Hey Larkin? How about something new?
in [Design]
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From: Bill Bowden on 15 Jun 2010 21:32 On Jun 15, 4:13 am, "amdx" <a...(a)knology.net> wrote: > >> Liberals will say" but they pay payroll taxes, these are > > >> social security and medicare. First SS is a retirement/disability > > >> program that they will most likely get more dollars back than they > > >> ever pay in, and Medicare is a medical insurance program > > >> while they will be collecting during retirement/disability. > > >> This has nothing to do with federal income taxes. > >Yes, but if they paid in say $50,000 over 40 years, the investment > >would double every 10 years at a 7% return. So, figuring the average > >amount of $25,000 doubling every 10 years for 40 years you get > >$400,000 and maybe 15k benefit which is less than a 5% return. Should > >last forever. > >So, you probably won't get back what you paid in, unless you paid very > >little in, in which case you win the game. > > -Bill > > That's a great arguement for allowing individuals to invest there own SS > funds. > Over the long term the stock market has returned well over 7%. > I'm pretty sure the government didn't get 7%, since the system is broke. > Your math is not right either, it would take me to long to hone on on it but > a financial guy could do quickly. One of the errors has to do with the > average > ($25,000) The first 20 years you don't have much money in the fund earning > interest. > Upon further inspection, what I said about collecting multiples of what you > paid > into the system would certainly apply to me, especially if I were collecting > now. > It will be about 12 years before I can collect, I suspect there will be > great changes > in SS by then. I predict lower benefits and higher SS premiums. Also in the > mix to fix > the SS system, further increases of the retirement age, increases in the cap > (now $106,000) > and means testing for benefit calculations. > And now some real world numbers, straight off my 2009 SS statement. > In a strange coincidence, I have a 40 payment history. > In those 40 years, my total paid into the SS system, drum roll please, > $72,311 dollars. I'm sure others have paid much more. > If I get the urge, I'll go back and find the percentage of SS for each of > those years and > then be able to do a better analyses. When I started paying the rate was > 4.2%, > now it is up to 6.2%. All very interesting :-) > Mike I did a little basic program to illustrate investing $500 per month over 40 years at 5% compounded return yields about $763,017. Income at 5% would be about 38K per year, probably not enough to pay the rent 40 years from now. Principal = 1 Rate = .05 For Year = 1 to 40 For Month = 1 to 12 Principal = Principal + Principal*(Rate/12) Principal = Principal + 500 Next Month Next Year Print Principal $763,017 -Bill
From: amdx on 15 Jun 2010 22:22 When I started paying the rate was > 4.2%, > now it is up to 6.2%. All very interesting :-) > Mike I did a little basic program to illustrate investing $500 per month over 40 years at 5% compounded return yields about $763,017. Income at 5% would be about 38K per year, probably not enough to pay the rent 40 years from now. Principal = 1 Rate = .05 For Year = 1 to 40 For Month = 1 to 12 Principal = Principal + Principal*(Rate/12) Principal = Principal + 500 Next Month Next Year Print Principal $763,017 -Bill I'm a believer in saving and the magic of compound interest. Maybe you misunderstood this comment from above; " When I started paying, the rate was 4.2%, now it is up to 6.2%." These are the percentages taken *from* your paycheck not the interest paid *on* your contributions. My average SS contribution has been about $150 a month not $500. At this point I'm not convinced that you earn interest on you contributions, I don't even think there is an account with SS money in, I think it has all been spent on previous recipients. And I think today's workers SS payments are going directly in one end of the SS admin. and right out the other end to today's recipients of SS. Mike
From: John Larkin on 15 Jun 2010 23:31 On Tue, 15 Jun 2010 06:54:48 -0700 (PDT), dagmargoodboat(a)yahoo.com wrote: >On Jun 14, 11:48�pm, Bill Bowden <wrongaddr...(a)att.net> wrote: >> On Jun 14, 7:51�pm, "amdx" <a...(a)knology.net> wrote: >> > > >> > Liberals will say "but they pay payroll taxes," these are >> > social security and medicare. First SS is a retirement/disability >> > program that they will most likely get more dollars back than they >> > ever pay in, and Medicare is a medical insurance program >> > while they will be collecting during retirement/disability. >> >> > This has nothing to do with federal income taxes. >> >> Yes, but if they paid in say $50,000 over 40 years, �the investment >> would double every 10 years at a 7% return. So, figuring the average >> amount of $25,000 doubling every 10 years for 40 years you get >> $400,000 and maybe 15k benefit which is less than a 5% return. Should >> last forever. >> >> So, you probably won't get back what you paid in, unless you paid very >> little in, in which case you win the game. >> >> -Bill > >Except that no one saves and invests your money, so those returns >don't apply. It's not a savings plan when you send your money to the >world's ultimate spendthrift. Uncle Sam sends it out the door to >someone else the moment you send it in. > >So, there are no investment gains. A bigger worry: even if you do manage to "save and invest" on your own, the money is usually just numbers in a computer somewhere, not stacks of gold in the closet. Its value depends on the next generation's productivity. And the government will most likely steal it from you via inflation. The only relatively safe investments are real things, like property and productive assets. John
From: Bill Bowden on 15 Jun 2010 23:43 On Jun 15, 7:22 pm, "amdx" <a...(a)knology.net> wrote: > When I started paying the rate was > > > 4.2%, > > now it is up to 6.2%. All very interesting :-) > > Mike > > I did a little basic program to illustrate investing $500 per month > over 40 years at 5% compounded return yields about $763,017. Income at > 5% would be about 38K per year, probably not enough to pay the rent 40 > years from now. > > Principal = 1 > Rate = .05 > For Year = 1 to 40 > For Month = 1 to 12 > Principal = Principal + Principal*(Rate/12) > Principal = Principal + 500 > Next Month > Next Year > Print Principal > > $763,017 > -Bill > > I'm a believer in saving and the magic of compound interest. > Maybe you misunderstood this comment from above; > " When I started paying, the rate was 4.2%, now it is up to 6.2%." > These are the percentages taken *from* your paycheck not the > interest paid *on* your contributions. > My average SS contribution has been about $150 a month not $500. > At this point I'm not convinced that you earn interest on you > contributions, > I don't even think there is an account with SS money in, I think it has all > been spent on previous recipients. And I think today's workers SS payments > are going directly in one end of the SS admin. and right out the other end > to today's recipients of SS. > Mike Well, you will have to find evidence of that. As I understand it, the SS funds collected are invested in "special-issue securities" similar to government bonds that pay interest, and carry the same guarantee as US government bonds. The money is basically borrowed from the SS fund to pay current obligations the same way the government borrows money from China by selling bonds. I'm not sure if regular treasury bonds held by investors, or special- issue bonds held in the SS trust fund have the same credit rating. In other words, if push comes to shove, who gets paid first? the Chinese holding our bonds? or the SS trust fund holding the special-issue bonds? It's an open question I can't figure out. -Bill
From: dagmargoodboat on 16 Jun 2010 04:29
On Jun 15, 7:10 pm, Bill Bowden <wrongaddr...(a)att.net> wrote: > On Jun 15, 6:54 am, dagmargoodb...(a)yahoo.com wrote: > > > > > On Jun 14, 11:48 pm, Bill Bowden <wrongaddr...(a)att.net> wrote: > > > > On Jun 14, 7:51 pm, "amdx" <a...(a)knology.net> wrote: > > > > > Liberals will say "but they pay payroll taxes," these are > > > > social security and medicare. First SS is a retirement/disability > > > > program that they will most likely get more dollars back than they > > > > ever pay in, and Medicare is a medical insurance program > > > > while they will be collecting during retirement/disability. > > > > > This has nothing to do with federal income taxes. > > > > Yes, but if they paid in say $50,000 over 40 years, the investment > > > would double every 10 years at a 7% return. So, figuring the average > > > amount of $25,000 doubling every 10 years for 40 years you get > > > $400,000 and maybe 15k benefit which is less than a 5% return. Should > > > last forever. > > > > So, you probably won't get back what you paid in, unless you paid very > > > little in, in which case you win the game. > > > > -Bill > > > Except that no one saves and invests your money, so those returns > > don't apply. It's not a savings plan when you send your money to the > > world's ultimate spendthrift. Uncle Sam sends it out the door to > > someone else the moment you send it in. > > > So, there are no investment gains. > > > An easy double-check is this--where is that big pile of people's > > accumulated contributions? It's with Santa Claus and the Easter > > Bunny--it never existed. It's gone. So, you're not getting your > > money back. You might get someone else's money, if you can elect a > > government to take it for you. > > > It puzzles me that Washington's Gang of Three constantly points to > > Social Security as a giant accomplishment. It's a disaster, the > > world's 2nd biggest Ponzi scheme & largest unfunded pension plan. > > > Fortunately, unlike real pension plans, the government can just change > > the terms and benefits of the plan whenever it wants. > > > All this nuisance can be cured by simply raising the retirement age to > > 97. > > > -- > > Cheers, > > James Arthur > > Actually, the income from payroll taxes is credited to the SS trust > fund in the form of "special-issue" securities", which are like > Treasury bonds and earn interest the same as Treasury notes. > Reference: > > http://www.socialsecurity.gov/OACT/ProgData/fundFAQ.html#n2 > > "Far from being "worthless IOUs," the investments held by the trust > funds are backed by the full faith and credit of the U. S. Government. > The government has always repaid Social Security, with interest. The > special-issue securities are, therefore, just as safe as U.S. Savings > Bonds or other financial instruments of the Federal government. " That's just debt Bill. Worthless or not, they *are* just IOUs. They are not a pile of money that's been invested anywhere making money. Yes, those bonds supposedly pay interest (...I could see you were going to say that...), but that's just another promise--a promise to take that money from someone in the future. It's not the same as being truly invested in something that produces a return, for example, invested in a factory that makes widgets at a profit, and will repay the loan over time from the profits. So, the upshot is that your money isn't invested, it's gone, and even though they promise to pay you back with interest, the money in fact _earns_ no return. > The only question is, when the SS fund runs out of money, who will get > paid first? the Chinese holding treasury bonds, or the SS trust fund > holding special-issue securities? The most likely scenario, I think, is inflation, or hyperinflation. It all depends. The financial thing isn't over--there's still a tsunami out there, on the way. The funny thing with tsunamis, though, is that they're sensitively dependent on several conditions--you never know if a gnarly wave's going to scour the coast, or if the water will just slowly rise and flood everything for a long, long time. > The Chinese don't vote, and all the retired people do. So, I would > imagine when things get tough, the politicians will know who to pay > first, if they want to stay in office. The unfunded federal liabilities are roughly $100T. They almost make California look responsible. -- Cheers, James Arthur |