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"John H" wrote in message
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On 15 Feb 2005 09:41:15 -0800, wrote:
JohnH wrote:
Remember, the plan is designed not for people in their 50's, but for a
much
younger population. I wish I had been investing 3% of my ss money into
stock
funds since I began paying ss taxes as 17!
***********************
And precisely what portion of the Social Security System, as it
currently exists, prevented you from budgeting 3% of your income for
savings or investment?
Absolutely nothing in the current system prevented me from budgeting any
amount
of my net income for savings or investment.
Did the rest of your expenses and luxuries consume all of your
disposable income? If you didn't invest 3%, was that the government's
fault? (Careful, you'll start to sound like your own stereotype of a
Democrat) :-)
No and no.
I was thinking of how tough it must be for people who rely on the
"accumulation" model to retire these days.
It's different for people who establish passive income streams, but
with a retirement "nest egg" invested in
a relatively safe bond fund, etc, wouldn't it take about
$2.5- $3 million in cash to spin off $1500-2000 a week at current
interest rates? It takes at least that kind of income to sustain a
middle class lifestyle- and the typical couple earning enough to
accumulate liquid assets or savings of $3 million may be used to living
at something above middle class.
I don't think anyone has stated the 3% investment would *ever* provide a
$1500
income stream. Where do you come up with this stuff?
(High real estate values have created a false sense of security for a
lot of people. In many parts of the country,
million-dollar homes are becoming common- and are nothing all that
exceptional. People conclude they've got a million bucks as they pay
off the mortgage- and maybe they do if they're willing to cash out and
move to a single wide trailer someplace in the Dakotas. For everybody
else, a million of their bucks are stuck in a house.)
What, pray tell, does anything in the above three paragraphs have to do
with the
voluntary investment of 3% of one's social security withholdings?
I'm not certain that it's reasonable to expect the average couple to
accumulate $3 million in liquid assets, including compoounded interest,
through the investment of 3% of average wages.
I'd be fairly certain it would be unreasonable to hold such an
expectation. What
has that to do with the question at hand?
People retiring today from an annual salary of $100,000
usually started working in the late 50's and early 60's when one tenth
of that amount would have been considered a very high wage indeed. $500
a month was pretty common money back then. Compounding works most
dramatically on money saved or invested during the earliest years of a
working career, and even if a super thrifty couple managed to save 5-7%
in those days, the sum that has been compounded started off as too
small a number to (a few hundred bucks) to be worth as much as needed
today.
Compounding is the key, for sure. If I were an 18 year-old now, I'd love
to be
able to have a choice of investing in the market or letting the government
'invest' my social security withholding, especially knowing I'd be able to
pass
it on if I die.
New American employment model might be this:
Rather than work to earn a pension that insures you can quit work but
maintain your lifestyle, work toward developing a career that you truly
enjoy and is personally fulfilling. When the day comes when you turn
55, 60, 65 or whatever and your frinds ask if you're going to sit back
and clip coupons from here to the finish line, you can look them in the
eye and say "I couldn't imagine giving up my job! I enjoy it far too
much to consider quitting." IMO, that may be the secret to a
satisfactory old age..........(but it might be nice to have the
financial resources to get by if it became medically impossible to
continue working)
That last paragraph is nicely done. Of course, it has no bearing on the
voluntary investment of 3% of social security withholdings.
A lot of words, Chuck, nicely written and all, but with no bearing on the
question.
His whole premise is flawed, since it is based on generating an income
stream solely from investment growth and not from reducing the principal.
The gross savings required to have a 2k a week retirement is significantly
less if you withdraw from the principal as well.....
John H
On the 'PocoLoco' out of Deale, MD,
on the beautiful Chesapeake Bay!
"Divide each difficulty into as many parts as is feasible and necessary to
resolve it."
Rene Descartes
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