Posted on 06/24/2018 11:52:27 AM PDT by SeekAndFind
There is no such thing as a social security trust fund. It is an accounting impossibility in the federal budget.
SS monies in excess of payroll taxes needed to pay benefits are “loaned” to the federal government which issues essentially an IOU to the mythical trust fund.
Demoncrats will propose the confiscation of 401(k)s and other savings of "rich" people.
No way they're gonna let "benefits" be reduced.
What return did a non-stock 401k get, as compared to the stock-based 401k ?
Welfare? Section 8? EBT? They are drawn from the very same source pool of money. A trust fund for Social Security is a mere talking point.
I’ve been telling kids for years that even as old as I am, I likely wont see a dime of Social Security because it will be bankrupt by then (or the swindlers to keep it alive will start raising the age or start paying out mere gum-money).
I then remind them that they are paying nearly ONE SIXTH of their income wages/salaries (they don’t usually make 65K+ yet) into this hole, and THEY certainly will NEVER see any of it back. And then have them think what they might have done with that money RIGHT NOW.
All the old leftists have gone to their graves happy to have carried out their swindle to their own political advantage.
I leave it upto the American people to eventually extract repayment from all our current crop of vile leftards continuing the scam (even if just redistributing their ill-gotten wealth being only drop in a bucket, but still deserved).
We have fiat money and fractional reserve lending based of of fiat money. It doesnt matter. Its backed by good wishes and happy thoughts.
They will just keep spending like they always have.
Social Security never guaranteed anyone theyd get more money out of it than they paid in.
It worked out this way for the wwii generation at the top of the ponzi scheme pyramid, due to the baby boom, inflationary monetary changes, and advances in medicine to expand lifespans well past 65 years old.
Everyone else gets screwed.
Wait...
This cannot possibly be happening. AL Gore told me that SS was in a “Lock Box”, and did not need to be saved. The media told me that anyone daring to question that was a hater of OLD PEOPLE!.
What do I do now?
Dumb and Dumber has the lock box. The briefcase of IOUs.
That right there is better than cash.
I dont know much about boiling a frog...but I do know you cant boil a lobster in a frying pan.....without a heavy cover.....*W*
Your question indicates that you are not an investor, so I will give you a serious answer.
A 401(k) plan usually give participants a choice of how to allocate their investments. Typically there will be stock mutual funds, bond mutual funds, possibly target date retirement funds, etc. The particular investments will vary from plan to plan.
In general, most plans will allow a participant to allocate any percentage of their investments to any of the funds in the plan. Depending on the time period one looks at, bond funds have either done about as well as stocks, or miserably. Bond performance during the Obama years was miserable. Many people mistakenly believe that bond funds, or "stable value" funds are somehow more safe than stock investments. The reality is that they are guaranteed to lose out to inflation.
BUT this is not excuse for personal poor performance. Every single one of us should take personal responsibility for our own retirement. Do you think the government will take care of you in your old age? Maybe Santa will bring income -- just as probable.
It is highly likely that the final 1/4 to 1/3 of your life will be spent in retirement. It is our responsibility to educate ourselves about this time of our lives and prepare for it while we are in our earning years.
Some of us have. I had no secret training, I read commonly available magazines 30 years ago and switched to the internet when it became widespread. I once spent $300 on an investing course, but only after I had been a 401(k) participant for over a decade. It was money well spent. Other than that my investing education has been free.
Specific answer to you question is: "It depends on the particular non-stock 401(k), but probably performance was very poor." OTOH, every single 401(k) plan I have ever seen includes an option to invest in something like the S&P 500, or maybe the total stock market (the difference is very small).
If you have not chosen that in the past, the fault does not like with the government. But, it is a correctable problem. Change your 401(k) election to at least 80% stocks, and maximize your contribution. Even if you have to give up a little lifestyle now. You want retirement to be the golden years, not the Alpo years.
#22 Those kind of return forecasts are what has gotten the pensions in trouble in many states. In California the unions want the taxpayers to make up the losses.
I am lucky that some stock I own has made good returns and I think I will be retiring making more money then when working!
Wrong. Those kind of returns are actually achievable. The problem is that the state pension funds are run by politicians. They invest wherever the political winds blow, not where it makes good financial sense. No tobacco companies, divest from Israel, no gun makers, no alcoholic beverages, etc, etc. Oh, and by the way if the state needs money, we will sell the pension fund a bond. And, be sure that our "good friends" make plenty of commissions on the transactions.
And, even better, if we buy enough of the stock in any particular company, we want a seat on the board of directors and we will impose our political agenda on your business plan.
Over the long term, 7% is easily achievable. It should be more than possible to run the investment portion of the entire State of CA pension plan with nothing more exotic than a laptop, a brokerage account, and instructions to invest all of the money in a total stock market mutual fund.
Now there will be individual years when 7% growth is not achieved, maybe even two or three in a row, but over decades it has always happened.
The real issue is that there are insufficient opportunities for graft if the investments are made this way.
How would the young person pull their support for social security, when it’s taken out of their paychecks automatically ?
Thanks for the detailed response.
What in your estimation was the average percentage return for the 401(k)’s that didn’t have the funds invested in —any— stocks?
Please see your greenmail.
Hard to say without knowing what the funds were invested in, but as a guess, over the past decade, 1 or 2%. Probably didn't even keep up with inflation. If you have a 401(k) with that kind of asset allocation, and have records, the XIRR function in EXCEL will tell you exactly what your return was. It might take a few hours to understand the directions and input everything.
Of course inflation is another ball of worms. There are a lot of measures of inflation. I can tell you with great confidence that my personal inflation, and probably yours also, has been a lot higher than any of the government estimates.
But, coming back to returns, not having any 401(k) money in stocks wold be extreme financial malfeasance. Probably worthy of a lawsuit, except that the only winners would be lawyers.
From your screen name, I will guess that you were born in 1957. If you do not have a company pension and SS plus a very small 401(k) is going to be your only retirement income, you are not in good shape.
If I were in that predicament, I would start seriously looking into retirement in some of the expat communities in very low cost of living areas. You can find communities of US citizens retired in small areas in Costa Rico, Mexico, some places in Asia, etc. A dollar goes a lot further there than it does in the US.
There is just no way to sugar coat the fact that minimal savings at 61 isn't going to translate into desirable living in the US, unless you have relatives or children who can help.
OTOH, I will make the prediction that some way will be found to "fix" SS, probably in such a way as to maintain benefits for lower income people while introducing a means test of some sort for people who have saved on their own. I fully expect to be totally screwed by whatever is done.
Now some people will look at that and think that since I don't really "need" the money, it is a good solution. My only response will be that I was taxed for 40 years with the promise that I would be paid a SS benefit when I was old. Now that I am too old to do anything about it, there is a certain moral issue associated with snatching the promised benefit away from me.
Of course, since I saw this coming, I started SS benefits at the earliest possible opportunity, and I don't think they will want what has already been paid back. I won't be hurt badly enough to ferment revolution. OTOH I will vote my interests.
What I think they will do is get rid of the cap on how much of your income is subject to the social security tax combine with a maximum cap on benefits. Currently only the first $128,400 of income is subject to social security tax.
And as far as I am concerned they can go ahead and do that. All these rich Hollywood, sports, and business liberal can put their money where their mouth is then.
#53 I guess you are right as Social Security money is stolen every year by congress instead of remaining in the fund.
I have read about those in charge in Calif wanting not to get the best investment and investing in snake oil investments instead because it fits their agenda because they know they are set for retirement as the taxpayers are liable. The only way out is bankruptcy and that is happening in California cities.
The trust fund has already been spent and replaced by government IOUs.
What that means is that the U.S. Treasury must go out into the competitive financial markets and BORROW the money that is “owed” to Social Security beneficiaries.
I put “owed” in quotation marks because there is no enforceable contract between S.S. beneficiaries and the government.
It is completely possible - and completely lawful - for the millions and millions of new foreign born USA citizens to elect representatives who will revoke future Social Security payments.
And why shouldn't they revoke it?
In the future, no one in the world is going to be dumb enough to emigrate to the USA just to pay Social Security benefits to the previous generation.
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