Well let,s look at someone who has calculated this question and is not just regurgitating libertarian tracts. (I assume, based on arcane code words like "stole" and theft" for social security taxes). Like many a happy libertarian outcomes it assumes good luck wrt to personal health, but even assuming that, you also have to be lucky wrt to what even 45 year span you happen to be working. http://www.csmonitor.com/2004/1227/p01s03-cogn.html One man's retirement math: Social Security wins -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- .By David R. Francis, Staff writer of The Christian Science Monitor / December 27, 2004 At the heart of President Bush's plan to sell Social Security private accounts is a simple notion: You're always better off investing your retirement money than letting the government do it. By doing it yourself, you can stow some money in the stock market, and over the long run will get a better return on that investment than today's Social Security system offers. The idea is broadly accepted. That's why the administration's plan to partially privatize the system sounds appealing to many. But that better return won't always happen. Just ask Stanley Logue of San Diego. For 45 years, the defense-industry analyst paid into the system until his retirement in 1994. But with all the recent hoopla over reform, Mr. Logue, a Massachusetts Institute of Technology graduate, decided to go back and check his own records. Would he have done better investing his money than the bureaucrats at the Social Security Administration? He recorded all the payroll taxes he paid into the system (including the matching amount from his employer), tracked down the return the Social Security Trust Fund earned for each of the 45 years, and then compared the result with what he would have gotten had he been able to invest the same amount of payroll tax money over the same period in the Dow Jones Industrial Average (including dividends). To his surprise, the Social Security investment won out: $261,372 versus $255,499, a difference of $5,873. It's an astonishing finding. The DJIA represents blue-chip stocks. Social Security invests in US Treasury bonds. Over long periods of time, stocks have consistently outperformed bonds. So, you would think that Logue's theoretical stock investments from 1950 to 1994 would have surely outpaced the return on government bonds. The fact that they didn't illustrates one of the hard truths about stock investing: Timing matters. Although Logue started pouring money into Social Security in the 1950s and early 1960s, some of the best years for stocks, he hadn't accumulated a lot of money. So the gains of his theoretical stock portfolio would have been limited. By the time he had substantial sums, the market swooned for long periods. From 1965 to 1982, for instance, the DJIA made no progress. Logue retired before the real run-up in stocks in the latter half of the late 1990s. So the real lesson from his analysis is that any pension plan based on stock investments carries extra risks. *****
Only in America... can you find fools willing to make up/extremely exaggerate a story and post it on a message board in hopes of scoring meaningless political points.
For some odd reason, glynch is not responding to either of us - the guys that tried to offer solutions to the problem. This tells me that either: 1. He made the whole thing up, or 2. He is interested in deriding people because they do not think government is the answer to every problem and is not interested in solving this man's problem. Either way, it is sad. glynch...did they sell the house on 9/7/10? Have you informed him of his right to redeem with the HOA?
Ya, no ****. A 10th grader could come to that conclusion. Who is going to invest all of their retirement in stocks?
Disappointing Glynch. Ref and I have both offered to help and have received no response. Only in Humanity... can we use other people's misfortunes to preach our point as turn our backs to them.
Sorry, I am busy helping clients. Also need to correct a lot of the misunderstandings of brainwashees on this bbs. Not a lot of time to spend with someone who is not a client. Maybe Refman could understand this. I will go back and read the posts that supposedly weren't answered.
Yeah I can't comment on economic injustice in this country unless I give away all my money. Can't comment on an injustice to a possible client unless I give away all my time for free trying to right a particular exmple out of the millions. Meanwhile libertarians and conservatives who don't do crap and don't advocate any changes to the status quo in the health care, bankruptcy etc. are non hypocritical. They advocate selfish policy positions and structures in society and selfishness in their personal lives, too, so they should not be blamed as they are consistent at all times. I got it. PS I know some conservatives and even libertarians do give of their time and give some charity to right wrongs created needlessly by our laws, but you would think that they would want to change the laws that led to the problems needlessly in the first place.
So even if you cherry pick a period to show the superiority of Social Security, you only end up with about a 2% improvement?
You just summed up conservatives health care plan. Do away with tons of regulation and legislation that handicaps the private health care sector. Conservatives have no political power right now so they must try to prevent further regulation and legislation such as Obamacare from being enacted. Sounds to me liek you and the Conservatives agree 100%. Get rid of bad legislation/regulation.
Uh, it picked a 45 year horizon dating back from 1994 to 1949. Social Security only goes back to 1935, and really didn't go into effect until 1936-37 (right before another bad equities crash) - I'd say about a half century is a sufficiently long time horizon. (mind you you get this measly 2% improvement with no associated costs or fees). Honestly the only thing that the Bush administration could have done worse that it wasn't able to do was plow all of the social security trust fund into equities in 2005 as it wanted to at the peak of the credit bubble. You think that was bad in 2008/09? It's scary to even think about what would have happened had they been successful.
Nobody ever said that if you have the luck to have your 45 years of a working life at the right time you cannot be a millionaire. The max SS benefit is about $2600 per month and it can outlive you and god to your spouse and or minor or adult disabled kids. Hey I listened to Dave Ramsey tell his unsohisticated audience it is all so simple-- 1.10 to the 45th power leads to tens of millions of dollars. Denton was not much more sophisticated in his argument. BTW social security is supposed to be fool proof for your really safe money and it is. I have money in the market and try to make it grow, though unlike Denton I don't always enter and leave at the right time. Still glad to have SS, SS Disability and SS Survivors benefits for my wife who makes less than me etc.
Who asked you to give "all your money away?" This guy is losing his home over $700 and at least two people in here have expressed a willingness to help. Instead of helping and giving anything up, what you want to do is use this as a platform to rail against the system and argue that other people need to give up more of THEIR money. To be honest Glynch, I'm very disappointed. I always thought you a true believer in liberalism, but it turns out you are just another liberal that is liberal with other people's time and money. You can comment on whatever you want. It shows your true character though that you are interested in doing nothing to help beyond commenting and suggesting that someone else should have to help him. Some just don't think government should be doing those things. You are on the opposite end. You think government should tax others to do it while you save YOUR money and YOUR time. I will honestly never forget this conversation Glynch. You make a thread about a sad story about a guy losing his home over $700. People offer to help, even to help raise the $700. Your response? I don't want to give away all my money!
I read the piece, I know what it did. What if instead it had picked a 45 year period from 1937 to 1982? What if it had picked a period going from 1955 to 2000. I think either one would have had far superior performance for the DOW. It even explicitly says in the article that the timing is what makes the difference, where he is getting very little money in when the prices were extremely low, and the final valuation occurs just before the prices shot through the roof in the late 90s. If the 45 year window had shifted 5 to 10 years in either direction, then the gains would have been much larger for the DOW. Instead, the window happened to be at a good point for comparison with SS, so SS ended up looking better, but again at a mere 2% increase over the DOW. To me, that says allowing a choice between SS (US Treasury bonds) and the DOW, the downside of picking the DOW over a 45 year window is your final retirement amount could be 2% less, while the upside is it could be far, far more. The smart money would bet on the DOW. How many investment advisers would tell their clients to put all their money in treasury bonds?
