and when the index falls several thousand points in a day and the bulk of the portfolios value is lost, how well will that pension perform?
Right, so quit trying to grow the fund and use it to directly pay your pensions to your employees from the fund put there by the business and the employee… like we used to do… because it works and does not risk your employees future.
I doubt it. I think Social Security will be abolished the moment Xers like myself are supposed to start collecting. Those funds plus cuts to Medicare and other welfare programmes will be used to kickstart the nasty UBI I described above. I’m sure they’ll find other ways to screw over Xers in the process.
How delightful to know that I am super rich. I am astounded. Here I thought I was just a middle class, retired civil servant of no particular elevation or fiscal acumen.
Retired early at 60 on about as much net income as I made working. 401K worked just fine for me and if I could have invested my Social Security “insurance” I’d be flirting with well-off rather than comfortable. If I had been more disciplined in saving for retirement and controlling spending I probably would be making more money retired than I did working, but that was my fault, not society at large.
(Those $5 soy lattes add up over your lifetime, kids, think about it next time you are in line at Starbucks. Same for your “vaping”, 5$/gram pot and $10 a bottle microbrews).
Housing bubble and sub-prime mortgages? Only hooked in stupid people so I bypassed all that nonsense.
Not saying it’s easy. Self-discipline and putting an interval of thought between your desire and your reaching for that $6 artisanal cookie are a bit foreign to younger generations as far as I can see.
[quote=“anotherone, post:84, topic:95143, full:true”]
and when the index falls several thousand points in a day and the bulk of the portfolios value is lost, how well will that pension perform?[/quote]
Not well, but everyone will be suffering at that point. Competent pension managers are supposed to take a long-term outlook and hedge against a fall in equities with a diversified portfolio.
That would be workable only if inflation didn’t exist. The dollar saved on a person’s behalf when he started working 35 years ago isn’t going to buy a lot now that he’s retired if the return hasn’t kept pace.
You might want to look up “inflation” to understand why hoarding cash is just about the most ignorant strategy this side of playing Baccarat with your savings. This is 9th grade Home Ec level finance.
Social Security will exist, but the age to obtain full benefit will be 75 or 80. Unobtainum, surely.
Permission to get off your lawn, sir? 
Careful, your ideology is showing 
Pensioners should not suffer during a market downturn. Only those invested in the market should be effected. If you don’t put the pension in the market, then they will not suffer.
It buys much more than it would if the entire fund is lost in the market, something which many people are going through right now. Fixed rate bonds, CDs, etc all produce interest to offset some of the inflation without risk.
I just can’t agree with risking money that people depend on their survival for. After all, the golden rule of investing is never to risk what you cannot afford to loose and brother, pensioners can’t afford to loose anything.
Please keep paying into Social Security/Disability. I hate it but that money is where my benefits come from.
T-bills are pretty close. Municipal bonds not too far behind.
Nah, don’t want to eat the rich. Too much fat and silicone to be healthy.
It isn’t like we are given a choice. That’s why it is effectively a tax for anyone after boomers. We’ll never get the benefits of it but we get wages garnished for it every paycheck.
True. That’s exactly why Social Security insurance was put into place, as a hedge against a catastrophic situation where not only the market but also companies (i.e. employers who expected to pay out pensions) and banks went under.
Not much more. The cumulative rate of inflation between 1981 and 2017 was 167%. If entire pension funds are being lost in the market it’s because of rank incompetence or criminal activity on the part of the fund manager.
And they continue to comprise a significant portion of any properly diversified portfolio, whether it’s a pension fund or an IRA. But putting everything into bonds is a bad idea – a risk in and of itself.
I agree. The problem, again, is that the rates aren’t currently enough to keep up with inflation. Tax-free munis are also safe and get you a slightly better return.
I’ve got history in economics, some psychology, maths, legal stuff, so on … I think about this a lot, and keep coming up with narcissistic sociopaths being the glitch in the system. The Mugabe syndrome - they keep drawing everything to themselves.
In an awful allegory, I blame the rest of the world, including me, for letting them get away with it.
Oddly, in terms of my personal perspective, peoples like the Amish seem to actually deal with them in economic terms better than we have been.
I’m in a health insurance trap / scam - every time I breathe on it, my ‘discount’ gets cut by 10%. Recently I realised this means one more thing and I’m paying US$10,000 per year for health cover - and I am, by and large, extraordinarily healthy! I use it only when needed, and avoid operations etc - taking always the conservative approach.
But I think most people, when treated with mutual respect, are willing to not be rich, and happy to be moderately well-off.
As for retirement and me - LOL - I’ll have no choice but to keep going till I die!
When they introduced state pensions in the UK, most people who lived long enough to get it weren’t expected to survive more than a few years longer.
It seems like the anti-welfare people want to bring back those days.
It’s based on a German idea that was concocted when ‘retirement age’ generally wasn’t far from death.
That’s it though, isn’t it?
If lots of people are paying in for 35-40 years, retiring and living another 20+ instead of <5, the maths gets tricky.
Only answer is to put more in, or pay less out.
I don’t understand why there is an upper cap on the assessed salary for contributions.
I liked my old defined benefits company pensions an awful lot more than this 401K malarky, too.
