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

[Uhtrinity]

[/quote]

The only place where SS may be better than private accounts is with children. I dont think private accounts will have high enough balances to effectively deal with the loss of a parent at a young age. But to that I say, this is why there is a private sector tool called "Life Insurance". [/quote]

Still even more offtopic, but on life insurance, I did have a small policy through my place of employment. But typically you only claim 10% due to natural causes (she died of cancer) vs accidental death (25k in our situation vs 250k). About a 3rd of that was swallowed in funeral costs, and another 3rd went to medical bills. The rest luckily found it's way to savings.

Just to be safe you would have to carry $1,000,000 coverage just to have a $100,000 benefit for accidental death, and that is assuming it is a plan that even does 10% for natural.

edit: I have a plan offered through my bank, 300k for $36 / mo for a family plan, but it is strictly accidental / dismemberment.

 

[MonkeyK]

Originally posted by: alent1234

Originally posted by: MonkeyK

Originally posted by: alent1234
i love the stock market, but in the end to make money in stocks someone has to buy the stock at a higher price than you paid for it. this means that except for a few things, it's like a ponzi scheme since you have to have more money chasing after the assets in the future than at present. If there is money flowing into the stock market from SS, than in the future there has to be enough payers into the system to buy that stock at a higher price.

Of course this doesn't include dividends and mergers, but if SS money flowed into the system the dividend payout ratio would plummet.

OT and just wrong.

how is it wrong? The value of a stock just doesn't magically go up. It goes up because someone is willing to pay more for the shares. If you bought Microsoft at IPO and held it, than your dividends would be more than what you paid for it back then. Since we are talking about the SP500, we are talking about established companies. When I buy stock through E-Trade or via my 401k mutual fund I'm not giving any money to the company to build their business. I'm buying the shares from someone locking in a profit, a baby boomer selling stock or one of the wall street traders.

There are even theories about this like in the book TrimTabs. The author even runs a service and sells his calculations to institutional investors. he tracks liquidity in the stock market which is companies buying back stock, mutual fund inflows, etc.

you can do capital asset price model and other calculations all day long, but you make money in stocks buy selling the shares to someone who is willing to pay more for them than what you paid.

Presumably the reason someone is willing to pay more for the stock is because the company is or has the opportunity to be worth more. Otherwise it's not called investing.

OTOH, maybe I just misunderstood your point.

 

[rahvin]

Originally posted by: techs
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.

You need to brush up on your history. SS was never implimented to be a LIVING wage. In other words it was NOT implimented to be something you lived on. It was implimented to be SUPPLEMENTAL income.

Peoples view of that has changed so congress in the glory of a 15% tax that was bringing in billions and paying out millions changed it so that they would promise a living wage. That was a VERY big mistake and it wasn't commited that long ago.

SS is a pyramid scheme, and guess what, the pyramid is collapsing. In about 2015 there will be 2 retirees for every 3 workers paying SS, in 2025 it goes to 3 retirees for every 2 workers. Do you really want to be paying into SS (assuming the budget is actually balanced) at a rate that you will be paying for 1.5 retiree's retirement? Can you guess what that tax rate will be? (50% for SS alone)

 

[alent1234]

Originally posted by: MonkeyK

Originally posted by: alent1234

Originally posted by: MonkeyK

Originally posted by: alent1234
i love the stock market, but in the end to make money in stocks someone has to buy the stock at a higher price than you paid for it. this means that except for a few things, it's like a ponzi scheme since you have to have more money chasing after the assets in the future than at present. If there is money flowing into the stock market from SS, than in the future there has to be enough payers into the system to buy that stock at a higher price.

Of course this doesn't include dividends and mergers, but if SS money flowed into the system the dividend payout ratio would plummet.

OT and just wrong.

how is it wrong? The value of a stock just doesn't magically go up. It goes up because someone is willing to pay more for the shares. If you bought Microsoft at IPO and held it, than your dividends would be more than what you paid for it back then. Since we are talking about the SP500, we are talking about established companies. When I buy stock through E-Trade or via my 401k mutual fund I'm not giving any money to the company to build their business. I'm buying the shares from someone locking in a profit, a baby boomer selling stock or one of the wall street traders.

There are even theories about this like in the book TrimTabs. The author even runs a service and sells his calculations to institutional investors. he tracks liquidity in the stock market which is companies buying back stock, mutual fund inflows, etc.

you can do capital asset price model and other calculations all day long, but you make money in stocks buy selling the shares to someone who is willing to pay more for them than what you paid.

Presumably the reason someone is willing to pay more for the stock is because the company is or has the opportunity to be worth more. Otherwise it's not called investing.

OTOH, maybe I just misunderstood your point.

and without the possibility of future dividends or another company buying your company out to give you cash for your shares buying stock is no different than buying baseball cards.

If company A says they will never pay a dividend and will never sell out or buy any of their shares back from investors who cares how much the company is worth. there is no liquidity.

Now compare to Microsoft. If you had bought $1000 worth of stock at IPO and still held it than after all the splits you would have $10,000 a year coming to you in dividends. One share back then is something like 288 shares today. Or say you have stock in company A and company B buys the company for cash at a 30% premium. You are getting cash for your shares. Same thing when companies buy back shares. The day to day trading is just estimations of the future value based on possible future liquidity.

if SS were to invest in the stock market than you will have so much money chasing the stock market, it would bid the prices up and the dividend yield would plummet. But as with all paper value it is only accurate as long as someone is willing to pay the prices. Go look at the technicals of some growth stocks. They normally fall 10% - 15% on a regular basis even if they grow 30% in a year. Look at their charts with the 50 and 10 day moving average lines. The falls are due to demand drying up and traders locking in their gains. When the price falls, the stock usually goes up again. Then look at the long term charts of the SP500. Same thing.

Now imaging if you have the tidal wave of SS money flowing into the market. It will cause prices to rise and then demand will dry up until things balance themselves out. Of course if you have too many people drawing benefits than it means stock has to be sold to pay for the benefits. If too much stock is being sold compared to the buy orders than no amount of good earnings will push stock prices up.

 

[Uhtrinity]

[/quote]

SS is a pyramid scheme, and guess what, the pyramid is collapsing. In about 2015 there will be 2 retirees for every 3 workers paying SS, in 2025 it goes to 3 retirees for every 2 workers. Do you really want to be paying into SS (assuming the budget is actually balanced) at a rate that you will be paying for 1.5 retiree's retirement? Can you guess what that tax rate will be? (50% for SS alone)[/quote]

But what about after the Baby Boomers get flushed through the system, we should then get back to something closer to a 1:1 ratio.

 

[techs]

Originally posted by: Uhtrinity

SS is a pyramid scheme, and guess what, the pyramid is collapsing. In about 2015 there will be 2 retirees for every 3 workers paying SS, in 2025 it goes to 3 retirees for every 2 workers. Do you really want to be paying into SS (assuming the budget is actually balanced) at a rate that you will be paying for 1.5 retiree's retirement? Can you guess what that tax rate will be? (50% for SS alone)[/quote]

But what about after the Baby Boomers get flushed through the system, we should then get back to something closer to a 1:1 ratio.

[/quote]
Uh, I think you have it backwards. After the baby boomers pass the number of workers will rise per number of retirees. I believe the figure is somewhere about 3.5 workers to one retiree.
The SS system will have to raise the retirement age certainly. Heck, my Dad couldn't really work too well at 60 but nowadays with modern medicine and drugs most people can continue working to say 75 and in 20 years that might be 80 or more.
Yes the system needs to be tweaked. Howver, the idea of one generation working to pay the retirement for the previous generation is the best idea possible. It accounts completely for inflation and changing standards of living. As mentioned the problem is the skew caused by the baby boomers. Also, the very large number of people who stay alive thru modern medicine for ten years or more after the suffering an illness that would have killed them not 20 years ago.
A plan based on the average number of retirees versus workers could put the plan back on an even keel after the boomers by basically saying the retirement age is whatever age a certain number of workers could support, say 4-5-6 workers to one retiree.

 

[HombrePequeno]

Originally posted by: Uhtrinity[/i]

SS is not a , it is a risk management tool. You continue to demand that I argue against points that only emphasise your ignorance of SS. Learn what you are talking about and then I will continue a discussion with you.

You took that response as me saying they didnt exist?

ok

Your right, it isn't a wealth accumulation tool, Survivors benefits works as intended, SS retirement needs some work. IMHO the whole system needs to be revamped, but I'm not so sure private accounts are the way to go. I consider myself to be financially conservative (on my personal expenses), but I suck at the stock market and at the moment my own confidence in the market is low. How can I expect somone of lower education to take part in personal accounts when I won't do it myself. Granted some people (some on this board also) are good at it, but they / you don't neccesarily represent the average population.

Edit - I have no 401k and I am 35, the best I have been able to do is invest in a duplex (rental property), and hope to continue by aquiring more properties as I can. Better than nothing.

The government can always give out suggested models for those that aren't very knowledgable in the stock market. As long as you don't have people putting all of their money into one fund, chances are they're going to be fine. You may want to start putting into a 401k or an IRA. It's never too late to start saving. You can just put your money into an S&P 500 fund and not have to worry about moving it around (although you would want to start moving some of your cash to bonds).

As for survivor's benefits, I would imagine money from both the private account and the money they paid into SS would go to the survivors. I honestly don't think the commission's plan went far enough. I think they would have went with even more privitization if higher taxes were allowed.

 

[Uhtrinity]

[/quote]But what about after the Baby Boomers get flushed through the system, we should then get back to something closer to a 1:1 ratio.

[/quote]
Uh, I think you have it backwards. After the baby boomers pass the number of workers will rise per number of retirees. I believe the figure is somewhere about 3.5 workers to one retiree.
The SS system will have to raise the retirement age certainly. Heck, my Dad couldn't really work too well at 60 but nowadays with modern medicine and drugs most people can continue working to say 75 and in 20 years that might be 80 or more.
Yes the system needs to be tweaked. Howver, the idea of one generation working to pay the retirement for the previous generation is the best idea possible. It accounts completely for inflation and changing standards of living. As mentioned the problem is the skew caused by the baby boomers. Also, the very large number of people who stay alive thru modern medicine for ten years or more after the suffering an illness that would have killed them not 20 years ago.
A plan based on the average number of retirees versus workers could put the plan back on an even keel after the boomers by basically saying the retirement age is whatever age a certain number of workers could support, say 4-5-6 workers to one retiree.

[/quote]


I meant once the baby boomers are no longer collecting ... about 30 years from now.

 

[Uhtrinity]

[/quote] Edit - I have no 401k and I am 35, the best I have been able to do is invest in a duplex (rental property), and hope to continue by aquiring more properties as I can. Better than nothing.[/quote]

You may want to start putting into a 401k or an IRA. It's never too late to start saving. You can just put your money into an S&P 500 fund and not have to worry about moving it around (although you would want to start moving some of your cash to bonds).[/quote]

Believe me, it is a constant concern.

 

[Genx87]

Originally posted by: Uhtrinity

But what about after the Baby Boomers get flushed through the system, we should then get back to something closer to a 1:1 ratio.

[/quote]
Uh, I think you have it backwards. After the baby boomers pass the number of workers will rise per number of retirees. I believe the figure is somewhere about 3.5 workers to one retiree.
The SS system will have to raise the retirement age certainly. Heck, my Dad couldn't really work too well at 60 but nowadays with modern medicine and drugs most people can continue working to say 75 and in 20 years that might be 80 or more.
Yes the system needs to be tweaked. Howver, the idea of one generation working to pay the retirement for the previous generation is the best idea possible. It accounts completely for inflation and changing standards of living. As mentioned the problem is the skew caused by the baby boomers. Also, the very large number of people who stay alive thru modern medicine for ten years or more after the suffering an illness that would have killed them not 20 years ago.
A plan based on the average number of retirees versus workers could put the plan back on an even keel after the boomers by basically saying the retirement age is whatever age a certain number of workers could support, say 4-5-6 workers to one retiree.

[/quote]


I meant once the baby boomers are no longer collecting ... about 30 years from now.[/quote]

It doesnt, and isnt expected to ever turn a surplus again after ~2018.

 

[CSMR]

Originally posted by: techs
The SS system will have to raise the retirement age certainly.

Yes I think this is very necessary.

 

[Uhtrinity]

Originally posted by: CSMR

Originally posted by: techs
The SS system will have to raise the retirement age certainly.

Yes I think this is very necessary.

Only common sense as the average age of death increases. But don't expect someone to be able to work hard or manual labor that whole time, or maintain dexterity in highly precision jobs.