a plunge in any of the last ten years the stock market option still kicks the living crap out of the paltry T-Bill return that SS gets.

I will say, however, that the stock option is only good for people with at least 20 years ahead of them. That is more than long enough to substantially increase the odds of actually achieving a return close to the historical average.

[Happy Monkey]

Originally Posted by Beestie

The social security fund is heavily invested in T-Bills and returns a paltry 2-3% annually. The stock market returns, on average, 11-12% per year (which includes down years, btw).

That's average. If everyone in the US made the average salary, we would need no safety net. Whats the comparison of the minimum return for an individual in T-bills and stocks? That's what Social Security is for - a guaranteed minimum to live on.

Originally Posted by Undertoad

Also, I would not discount the effects on a 15% tax on employment wages on the chances that a young black male will be violently killed.

Someone who dies young doesn't contribute much to Social Security in the first place. Once one reaches retirement age, I'd guess that most of the death-age discrepancy is more aligned to prosperity than race.

[Beestie]

Originally Posted by Happy Monkey

That's average. If everyone in the US made the average salary, we would need no safety net. Whats the comparison of the minimum return for an individual in T-bills and stocks? That's what Social Security is for - a guaranteed minimum to live on.

That argument is completely devoid of logic. No one earns exactly the "average" salary of all wage earners. But everyone who invests in the stock market earns the average return over the long run and that average return is remarkably stable. Why should I be penalized because you are terrified of the stock market. I can turn 10k into 450k while your 10k turns into 21k. But, in your world, I am prohibited because "its not fair to you." How so?? How does what I do with my money affect what you do with yours?

Also, please provide a scenario where a long term investment in T-Bills has outperformed the same investment in the stock market over a 35-year span.

And as for your point that SS provides a minimum amount to live on, let's see you do it. SS income is inadaquate - that's the reason alternatives are being proposed. And the whole basis of the SS system is that there be enough people paying into the system to cover those drawing from the system. That requirement is about to go out the window when the retiring baby boomers outnumber wage earners by a substantial margin. Prepare for even more cuts in benefits or, allow me to take more risk than you are willing to take to and earn (historically speaking) five times more than you and I'll help cover your deficit. If you do nothing, the system will not survive. What's your alternative solution?

[Happy Monkey]

Originally Posted by Beestie

But everyone who invests in the stock market earns the average return over the long run and that average return is remarkably stable.

No they do not, as you admit later on:

Prepare for even more cuts in benefits or, allow me to take more risk than you are willing to take to and earn (historically speaking) five times more than you

What risk are you speaking of, if everyone earns the average? The fact is, people can and do lose their life savings on the market. Every fund is not a winner.

and I'll help cover your deficit.

That's not how it works, unless that's a personal promise from you to me, in which case it hardly solves the greater problem.

If you do nothing, the system will not survive. What's your alternative solution?

If we do nothing, the benefits eventually fall to 80% of the current levels, (adjusted for inflation). The simplest fix is to adjust the maximum taxable earnings based on the needs of the system.

[lookout123]

The simplest fix is to adjust the maximum taxable earnings based on the needs of the system

can you expand on that HM?
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personally, i like an idea that would never get passed because it would be political suicide. but i would say that for anyone under 18 on 1 January 20xx there will be no social security check to look forward to. they have their entire lives to plan for their retirement and invest. for those 18-30, cut their benefit to 60%, for those 31-40 80%, for those 41-50 95%, for those of 51 on 1january 20xx they continue to receive their expected check until death.

in the beginning everyone would have to continue to pay SS tax, but that would be scaled down until there was no SS tax.

if you are 18 and know that there won't be any handout at age 62, you are a little more likely to put some money away for the future. and if you don't, tough s**t, i hope your family saved enough for the both of you.

how we got to a point where we expect our government to give us money for retirement is beyond me.

[Happy Monkey]

Originally Posted by lookout123

can you expand on that HM?

There is a maximum level of contribution per year. If there aren't enough funds, that level can be raised.

[lookout123]

are you saying that if there isn't enough money to pay for SS then we should increase the tax for SS?