To those who want individual retirement accounts could you explain to me this...

[Specop 007]

Originally posted by: Engineer

Originally posted by: MonkeyK


I applaud your financial acumen and hope that others may be inspired by it. However, I would rather not count on most doing as well as you.

I applaud his financial achievement also, but as you point out (as does the article I posted in the first 20 posts), most people just can't/won't do it.

With a negative savings rate in the US, I doubt that will change much in the short term either.

I've only been in 401k for 11 years now. I only wish that I could have been in it for 20 as those years between 85 and 95 were booming for market investors. I'm not doing badly, but I could have had so much more if I could have been investing during that timeframe.

Cant?? Or wont?? Big difference there.
I see alot of people with satellite dish's on their houses, nice cars in the driveway, big TV's, stacks of movies and games, steaks on the grill.....
Its about financially repsonsible. Maybe, instead of buying that fancy new 3 series BMW they should buy a used Honda and put the rest in the bank. But thats no fun now is it.......

 

[Corn]

Originally posted by: MonkeyK

Originally posted by: Corn

Originally posted by: techsWow. You don't know too much about this. No one can afford to put away enough to live on the interest and not use the principal. In 30 years your 50,000 would be worth what, say, 10,000 in todays dollars? Plus your 10 percent return on investment doesn't talk at all about years you earn little or no money on your investment. In fact if invest conservatively this year you would have gotten like 3.5 percent.
And all the while you keep talking about earning 10 percent interest. Laughable.

Hahaha! Laughable indeed!

I'm 40 years old. I started investing in my 401K at 22 years old and have put away the maximum allowed each and every year.

This year, my 401K earned my yearly salary * 2.5 (this does not include my wife's 401K either)

Granted when I retire I'll be a little more conservative in my investments, but the plan is to live solely off my interest income. I could retire reasonably comfortably now, but I'm expecting a new addition to my family (Corn Jr. is due in a couple weeks) so I plan to give another 10 years to employment before I retire.

Obviously as with anything in this life, there are no guarantees. But I spend 15 minutes a day working for my investments and this 15 minutes greatly increases my odds.

I applaud your financial acumen and hope that others may be inspired by it. However, I would rather not count on most doing as well as you.

I am really not doing significantly better than anyone else who was smart enough to start saving for their retirement at a young age. I would expect anyone who has been investing the maximum into their 401K for nearly 20 years and have been at least paying some attention to have similar results.

You're absolutely right though, not everyone can be expected to plan for their retirement. For those that don't I say give them enough eat and obtain habitable shelter and give them no more. I do believe that the privatized plan floated about by Bush was optional and only invested at most 2% of the SSI witholdings collected IIRC. Big deal?

 

[MonkeyK]

Originally posted by: Specop 007
Cant?? Or wont?? Big difference there.
I see alot of people with satellite dish's on their houses, nice cars in the driveway, big TV's, stacks of movies and games, steaks on the grill.....
Its about financially repsonsible. Maybe, instead of buying that fancy new 3 series BMW they should buy a used Honda and put the rest in the bank. But thats no fun now is it.......

Cant?? Wont?? I am of the opinion that it does not matter.
SS does enough that anyone can/should count on it for a comfortable retirement. If people do not have even that, I believe that we will all be paying anyway. Just maybe not in something as easy to deal with as money.

 

[techs]

Originally posted by: Engineer

Originally posted by: MonkeyK


I applaud your financial acumen and hope that others may be inspired by it. However, I would rather not count on most doing as well as you.

I applaud his financial achievement also, but as you point out (as does the article I posted in the first 20 posts), most people just can't/won't do it.

With a negative savings rate in the US, I doubt that will change much in the short term either.

I've only been in 401k for 11 years now. I only wish that I could have been in it for 20 as those years between 85 and 95 were booming for market investors. I'm not doing badly, but I could have had so much more if I could have been investing during that timeframe.

What is really interesting is my sister started serious planning for retirement in 1990 when she started looking at what her retirement money will get her. Despite the ups and downs of the market she is almost exactly where the 1990 plan had her as of 2 months ago. Of course she did this by managing 50 percent of her money herself as she is an MBA from Columbia University and lucked out getting out of the market before the Bush market.
Anyways what is interesting is despite making a lot of money on her job and contributing to her own retirement for years she plans on living off Social Security if she lives past 83 since thats when her money will run out.
Even more interesting is that in 1998 she had enough to live till she was 91. That is how variable your reitrement is when projecting that far ahead and she is now 56.
It seems that no matter how you try saving for your own retirement it is either a gamble you will die early versus living without a substantial portion of your income now(if you make a middle class living). And tens of millions of Americans just can't save enough and still live now if they plan to make it mid to late 80's.
The result is that no one can answer the question of how to save for their own retirement based on an indeterminate age you will live to. Therefore every one of the plans to provide exclusively for ones own retirement has the result of tens of millions of seniors with no money during their retirement. And of course we won't let seniors die in the streets. So we will have to pay for retirement from federal revenues which will end up bankrupting the US.

 

[smack Down]

Originally posted by: Corn

Originally posted by: MonkeyK

Originally posted by: Corn

Originally posted by: techsWow. You don't know too much about this. No one can afford to put away enough to live on the interest and not use the principal. In 30 years your 50,000 would be worth what, say, 10,000 in todays dollars? Plus your 10 percent return on investment doesn't talk at all about years you earn little or no money on your investment. In fact if invest conservatively this year you would have gotten like 3.5 percent.
And all the while you keep talking about earning 10 percent interest. Laughable.

Hahaha! Laughable indeed!

I'm 40 years old. I started investing in my 401K at 22 years old and have put away the maximum allowed each and every year.

This year, my 401K earned my yearly salary * 2.5 (this does not include my wife's 401K either)

Granted when I retire I'll be a little more conservative in my investments, but the plan is to live solely off my interest income. I could retire reasonably comfortably now, but I'm expecting a new addition to my family (Corn Jr. is due in a couple weeks) so I plan to give another 10 years to employment before I retire.

Obviously as with anything in this life, there are no guarantees. But I spend 15 minutes a day working for my investments and this 15 minutes greatly increases my odds.

I applaud your financial acumen and hope that others may be inspired by it. However, I would rather not count on most doing as well as you.

I am really not doing significantly better than anyone else who was smart enough to start saving for their retirement at a young age. I would expect anyone who has been investing the maximum into their 401K for nearly 20 years and have been at least paying some attention to have similar results.

You're absolutely right though, not everyone can be expected to plan for their retirement. For those that don't I say give them enough eat and obtain habitable shelter and give them no more. I do believe that the privatized plan floated about by Bush was optional and only invested at most 2% of the SSI witholdings collected IIRC. Big deal?

Isn't the maxium to invest in a 401K 50% of your gross income. Most people can't affoard to do that.

 

[Specop 007]

Originally posted by: smack Down


Isn't the maxium to invest in a 401K 50% of your gross income. Most people can't affoard to do that.

I think its 15,000 per year isnt it?

 

[Engineer]

Originally posted by: Specop 007

Originally posted by: smack Down


Isn't the maxium to invest in a 401K 50% of your gross income. Most people can't affoard to do that.

I think its 15,000 per year isnt it?

This year, it rises to $15,000 (up from $14,000 last year). Starting in 2008 (maybe 2007, but I think 2008), it will rise at $500 increments based on inflationary numbers.

Edit: 2007, it will be increased based on inflation.

 

[JEDIYoda]

Originally posted by: smack Down
Personal accounts are just a scam to prop-up the stock market when rich bady boomers start to cash out. Where regular SS is a scam to give money to all bady boomers.

Gotta Love a well thought out informative post!!
A real contribution to this thread!

 

[Specop 007]

Originally posted by: techs
What is really interesting is my sister started serious planning for retirement in 1990 when she started looking at what her retirement money will get her. Despite the ups and downs of the market she is almost exactly where the 1990 plan had her as of 2 months ago. Of course she did this by managing 50 percent of her money herself as she is an MBA from Columbia University and lucked out getting out of the market before the Bush market.
Anyways what is interesting is despite making a lot of money on her job and contributing to her own retirement for years she plans on living off Social Security if she lives past 83 since thats when her money will run out.
Even more interesting is that in 1998 she had enough to live till she was 91. That is how variable your reitrement is when projecting that far ahead and she is now 56.
It seems that no matter how you try saving for your own retirement it is either a gamble you will die early versus living without a substantial portion of your income now(if you make a middle class living). And tens of millions of Americans just can't save enough and still live now if they plan to make it mid to late 80's.
The result is that no one can answer the question of how to save for their own retirement based on an indeterminate age you will live to. Therefore every one of the plans to provide exclusively for ones own retirement has the result of tens of millions of seniors with no money during their retirement. And of course we won't let seniors die in the streets. So we will have to pay for retirement from federal revenues which will end up bankrupting the US.

2 questions.

10 What standard of living is your sister planning for?

2) Why is it our responsibility to provide for elderly? Shouldnt that be the families? Why is it kids these days have a "fvck'm" attitude TO THEIR OWN PARENTS!! Back in the "good ole days" family took care of family. In todays market having a nice house and fancy car is placed above taking care of your own damned parents.
Disgusting. :disgust:

 

[HombrePequeno]

I've been putting into an IRA for the past 2 years (I'm 21) and I should have more than enough by the time I retire. I don't see how someone could not have enough for retirement if their SS was diverted to a private fund. If you place that money into an S&P type fund you're probably going to get an average of 11-12% a year. If you compound that over 45 years it comes out to be quite a bit ($2000/year comes out to over $2 million over 45 years).

If you want a lot of security for your investment you could always go with bonds. If you're looking for even more security, you can go with government bonds. I'm really not seeing the problem with privitization. If you still want to provide for those that may not have saved enough for their retirement or they lived past what they planned on, you could always keep a few percent of the SS tax that wouldn't be allowed to be privitized and would go towards supporting them.

 

[Engineer]

Originally posted by: Specop 007

Originally posted by: Engineer

Originally posted by: MonkeyK


I applaud your financial acumen and hope that others may be inspired by it. However, I would rather not count on most doing as well as you.

I applaud his financial achievement also, but as you point out (as does the article I posted in the first 20 posts), most people just can't/won't do it.

With a negative savings rate in the US, I doubt that will change much in the short term either.

I've only been in 401k for 11 years now. I only wish that I could have been in it for 20 as those years between 85 and 95 were booming for market investors. I'm not doing badly, but I could have had so much more if I could have been investing during that timeframe.

Cant?? Or wont?? Big difference there.
I see alot of people with satellite dish's on their houses, nice cars in the driveway, big TV's, stacks of movies and games, steaks on the grill.....
Its about financially repsonsible. Maybe, instead of buying that fancy new 3 series BMW they should buy a used Honda and put the rest in the bank. But thats no fun now is it.......

For those that won't, then tough @#$@#. For those that can't, then what? If they have no family to help them then what? There should always be some sort of safety net, but I would love privatization...or at least a hybrid model of it.

 

[Specop 007]

Originally posted by: HombrePequeno
I've been putting into an IRA for the past 2 years (I'm 21) and I should have more than enough by the time I retire. I don't see how someone could not have enough for retirement if their SS was diverted to a private fund. If you place that money into an S&P type fund you're probably going to get an average of 11-12% a year. If you compound that over 45 years it comes out to be quite a bit ($2000/year comes out to over $2 million over 45 years).

If you want a lot of security for your investment you could always go with bonds. If you're looking for even more security, you can go with government bonds. I'm really not seeing the problem with privitization. If you still want to provide for those that may not have saved enough for their retirement or they lived past what they planned on, you could always keep a few percent of the SS tax that wouldn't be allowed to be privitized and would go towards supporting them.

Let me tell you what the true problem is and why Democrats hate the idea.

It gives a bit of voice to the people. Its one less hold the governmnet has over you. God forbid we be a free people. Democrats HATE the thought that the nanny government cant hold your hand in every little thing you do.

Theres no rational reason not to want private accounts, other then the fact the government no longer has any say in what you do with your money.

 

[CSMR]

Originally posted by: MonkeyK
Your proposed solution (an annuity) sounds a lot like SS, just without the associated disability and survivor benefits...

Thanks for the correct word. Yes sure, the main difference would be that it is private. Private companies could presumably offer a copy of SS if they chose to.

And while it is true that you can add those benefits to an annuity (and probably should if you are counting on it for when you are no longer working for whatever reason), what do you think the effect will be on your return?

You have to pay (in expected monetary return) for security; is that what you are asking?

 

[HombrePequeno]

Originally posted by: Specop 007

Originally posted by: HombrePequeno
I've been putting into an IRA for the past 2 years (I'm 21) and I should have more than enough by the time I retire. I don't see how someone could not have enough for retirement if their SS was diverted to a private fund. If you place that money into an S&P type fund you're probably going to get an average of 11-12% a year. If you compound that over 45 years it comes out to be quite a bit ($2000/year comes out to over $2 million over 45 years).

If you want a lot of security for your investment you could always go with bonds. If you're looking for even more security, you can go with government bonds. I'm really not seeing the problem with privitization. If you still want to provide for those that may not have saved enough for their retirement or they lived past what they planned on, you could always keep a few percent of the SS tax that wouldn't be allowed to be privitized and would go towards supporting them.

Let me tell you what the true problem is and why Democrats hate the idea.

It gives a bit of voice to the people. Its one less hold the governmnet has over you. God forbid we be a free people. Democrats HATE the thought that the nanny government cant hold your hand in every little thing you do.

Theres no rational reason not to want private accounts, other then the fact the government no longer has any say in what you do with your money.

God forbid that people be allowed to give their left over retirement money to their children/grandchildren when they pass away. I'm all for a safety net but the current SS is far from making a good efficient safety net.

You could easily achieve a safety net through what I described. Chile and several other countries already do this I believe.

 

[techs]

Originally posted by: Specop 007

Originally posted by: techs
What is really interesting is my sister started serious planning for retirement in 1990 when she started looking at what her retirement money will get her. Despite the ups and downs of the market she is almost exactly where the 1990 plan had her as of 2 months ago. Of course she did this by managing 50 percent of her money herself as she is an MBA from Columbia University and lucked out getting out of the market before the Bush market.
Anyways what is interesting is despite making a lot of money on her job and contributing to her own retirement for years she plans on living off Social Security if she lives past 83 since thats when her money will run out.
Even more interesting is that in 1998 she had enough to live till she was 91. That is how variable your reitrement is when projecting that far ahead and she is now 56.
It seems that no matter how you try saving for your own retirement it is either a gamble you will die early versus living without a substantial portion of your income now(if you make a middle class living). And tens of millions of Americans just can't save enough and still live now if they plan to make it mid to late 80's.
The result is that no one can answer the question of how to save for their own retirement based on an indeterminate age you will live to. Therefore every one of the plans to provide exclusively for ones own retirement has the result of tens of millions of seniors with no money during their retirement. And of course we won't let seniors die in the streets. So we will have to pay for retirement from federal revenues which will end up bankrupting the US.

2 questions.

10 What standard of living is your sister planning for?

2) Why is it our responsibility to provide for elderly? Shouldnt that be the families? Why is it kids these days have a "fvck'm" attitude TO THEIR OWN PARENTS!! Back in the "good ole days" family took care of family. In todays market having a nice house and fancy car is placed above taking care of your own damned parents.
Disgusting. :disgust:

She is planning on having 50 percent of her current salary in retirement years dollars. She makes a lot so 50 percent is enough for retirement.
And the reason SS started was because even in the 1930's when family bonds were far stronger the reality is enough children can't or wont take care of their parents.
It is one thing to talk about kids taking care of their families but the fact is tens of millions today couldn't evenif they wanted to.

And as to the previous post by HombrePequeno above,you think that 2 million (taking your number) will be enough money to live on from retirement til death? Just ask yourself this. In 1961 (45 years ago) you could by a new car for what? say 2,000 dollars? Now its 24,000 which is 14 times more. Try dividing your 2 million by 14. Comes to 143,000 dollars. Not much to live on for say 20 years. Of course by then you would need to add another 20 years. How much was a car 65 years ago? A few hundred?
Many people look at the money they will have in 45 years and it seems enormous. Until the 45 years go by and you see how little it is then.

 

[MonkeyK]

Originally posted by: CSMR

Originally posted by: MonkeyK
Your proposed solution (an annuity) sounds a lot like SS, just without the associated disability and survivor benefits...

Thanks for the correct word. Yes sure, the main difference would be that it is private. Private companies could presumably offer a copy of SS if they chose to.

And while it is true that you can add those benefits to an annuity (and probably should if you are counting on it for when you are no longer working for whatever reason), what do you think the effect will be on your return?

You have to pay (in expected monetary return) for security; is that what you are asking?

Precicely. What I would argue is that an annuity might not offer very different returns if it included the additional benefits that SS does.

 

[Corn]

Originally posted by: techs

...lucked out getting out of the market before the Bush market.

I didn't "get out of the market before the Bush market". Statements like this lend you no credibility and your story is just that, a story.

 

[MonkeyK]

Originally posted by: techs
And as to the previous post by HombrePequeno above,you think that 2 million (taking your number) will be enough money to live on from retirement til death? Just ask yourself this. In 1961 (45 years ago) you could by a new car for what? say 2,000 dollars? Now its 24,000 which is 14 times more. Try dividing your 2 million by 14. Comes to 143,000 dollars. Not much to live on for say 20 years. Of course by then you would need to add another 20 years. How much was a car 65 years ago? A few hundred?
Many people look at the money they will have in 45 years and it seems enormous. Until the 45 years go by and you see how little it is then.

Tip: My quick and easy way to avoid the confusion of what my money will be worth is to just subtract inflation from expected returns. If you feel that you can earn 10% and that inflation will run 3%, just calculate a 7% return. That way your retirement dollars are in values that you can comprehend today.

 

[Specop 007]

Originally posted by: Corn

Originally posted by: techs

...lucked out getting out of the market before the Bush market.

I didn't "get out of the market before the Bush market". Statements like this lend you no credibility and your story is just that, a story.

Please leave your facts at the door. Its so much more fun to have arguments based on irrational emotions and opinions.

 

[Corn]

Originally posted by: techs

Originally posted by: Specop 007

Originally posted by: techs
What is really interesting is my sister started serious planning for retirement in 1990 when she started looking at what her retirement money will get her. Despite the ups and downs of the market she is almost exactly where the 1990 plan had her as of 2 months ago. Of course she did this by managing 50 percent of her money herself as she is an MBA from Columbia University and lucked out getting out of the market before the Bush market.
Anyways what is interesting is despite making a lot of money on her job and contributing to her own retirement for years she plans on living off Social Security if she lives past 83 since thats when her money will run out.
Even more interesting is that in 1998 she had enough to live till she was 91. That is how variable your reitrement is when projecting that far ahead and she is now 56.
It seems that no matter how you try saving for your own retirement it is either a gamble you will die early versus living without a substantial portion of your income now(if you make a middle class living). And tens of millions of Americans just can't save enough and still live now if they plan to make it mid to late 80's.
The result is that no one can answer the question of how to save for their own retirement based on an indeterminate age you will live to. Therefore every one of the plans to provide exclusively for ones own retirement has the result of tens of millions of seniors with no money during their retirement. And of course we won't let seniors die in the streets. So we will have to pay for retirement from federal revenues which will end up bankrupting the US.

2 questions.

10 What standard of living is your sister planning for?

2) Why is it our responsibility to provide for elderly? Shouldnt that be the families? Why is it kids these days have a "fvck'm" attitude TO THEIR OWN PARENTS!! Back in the "good ole days" family took care of family. In todays market having a nice house and fancy car is placed above taking care of your own damned parents.
Disgusting. :disgust:

She is planning on having 50 percent of her current salary in retirement years dollars. She makes a lot so 50 percent is enough for retirement.
And the reason SS started was because even in the 1930's when family bonds were far stronger the reality is enough children can't or wont take care of their parents.
It is one thing to talk about kids taking care of their families but the fact is tens of millions today couldn't evenif they wanted to.

And as to the previous post by HombrePequeno above,you think that 2 million (taking your number) will be enough money to live on from retirement til death? Just ask yourself this. In 1961 (45 years ago) you could by a new car for what? say 2,000 dollars? Now its 24,000 which is 14 times more. Try dividing your 2 million by 14. Comes to 143,000 dollars. Not much to live on for say 20 years. Of course by then you would need to add another 20 years. How much was a car 65 years ago? A few hundred?
Many people look at the money they will have in 45 years and it seems enormous. Until the 45 years go by and you see how little it is then.

Hmmmm, my wife and I just bought my mother in law a new car. It cost $12,000. Oddly enough, we suppliment her retirement because she didn't plan for hers.....

 

[MonkeyK]

Originally posted by: Specop 007
Please leave your facts at the door. Its so much more fun to have arguments based on irrational emotions and opinions.

ahem

Let me tell you what the true problem is and why Democrats hate the idea.

It gives a bit of voice to the people. Its one less hold the governmnet has over you. God forbid we be a free people. Democrats HATE the thought that the nanny government cant hold your hand in every little thing you do.

Theres no rational reason not to want private accounts, other then the fact the government no longer has any say in what you do with your money.

 

[Corn]

Originally posted by: MonkeyK

Originally posted by: techs
And as to the previous post by HombrePequeno above,you think that 2 million (taking your number) will be enough money to live on from retirement til death? Just ask yourself this. In 1961 (45 years ago) you could by a new car for what? say 2,000 dollars? Now its 24,000 which is 14 times more. Try dividing your 2 million by 14. Comes to 143,000 dollars. Not much to live on for say 20 years. Of course by then you would need to add another 20 years. How much was a car 65 years ago? A few hundred?
Many people look at the money they will have in 45 years and it seems enormous. Until the 45 years go by and you see how little it is then.

Tip: My quick and easy way to avoid the confusion of what my money will be worth is to just subtract inflation from expected returns. If you feel that you can earn 10% and that inflation will run 3%, just calculate a 7% return. That way your retirement dollars are in values that you can comprehend today.

I think we are going to have to sue you for exposing our trade secrets!

 

[Jadow]

its real simple for me, I just put away as much as I can afford to.

 

[Specop 007]

Originally posted by: techs

Originally posted by: Specop 007

2 questions.

10 What standard of living is your sister planning for?

2) Why is it our responsibility to provide for elderly? Shouldnt that be the families? Why is it kids these days have a "fvck'm" attitude TO THEIR OWN PARENTS!! Back in the "good ole days" family took care of family. In todays market having a nice house and fancy car is placed above taking care of your own damned parents.
Disgusting. :disgust:

She is planning on having 50 percent of her current salary in retirement years dollars. She makes a lot so 50 percent is enough for retirement.
And the reason SS started was because even in the 1930's when family bonds were far stronger the reality is enough children can't or wont take care of their parents.
It is one thing to talk about kids taking care of their families but the fact is tens of millions today couldn't evenif they wanted to.

And as to the previous post by HombrePequeno above,you think that 2 million (taking your number) will be enough money to live on from retirement til death? Just ask yourself this. In 1961 (45 years ago) you could by a new car for what? say 2,000 dollars? Now its 24,000 which is 14 times more. Try dividing your 2 million by 14. Comes to 143,000 dollars. Not much to live on for say 20 years. Of course by then you would need to add another 20 years. How much was a car 65 years ago? A few hundred?
Many people look at the money they will have in 45 years and it seems enormous. Until the 45 years go by and you see how little it is then.

You misunderstand me.
i didnt ask what is she expecting for income to live on, I asked what is her expected standard of living. If she wants a new BMW every 2 years and a new Benz every 4, she might have a problem. If she wants a average car thats relaible, thats doable for 20,000 every 6 years.
Is her hous epaid for, or did she play the upsize game every 5 years and now she owes 300,000 for a house and wont have it paid off till shes 90? Thats a big factor, and an important reason to wkr on paying off your house instead of upsizing all the time.

As for taking care of your parents, how is it not doable? You dont have to buy them a condo in Florida and a new Jaq you know.

 

[techs]

Tens of millions of families are livinging poverty or up to their neck in debt without the ability to care for their immediate families.
My sister plans on living in her manhattan apartment without major purchases.