Let's say you're 25 and have your "personal SS account" for 40 years

[SoCalDem]

You earn $25K (average)..This is what the interest calculator says your "account" would be worth after 40 years @ 3% compounded monthly.. Now assume that the "regular" SS is REDUCED by up to 30%...Is it really worth the gamble to you???? Once the money in your "account" is used up....IT'S GONE!!! and your SS will NOT be increased because you "outlived" your personal account..



2%


4%

[Wickerman]

1. Nice work

Very easy to understand version of how, once again, the Rethugs are working for the upper 10% and playing with the rest of us. If you pull the money back out at even a modest rate you only have about 10 years of spend down. The scary thing is that I think folks would be even more certain that this fund would "take care of" them in their old age than they mistakenly believe SS will.

Yikes!

[Lydia Leftcoast]

3. Yesterday's NYT (and I can no longer find the link) had an article

about how Federal workers were fairing with their 401ks. The low-paid ones were retiring with "nest eggs" of about $60,000. while the highly-paid ones were rolling in dough.

[SoCalDem]

5. The bulk of those "nest eggs" probably came during the Clinton years

and it all depends on when YOU retire and start taking it out.. If you retire right after or during a serious downturn, you are screwed.. It's "Retirement Roulette"..Close your eyes ans spin the wheel...

Also, federal workers..especially the union and highly paid ones probably skew that "average" too..

If I am unemployed and my neighbor earns a million, our "average" is $500K.:eyes:

Beware of averages:)

[Warpy]

7. That's what artificially depressing wages has done

if workers were still paid proportionate to the wealth they generate, with increases in wages tied to increases in productivity, the low rung workers would also be doing well enough at retirement to eke out survival with a combination of 401K proceeds and social security.

Alas, wages have been pushed down for about 30 years, while executive salaries have skyrocketed. Workers are literally being robbed to fatten the owning and ruling class.

The owning class is on the brink of getting a very hard lesson in why starving the workers is not a particularly great idea. First, they're choking off their own marketplace. They'll be left with what they hoarded, with greater wealth impossible, which ruins the fun of acquisitiveness. Second, the people who are being starved generally do not take it kindly, and the tumbrils await.

[vpigrad]

2. Your post is a perfect example...

of how the rich get richer and the poor get poorer because of compounding interest. The party needs to break that chain.

[SoCalDem]

4. online calculator here.,..figure your own..

http://www.moneychimp.com/calculator/retirement_calculator.htm

I divided 25K by 52 and then took 2% of that..multiplied again by 52 to check it..

If you are at the 90K level, 2 % would net you almost $32K a year

[Ernesto]

6. If you are 25..............it might not matter what you save

the chances are that you might get drafted & sent you know where.

[seventythree]

8. your personal account will be reduced by the cost of an annuity

to provide you a floor retirement monthly pay out (you won't be getting any SS because of this annuity, as I understand it)so the pot of savings is further diminished -- then deduct the erosion of the value over 40 years, and you are so right, it's not worth the risk of a downturn. Meanwhile, the 2-3 trillion which has to be borrowed for the transition puts us into another trick bag with our ever growing deficit.

[hfojvt]

9. you know they are going to want it figured with an 8% return

Inputs

Current Principal: $ 0
Annual Addition: $ 500
Years to grow: 40
Interest Rate: % 8
Compound interest time(s) annually 4


Results

Future Value: $ 145,158.16

Of course, they want us to believe that all of us are going to get a great return on our money. I surely would not mind 8% since my CDs are currently getting about 2.9%. Also, I read that Kpers has averaged a return of 10.1% over the last five years, so maybe I should be following their investment strategy.
A finance guy was telling me about this mutual fund with a good return, but it seemed too much like lending my money to the military industrial complex. Of course, in a bank, my money is being borrowed by some rich SOB to buy a $300,000 house or a hummer or something insidious like that, or credit card companies are borrowing it so they can lend it out at usurious rates to desperate and stupid working people. Or maybe I should buy T-bills and finance the war in Iraq.
It is hard to find a clean investment. Anyway, varying rates of return mean that some people will do well and some people won't, which will mean further inequality. Which makes the idea of private accounts anathema to a progressive.

[SoCalDem]

10. $ 145,158.16 divided by 20K a year = 7.26 years

so if you live 8 yrs past "retirement" whaddayah-gonna-do?

[Yupster]

12. So once you start taking out the 20 k per year,

the other 125 k stops earning interest?

What kind of an investment is that?

[SoCalDem]

13. nope, but somewhere down the line the law of diminsihing returns

will get you..

[GreenPoet64]

11. great presentation! n/t

[SoCalDem]

14. Thanks..and a self-serving kick

:)

[Wilms]

15. kick n/t