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Country Discussion Topics
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SS
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steve19438    Posted 02-25-2005 at 10:31:06       [Reply]  [Send Email]
soon after i started working for the USPS in 1984 all employees were given the opportunity to switch to FERS. i switched. FERS was/is baseed on the S&P. the whole key to sucess with this program is to contribute as much as possible by law. i was fortunate enough to do just that and by the end of the nineties i had accumulated a sizable nest egg. during clinton's last six months in office the stock market began it's downturn and after bush got elected nothing much changed. since 1999 (when i left the USPS and transferred my holding's to a private firm)) my investments (mutual funds and some stocks) have decreased by half. had i been more astue with my investments i probably could have held my losses to about half of what they did lose.
what's this got to do with SS? this is the same situation that will confront people and their money if SS is privatized. the stock market has it's highs and lows. now before you shed a tear for me; i am not destitue and i still plan on "semi" retiring when i am 60 (5 more yrs) as does my wife. (10 more yrs)
hopefully the stock market will enter another "up" period and some of my losses can be recouped. i still have all those shares!


Dug    Posted 02-25-2005 at 21:42:10       [Reply]  [No Email]
Interesting thread you have started here, Steve. There has been a lot of good advice. A couple of facts to consider: the stock market has averaged 11% over it history. There have only been two major declines in the market. You can not find a 10 year period when the stock market, as a whole, declined (including the depression years!) The average return on a SS account is negative when inflation is included in the equation. Diversification and dollar cost averaging over an extended period of time (10 years or longer) is the only "safe" way to invest in stocks.

I am 38 years old and if given the choice, I would opt out of SS! Why? Because I understand the value of money and realize SS, while it provides a sound form of insurance in case of emergencies, is not going to allow me to retire with the life style I deserve.

One final pont, Steve, you may want to consider rebalancing your portfolio if you plan to retire in 5 years. This is too short a time to stay heavily invested in stocks. While they do provide a good return on average, the averages play against you when time is short.

Dug


jughead    Posted 02-26-2005 at 03:28:11       [Reply]  [No Email]
thats crap-those figures don't hold up. I once challenged a finaincial expert that if the stock market could get 12% why doesn't he borrow money at 6 and get 12 creating a flow of 6% with none of his capital and apparently none of the risk(according to him-hey those are the figures)that was the end of that!


big fred    Posted 02-25-2005 at 16:37:32       [Reply]  [No Email]
Well, I suppose it's possible for one to lose in the market in the long term, but it's danged tough. Let's say you get a 6% return on average over 24 years. Your initial money would have increased 400% in the time of an average career. Now let's say that in the last couple years before you retire, you lost half the value. You are now down to a 200% increase, which translates to an average of a little over 3% per year for 26 years. SS is averaging a little over 1%. Which is a better deal?


bill b va    Posted 02-25-2005 at 15:24:23       [Reply]  [No Email]

its unbelievable how easy it is for the politiations to pull the wool over the eyes of the supposedly inteligent voters .guranteed down the road the voters will get the short end while the polititiations position them selves for the next election .instead of getting us in deeper the crooks should go back and recover the SS funds that were squandered .


screaminghollow    Posted 02-25-2005 at 14:36:41       [Reply]  [No Email]
Yeah but, If'n ya dropped dead tommorrow, the kids would still have what ya invested and didn't take out. Social security just confiscates it to give to other people. Both systems have severe draw backs. And a combination may be best. I've been paying in since I was 14 yr old. That means I will have been paying in at least 50 yrs before I get my first check back.

Then there are abuses, like folks who only pay in three or four years and get "hurt" and gold brick the rest of their lives. Or the guy I met last week. He was single all his 62 yrs. Just found out he was terminal. For a small fee, he "married" a 34 yr old honey so she will collect the widows' benefits. He got a few thousand now to give to his mother and the honey gets 40 yrs of checks. There's something drastically wrong with the system.


Mike(inWisc.)    Posted 02-25-2005 at 12:09:34       [Reply]  [Send Email]
Steve,

I don't think you understand what the proposals are for a PARTIAL privatization.

What Bush proposes is to allow younger people to put ONLY UP TO 20% of what they pay in FICA into a private account. The other 80% has to stay exactly like it is.

The idea behind the private accounts is that they would be invested in some sort of index fund that matches the broad average like the SP 500. The historical return on that over the last 100 years is about 10% year.

Bush HOPES that such a return in the future would allow the gov. to forego some of what they will owe these younger people. If the market tanks a great deal for a long time and those private accounts do not grow into anything, then the gov. would be on the hook to make those participants whole.

But as it is now, if the gov does nothing, then they are on the hook anyway with no way to make good on it.


Honestly, nobody knows how sucessful it might be, but considering your age you have no reason to oppose it. It does not affect you.

I understand your comparisons with your own personal investments, but they are not relevant to the discussion. Those personal accounts as proposed by Bush have only a few very broad investment choices. It would not be possible to micromanage them.

Me? Personally I am a 36 year old stockbroker who is pretty lukewarm on the whole idea. I am not sure I would do it myself, but I think others in my age bracket should be allowed to choose for themselves.

just my opinion.

Mike


Cynthia    Posted 02-25-2005 at 12:31:40       [Reply]  [Send Email]
Thank You for explaining it so well. I keep hearing different things about the social security plan and I was not sure what to think, but you gave me the best explination that I have heard. I am not sure how I feel about it except to say that I think it should have been taken care of a long time ago. Thanks again!


Red Dave    Posted 02-25-2005 at 11:20:43       [Reply]  [No Email]
Don't know what stock market you are in, but things have been heading up since 2003. In a diversified portfolio, some things are down, some are up in the short-term. With stocks, 5 years is short-term. Dollar cost averaging over many years is the key to long-term gains.
Too many invest at $5, & dance a jig when the price goes to $10, then cry a river if it comes back to $7.50.
Same type will buy when the nightly news says stocks are way up. Too late then. You need to buy when all the chicken littles are crying that the sky is falling.


Bill in IN    Posted 02-25-2005 at 11:17:07       [Reply]  [Send Email]
I understand your point. The word diversity wouold have been a good one to have had in your portfolio. Mine has doubled in that same time period.

Different stratagies different results.

By the same line- SS takes the risk/reward out of the individuals control. Why shouldn't people accept responsibility for themselves? Isn't it time that we let people run their own lives?

Freedom means being able to make your own choices. There are a wide variety of programs available ranging from totally safe to "high roller". I say we should let people take their own risk and reap their own rewards. After all, before SS there were no rumors of old folks having to eat dog food.



midway    Posted 02-25-2005 at 12:12:00       [Reply]  [No Email]
You'd be surprised what old folks had to eat and do before SS


BIll in IN    Posted 02-25-2005 at 12:39:38       [Reply]  [Send Email]
I take it you were one of them?


midway    Posted 02-25-2005 at 14:05:12       [Reply]  [No Email]
I wasn't old, but saw what my family had to do before my 3 brothers and I had to go to an orphan's home because of the depression and no such thing as SS


mark    Posted 02-25-2005 at 11:02:16       [Reply]  [No Email]
On the other side of the coin I haven't lost
anything to speak of , a little here and there.
Averaged out they've all returned between 10 -
12 % .

What's the other answer, pay in more ? For
RRR I pay three taxes a month, what I pay to
that system each month would choke a horse.
If I would go back to a " normal " job all that
money would go to SS and I'd get to work to
age 70 just to get a min. payment out of the
system.


steve19438    Posted 02-25-2005 at 11:06:04       [Reply]  [Send Email]
then you are the exception and GOOD for you.
as i said before unfortunately most people just do not pay close enough attention to their monies.
RRR ?????


mark    Posted 02-25-2005 at 11:17:04       [Reply]  [No Email]
Railroad Retirement. That's something
seperate from my own personal retirement
stuff though.

The thing that most people aren't getting it
seems is that people my age and younger
won't get anything until age 70,. Ya even make
it to 70 and your one step away from a phlegm
bag and depends if your not already there.
Why not be honest about this current system
and tell younger people they're throwing their
money into a black hole. I'd rather make an
attempt at doing something with it myself.


sawtooth    Posted 02-25-2005 at 10:38:39       [Reply]  [Send Email]
Yep, I'm in the same boat with you on mutual fund losses. I'm not sure exactly what your point is regarding SS along with this- that SS is much more secure? It's only as secure as the government can afford to pay in its year to year budgets. With more old people retiring and less young people to support them- and the government not having saved ANY of your past payments- there isn't security in SS either. My broker still claims on the 'long term' mutual funds (at least the safe ones- will average 8 or so percent. The other thing tho is -- how much will inflation eat up- will the government resist the temptation to run the printing presses overtime to pay deficits?


steve19438    Posted 02-25-2005 at 10:55:37       [Reply]  [Send Email]
point being that when you invest on your own you gotta do the homework and PAY attention or you may not be able to PAY attention.
isn't strange that of all the people i know in the same boat as you and me when our losses got to about 50% things kinda leveled out.


sawtooth    Posted 02-25-2005 at 12:31:48       [Reply]  [Send Email]
One thing kind of always bothers me about being invested in stocks, the price depends on the demand, i.e. the demand there is for that stock. If the price goes up and many holders want to sell, what happens to the price if there aren't buyers? Reminds me of an auction, where a thing is worth what people are willing to bid.


Bill in IN    Posted 02-25-2005 at 12:47:10       [Reply]  [Send Email]
Just like an auction- very seldom does the price fall very far if there are enough in attendance. S8ince the stock exchanges have a large and pretty regular "audience" the only large drops are due to major events or the realization that the stocks value isn't what it was presumed to be.


bub    Posted 02-25-2005 at 14:47:39       [Reply]  [No Email]
tRY ENRON ONCE UON A TIME


mark    Posted 02-25-2005 at 15:17:03       [Reply]  [No Email]
That's why ya scatter your eggs around
instead of dumping them all in the same
basket


Mike(inWisc.)    Posted 02-25-2005 at 13:00:54       [Reply]  [Send Email]
You are correct on your sentiments about the market. Now, IF the Bush proposal becomes law and you have large numbers on younger people participating, THEN you WILL have LARGE SCALE buying into the market on a regular predictable basis. That would INCREASE stability and make it all the safer--(at least in theory), and that would benefit everyone.

Think about it.

Mike


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