John H wrote:
On 16 Feb 2005 09:16:20 -0800, wrote:
John wrote:
The 4% (not 3% as I'd thought) is applied to their *tax*, not their
income.
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Four pecent of 7.5%?
Isn't that about one third of a percent of income?
In other words, a young worker pulling in $50,000 a year would put
away
$150.00 per year toward retirement?
Better check your information. If true, tell them not to spend that
princely, compounded sum in any one place. :-)
Well, I just read another article that says, "...up to thirty percent
of their
payroll tax."
You're correct, 3% of the tax itself wouldn't amount to much. The
thirty percent
of the tax seems much more realistic.
Now it's an even better idea!
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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I'm not so sure.
I've been investing for retirement for decades. My situation is
different from a lot of people as some of my income ($10-20 a week)
will continue perpetually, whether I "work" or not, but I have taken
advantage of a number of tax saving retirement plans *already in
existence* to accumulate the couple of hundred bucks I have so far
managed to save for my old age.
I've got or have had Ira this, Ira that, Roth Iras, Sep Iras- hell, I
think I've probably got an Ira Hayes somewhere among those accounts.
:-) My CPA (and wife) does my taxes, but on some of these accounts I
believe I defer the income tax on any money put in. Even in my
impoverished bracket, that amounts to a lot more than 3-4% of my
income. Some of the accounts have provisions where the money that went
in initially was taxed, but all the earnings are tax exempt or tax
deferred until I draw out the money when I get old (er) and
theoretically will be earning less (hardly possible) and in a lower tax
bracket.
Some of these accounts are too risky. One of my accounts is with a
major brokerage firm.
The last time the market imploded, I decided to move some of the money
into a real property investment here in Seattle. (I bought part of a
warehouse down by Safeco Field. I believe I own one doorknob and half a
broom closet as my share). Getting the paperwork squared away to where
I was allowed to move some money out of stocks and into a less volatile
investment was a serious challenge. One of the problems with a
retirement portfolio that is heavily invested in securities is that if
the market decides to go into a corrective "nosedive" just about the
time a worker is ready to quit working, it can have a serious effect on
the type of retirement lifestyle available to the worker.
The government has been giving tax relief to people establishing
individual retirement accounts for decades. That is a good idea, and it
certainly isn't something that Bush dreamed up.
Diverting 25% of SS impounds into the stock market, when the SS system
is already in trouble, may not be wise. It certainly isn't the least
bit necessary, as there are already a number of tax sheltered accounts
and schemes in place through which an American can establish a personal
retirement savings.
Social Security: Don't count on it, but don't take it away from those
who are truly in need.