Anyone Care To Guess The Average Rate Of Return On Money Paid Into Social Security?

[Jhhnn]

The payments for LTD and LI are but a pittance of all the money. Give me all my money I put into SS and let me do what I want with it and retire 5 years earlier than I have planned.

The payouts aren't the issue at all. What's at issue is what such coverage costs in the open market, which would necessarily need to be deducted from the market earnings to make a valid comparison.

Fern misses that, too... although I don't count him among the ravers, anyway.

 

[spidey07]

The payouts aren't the issue at all. What's at issue is what such coverage costs in the open market, which would necessarily need to be deducted from the market earnings to make a valid comparison.

Fern misses that, too... although I don't count him among the ravers, anyway.

What such coverage costs in the open market really isn't as much as you believe as they can leverage their investments to provide a much higher ROI than SSDI. Me personally I max out my LTD/STD via private industry and SS would never pay as much to my wife as my life insurance.

Personal Responsibility, it goes a long way to making wise choices in life that are generally much better than what government can provide. The working/tax paying citizens of this country have had enough with this ponzi scheme.

 

[spidey07]

My guess is that when I get real hungry I'm going to come looking for you. You might want to keep that from happening. You might find yourself dozing off while the hungry never lose their focus.

Hey looter, hungry person. There is nothing for you here *points weapon at chest*. Move along. Nothing for you here. Move along.

 

[manimal]

The payments for LTD and LI are but a pittance of all the money. Give me all my money I put into SS and let me do what I want with it and retire 5 years earlier than I have planned.

Spidey made two valid points. When it comes to finance I am very conservative. From a personal point of view I could in fact if given all the money that I paid into SS and into unemployment do over my life much better than what I will ultimately be given.

The problem with this is most people are only thinking about how they are going to make their next car-house-drug dealer- payment. If left to their own devices many would be in fact out on the street after a bad turn and will in fact become greater liabilities on the government or their local communities/churches. Family dynamics are very different than they were 100 years ago. People do not live with their parents and take over the homestead as their parents are unable to work.

The reason I like personalised spending health accounts and privitization of social security are the exact same reasons they would not work for the general population. Most people are simply too stupid to plan for next month let alone their retirement.

I have plans to retire in about 10 years when the wife and I are about 52-53 depending on how the stock market and real estate rebounds. My brother on the other hand with a failed marriage and an exwife that is totally batshit will be lucky if he ever stops working. To help him I have started college funds for his kids that he doesnt know about...hes very prideful...

I look at SS in the same way as I look at my charitable contributions. I dont expect anything back other than knowing it will be doing some good somewhere. I know some will respond and say that I should decide what I donate and where it goes but again sadly most people will just buy more stuff they dont need in the stead of food for a starving family.


I hope the recent economic downturn has woken up many middle aged people. The act of opening those 401k statements during the major downturn has truly scarred some people. The seniors who lost 40-60 percent because they stayed very risky as they approached old age were basically greedy or led astray by stupid investment planners and sadly have learned a very hard lesson that many of their children who now have to support them must face.


2 cents/

 

[spidey07]

Manimal, I'm a social/financial darwinist, if I haven't made that abundantly clear.

The choice to live paycheck to paycheck is purely the choice and responsibility of the individual. Yes bad things happen, I went through a nasty divorce and had to give her 80K because she threatened to go after my retirement accounts. That was a very tough time and made me strengthen my financial standing so I don't wind up like "that guy", which it sounds like brother is in. That sucks. I don't wish that hell on anybody.

Your charity for your brother is to be applauded and even highlighted. But that is between him and you.

I guess my main point of this rambling is yes, bad things happen to good people. That's where personal responsibility comes into play. I could have all kinds of cool toys every single week, but I choose to spend that money in taking care of myself and my wife and our future. I/We are in charge of our own financial future, and that is a liberty I will never give up.

Full disclosure because it's hitting a little close to home. brother in law is getting divorced, he's a VP at a major international bank, he's going to get fucked and fucked hard. She's now moved back to new york city and expects the "standard of living she's accustomed to". Bitch hasn't worked a day in her life.

 

[Darwin333]

Buh, buh, buh

Need a crying towel ?




--

He has a very valid point.

Social Security lost money this year (they paid out more than they took in), would it be fair to judge the entire program by that? Of course not, revenue has fallen off a cliff due to the recession. I can cherry pick a time frame that the stock market had HUGE gains to counter your argument but it would be just as dishonest.

 

[JS80]

I'm sure for us young ones SS will yield -100%

 

[Darwin333]

Oh, my!

The wittle Trolls have got their panties in a wadd.

No big surprise.

What type of 'return' did Uncle Sam get on the 2001 & 2003 tax cuts?

Show us how that VooDoo Economics 'stimulated' GDP. Show us how pre-emptive war, a massive military build-up and a DrugCo give-a-way (none of which were paid for) provided a *reasonable* return to America.

Then you can bitch about SS (which, btw, you owe $4+ trillion)




--

Umm, you do realize that Obama is doing pretty much all of those things except for the "pre-emptive" part of the wars right? Same voodoo economics ($700B over 10 years for the tax cuts for the rich doesn't even dent our deficit THIS YEAR, but those tax cuts for everyone else are gooood), still fighting 2 wars and the Dems passed the biggest health insurance/"DrugCo" bailout bill of all time so what exactly is your point?

You Demadonts and Republicants refuse to have an adult discussion about any of this which is why I believe we are truly fucked. Just stick to the bullshit you are fed and pay no attention to what they are really doing, been working great..... for them.

For fucks sake neither party could even get Glass-Steagall reinstated and we don't care. OTOH, we will argue all day about a fucking mosque being built "too close" to ground zero when no one can even define the damned boundaries. Misdirection, that is all it is and it is working perfectly and I don't believe there is a damned thing we can do about it at this point. Even if I could convince you that you are being lied to by your own "club" we really aren't any closer to solving the problem.

 

[manimal]

Manimal, I'm a social/financial darwinist, if I haven't made that abundantly clear.

The choice to live paycheck to paycheck is purely the choice and responsibility of the individual. Yes bad things happen, I went through a nasty divorce and had to give her 80K because she threatened to go after my retirement accounts. That was a very tough time and made me strengthen my financial standing so I don't wind up like "that guy", which it sounds like brother is in. That sucks. I don't wish that hell on anybody.

Your charity for your brother is to be applauded and even highlighted. But that is between him and you.

I guess my main point of this rambling is yes, bad things happen to good people. That's where personal responsibility comes into play. I could have all kinds of cool toys every single week, but I choose to spend that money in taking care of myself and my wife and our future. I/We are in charge of our own financial future, and that is a liberty I will never give up.

Full disclosure because it's hitting a little close to home. brother in law is getting divorced, he's a VP at a major international bank, he's going to get fucked and fucked hard. She's now moved back to new york city and expects the "standard of living she's accustomed to". Bitch hasn't worked a day in her life.

I actually respect your economic darwinism and can tie many of these ideals to my own philosophies. I firmly believe in lifting ones self by the bootstraps of our own will and forging our own destinies.

I have also spent alot of time in the slums of the Philippines, in the favela's of Brazil, in the shantytowns of south Africa in outreach from our church and grew up in south America during hard economic times. These experiences have to me shaped my outlook as well. My wife calls me progressive in my social beliefs but economic conservative because I deplore her penchant for nice shoes...

I can advocate for many reforms to government but the fabric of our society would fall apart if social security were not there for the millions that depend on it. A large part of social security goes towards keeping people off the streets and being even more dependent of handouts from our churches and food lines from our cities.

While Social Security as it is now is unsustainable the removal of it would make the American way of living even less sustainable. In my post I was not trying to paint you in any light just trying to show our common ground..

Sadly I know too many people who are living paycheck to paycheck driving cars and living in houses they could not afford. I have tried to help them but alas consumerism is an addiction that takes hold much like heroin...

My wife did not like my idea to move back to the midwest and destress our lives. She now is happier than she ever was in her high powered job in Manhattan working at White and Case....

 

[Triumph]

ignore

 

[First]

I cannot find that in the article you linked.

Given the volitile nature of the market I find it hard to belive one cannot find some 30 periods which exceed 7%. (Just as one can likely find some that are much lower).

Believe it or not there are none that exceed 7% by any statistically significant measure (I mean that in the econometric way). It's in his book Stocks for the Long Run: http://en.wikipedia.org/wiki/Stocks_for_the_Long_Run

It really shouldn't be too hard to cherry pick some periods with very good returns.

I also don't see anything unreasonable about excluding pre-1900's stock info. In fact I'd prefer including only years following the establishment of the SEC and the application of universal accounting standards etc.

I disagree since 1900 is entirely arbitrary. Since 1913 or 1945 or some relevant date in history perhaps. 1900 is not that date.

It's not an "annonymous" blog.

Information about the author is provided, such as:

You should look up the definition of anonymous. Do you see a name or location listed there? No, you don't.

I'm not vouching for his accuracy etc. But it appears you may have not read all the site linked before dismissing it. The answers to your questions can be found there. He it appears he even makes his financial models available etc. I'm just not interested enough to bother, yet I still see no reason to dismiss his data out-of-hand. I noticed the 7% ROI your article cites is based on dividend reinvested in the stocks. While that's a reasonable approach it's reasonable to not do so. Small differences in the moedling will produce different results. There is no one to do it.

It's not reasonable to leave out dividend reinvestment since basically every publicly traded stock's dividend gets reinvested if you choose the default option of doing nothing but sitting on your investments. Besides, not reinvesting dividends would lower the %, not raise it to his 9.4% figure.

BTW: It's not clear, at least to me, if when he (blogger) says "the stock market" if he's referring to the DJIA. If he is referring to DJIA, then comparing your site to the other is apples to oranges. And there's nothing necessarily wrong about focusing on the DJIA to get an idea about how the market is performing; it's what everyone does.

Fern

He uses an average index of DJIA funds, same as Siegel. As he should, it's the most heavily traded.

 

[nonlnear]

I would be right pissed if SS paid more than a treasury bonds. After all, the money isn't actually being invested. The higher the effective rate of return, the more the silverbacks are stealing from their grandchildren. I'd like to see that rate of return shoot down to about -15% as we sunset the whole debacle. I expect -100% return on my contributions, so my elders who voted [politicians who voted to] to rob me by cashing it out early ought to be happy with the half pound of flesh they get.

 

[Jhhnn]

What such coverage costs in the open market really isn't as much as you believe as they can leverage their investments to provide a much higher ROI than SSDI. Me personally I max out my LTD/STD via private industry and SS would never pay as much to my wife as my life insurance.

Personal Responsibility, it goes a long way to making wise choices in life that are generally much better than what government can provide. The working/tax paying citizens of this country have had enough with this ponzi scheme.

Nice deflection and obfuscation, spidey. Upper income people often carry LTD/STD insurance because they can afford it. That's not true for middle income people at all, and the rates go up as one ages, too.

As for the working/taxing people being fed up with SS, you apparently live in a very sheltered environment, because the vast majority of working americans will depend on it, in whole or in part, for their personal retirement. They're not fed up with it at all. It's like saying people are fed up with breathing.

 

[Balt]

Two recessions, fuckhole? Is that sloppy seconds?

 

[HendrixFan]

Personal Responsibility, it goes a long way to making wise choices in life that are generally much better than what government can provide. The working/tax paying citizens of this country have had enough with this ponzi scheme.

You make it very clear that you (and presumably anyone else who tries)have no problem going beyond the mean when it comes to retirement and accident preparedness. The system we have now allows for that. How is that a problem?

Social Security isn't for you. It isn't for me. It isn't for him/her. It is for us. Is it the safety net for disability and retirement for the majority of the population (as a whole) who will not possess the personal responsibility you speak of. Keeping large chunks of our society from abject poverty and hopelessness is a common good, as they will never revolt and overthrow you from your personal palace. It is a pacifier for the common person, and helps to stabilize our society.

If Social Security were to have a big return, where would it come from? Volatility in the market prevents guaranteed returns on an annual basis. The government would have to foot the bill to make up for shortfalls, like this past decade. Of course, during poor performing years government revenue is down and money is harder to come by. You would have to raise SS rates, which would then kill off the higher returns unless you adjust the payouts to the new higher rates. That is a new problem unto itself. Unless you want to get into an endless loop with the whole thing...

The fact that SS doesn't have huge returns signifies that it is low risk. You put a guaranteed return of 6, 7, 8 or 9%, or whatever you want, then how does all that money going to SS affect CDs? Treasuries? Bonds? Stocks themselves?

 

[Zebo]

Sad thread, yet another thing whereby blood was spent & that got us out of stone age feudalism and under attack.

Let it all come out. minimum wage, or other improvements in wages and working conditions, "free trade", unions, racism, and everything else that keeps huge supply of desperately poor people over a barrel, and will work cheap while those that own dictate terms. SS is chump change.

I wish for awhile we would go to right wing paradise as a reminder. Just a month a year is all it would take.

 

[Zebo]

I actually respect your economic darwinism and can tie many of these ideals to my own philosophies. I firmly believe in lifting ones self by the bootstraps of our own will and forging our own destinies.

I have also spent alot of time in the slums of the Philippines, in the favela's of Brazil, in the shantytowns of south Africa in outreach from our church and grew up in south America during hard economic times. These experiences have to me shaped my outlook as well. My wife calls me progressive in my social beliefs but economic conservative because I deplore her penchant for nice shoes...

I can advocate for many reforms to government but the fabric of our society would fall apart if social security were not there for the millions that depend on it. A large part of social security goes towards keeping people off the streets and being even more dependent of handouts from our churches and food lines from our cities.

While Social Security as it is now is unsustainable the removal of it would make the American way of living even less sustainable. In my post I was not trying to paint you in any light just trying to show our common ground..

Sadly I know too many people who are living paycheck to paycheck driving cars and living in houses they could not afford. I have tried to help them but alas consumerism is an addiction that takes hold much like heroin...

My wife did not like my idea to move back to the midwest and destress our lives. She now is happier than she ever was in her high powered job in Manhattan working at White and Case....

White folk like to act as if they are superior to brown folk when in fact it was enabling society that caused them to rise above and accelerate in their endeavors...you don't see this too often. but countries who do, regardless of race start booming. Another way to put it is would you open a R&D facility in Uganda? I don't fucking think so since people are taught how to plow that's about it. Notice immigrants who come west kick ass? Not by accident. And most republicans would throw it all away. Cutting nose to spite face.

 

[IndyColtsFan]

Most people are simply too stupid to plan for next month let alone their retirement.

Truer words have never been spoken. The responsible citizens (the minority) are punished because of the irresponsible majority.

 

[HendrixFan]

Truer words have never been spoken. The responsible citizens (the minority) are punished because of the irresponsible majority.

You aren't punished if you realize the societal benefit of Social Security helps you more than not having it around. The better off you are financially, the more you benefit from keeping the poor unwashed masses from revolting.

 

[Pens1566]

The choice to live paycheck to paycheck is purely the choice and responsibility of the individual.

This is your idiocy summed up in one sentence.

 

[Mursilis]

This is your idiocy summed up in one sentence.

How is he wrong exactly? Sure, some people's paychecks are so small that they have no choice but living paycheck to paycheck, but other people just insist on making foolish choices. I've got a relative who insists he has nothing extra to put away for retirement, yet earns ~$135K and buys a new car about every year or so, spends a ton going out to eat, etc. There are tons of people like this. I'm driving a beater 13 year old base model econobox (and funding my retirement), and my relative has bought (and sold) a Mustang, Corvette, and other fancy cars in the past 10 years, and has a house almost twice as big as mine, but won't fund his retirement, so I'm supposed to subsidize him in the future?

 

[nick1985]

This is your idiocy summed up in one sentence.

It may not be so much their choice, but it is their responsibility. Do you disagree?

 

[Acanthus]

How is he wrong exactly? Sure, some people's paychecks are so small that they have no choice but living paycheck to paycheck, but other people just insist on making foolish choices. I've got a relative who insists he has nothing extra to put away for retirement, yet earns ~$135K and buys a new car about every year or so, spends a ton going out to eat, etc. There are tons of people like this. I'm driving a beater 13 year old base model econobox (and funding my retirement), and my relative has bought (and sold) a Mustang, Corvette, and other fancy cars in the past 10 years, and has a house almost twice as big as mine, but won't fund his retirement, so I'm supposed to subsidize him in the future?

He pays his cap in SS tax. You wont be propping him up.

He will live like shit though, at least he wont be homeless.

 

[Pens1566]

How is he wrong exactly? Sure, some people's paychecks are so small that they have no choice but living paycheck to paycheck, but other people just insist on making foolish choices. I've got a relative who insists he has nothing extra to put away for retirement, yet earns ~$135K and buys a new car about every year or so, spends a ton going out to eat, etc. There are tons of people like this. I'm driving a beater 13 year old base model econobox (and funding my retirement), and my relative has bought (and sold) a Mustang, Corvette, and other fancy cars in the past 10 years, and has a house almost twice as big as mine, but won't fund his retirement, so I'm supposed to subsidize him in the future?

He's wrong because his whole schtick is "people could choose to not be poor". The sky is purple in his world.

 

[Mursilis]

He pays his cap in SS tax. You wont be propping him up.

He will live like shit though, at least he wont be homeless.

If they start means-testing for SS, I will be. And that's one of the proposals floated toward making the fund solvent long-term.