The Republicans are the Problem

[Copernicus]

Most people are not financial experts and do not know how to invest money for retirement. Pensions are a very good thing to have. I'm on the verge of retirement now, and I will be collecting both a pension and Social Security, which will be almost enough for me to live on without digging into my savings. Unfortunately, my employer stopped paying into a pension fund and shifted everyone over to a 401K plan. Luckily for me, I was already vested in the old plan and was grandfathered in. Because of flakiness in the stock market and hidden fees by the people who manage the 401K fund, not to mention my ability to predict the best options to gamble on, it will be worth far less to me than my pension annuity. And after I die, assuming I go first, my wife will continue to live on income from SS and the pension. The 401K plan will only last as long as the money in it isn't spent. It is not a substitute for a pension.

 

[Penumbra]

Most people are not financial experts and do not know how to invest money for retirement. Pensions are a very good thing to have. I'm on the verge of retirement now, and I will be collecting both a pension and Social Security, which will be almost enough for me to live on without digging into my savings. Unfortunately, my employer stopped paying into a pension fund and shifted everyone over to a 401K plan. Luckily for me, I was already vested in the old plan and was grandfathered in. Because of flakiness in the stock market and hidden fees by the people who manage the 401K fund, not to mention my ability to predict the best options to gamble on, it will be worth far less to me than my pension annuity. And after I die, assuming I go first, my wife will continue to live on income from SS and the pension. The 401K plan will only last as long as the money in it isn't spent. It is not a substitute for a pension.

Is the pension run by the company, or by a third party? Many companies have unfunded pension obligations.

I think it's very likely that if you had a 401k for as long as you had a pension, with the same contributions, you'd have more value in there.

I don't particularly like 401ks either, though, and only contribute enough to get full matching contributions.

 

[Copernicus]

Is the pension run by the company, or by a third party? Many companies have unfunded pension obligations.

I think it's very likely that if you had a 401k for as long as you had a pension, with the same contributions, you'd have more value in there.

I don't particularly like 401ks either, though, and only contribute enough to get full matching contributions.

The pension fund is run by the company, but they have been forced by the government to fund it adequately (or so some of my colleagues say. I don't really know how solid it is, because companies play all sorts of games with pension funds, if they think they can get away with it.) I and my company have been contributing to my 401K for about as long as the pension fund, but there is a big difference between an annuity and a 401K plan. You can exhaust the 401K principal, whereas the pension pays out until you and/or your spouse die. The same is true of SS. Most young people don't seem to get the difference, and they tend to believe assurances that investment in the stock market ultimately yields a better return. That will probably hold true for many smart investors and those who are able to predict the future accurately. Of course, if they are good at that, then they should head for the nearest casino, where the returns will come in much quicker.

 

[Heathen Hammer]

Which is why I don't like pensions for my own money at all. I don't like any of the scenarios.

In a correct world, those funds should be ironclad and never gambled in any manner.

In some twisted way I think we agree.

 

[Penumbra]

The pension fund is run by the company, but they have been forced by the government to fund it adequately (or so some of my colleagues say. I don't really know how solid it is, because companies play all sorts of games with pension funds, if they think they can get away with it.) I and my company have been contributing to my 401K for about as long as the pension fund, but there is a big difference between an annuity and a 401K plan. You can exhaust the 401K principal, whereas the pension pays out until you and/or your spouse die. The same is true of SS. Most young people don't seem to get the difference, and they tend to believe assurances that investment in the stock market ultimately yields a better return. That will probably hold true for many smart investors and those who are able to predict the future accurately. Of course, if they are good at that, then they should head for the nearest casino, where the returns will come in much quicker.

Pensions and SS pay out until a person dies, but in most scenarios, if one calculates the full rate of return over the course of the career on invested money, returns are low. Which makes sense, because it's a conservative investment. But it's a conservative investment that people are forced into with a considerable portion of their savings. Only in very unusual scenarios like living to 100 would it be a very good investment.

Many pensions or insurance products are invested in the market in one way or another anyway. Diversified stocks, bonds, treasuries, etc. So some pensions are just a filter over other types of investments. Either that, or some types use a scheme where newer investors are paying out to older investors, which works as long as the ratios remain solid.

When politicians had that nonsense debt ceiling media-fest in 2011, I had relatives calling me about potentially needing money if their SS checks don't come, not me calling them. Income from a centralized source creates all sorts of worries.

 

[Reverend Rick]

Pension funds go broke all the time. Sure, they promise you a check for a life time, but it is just a promise and only as good as the company making the promise.

 

[T-Dawg]

I don't really understand the purpose behind pensions. Why not just put aside money for your retirement as you make it? (Or, alternatively, just die once you're too old to work. That's probably what I'll do, if I live that long.)

 

[Copernicus]

I don't really understand the purpose behind pensions. Why not just put aside money for your retirement as you make it? (Or, alternatively, just die once you're too old to work. That's probably what I'll do, if I live that long.)

You may be unique, but I doubt you'll be as sanguine about mortality when you find it staring you in the face. When you are young, and all the money you will ever make, your future opportunities, the cost of raising a family, and your future health are unknowns, it is hard to understand what all the fuss is over retirement options. As you get older, you change a lot. You have to live with the decisions made earlier by a less mature individual with different needs and wants. Your options become more limited, and you may find yourself dependent on the largesse of others. People in conditions of extreme poverty often have large families because their children really become their retirement plan. The reason that unions fought for pensions and the US government set up Social Security and Medicare was to give people better options for living after retirement. During the Great Depression, people had to choose between paying the rent, having heat, and eating food. A lot of old people suffered and died needlessly, because there was no work even for those who might otherwise have taken care of them. As welfare programs get dismantled and the market goes back to boom/bust cycles, we may see a return to uglier times. Maybe that is what is needed in order for people to understand why social welfare programs exist. I hope not.

 

[Shuddhasattva]

His point is that social welfare programs supplant personal responsibility which should be taught and upheld.

 

[Heathen Hammer]

Anything you've paid into is not welfare in the Republican context. It is not a lack of responsibility.

However, the failure of a pension fund is a lack of responsibility on the part of the company tending it

 

[Dirty Penguin]

Question....

Why not let me manage my own money?

Why can't my job and govt instead of taking out money for pensions, 401k or SS simply just deposit my witholdings into a separate trust "bank" account that can't be touched until I retire or released to my spouse if I die.....or even be disbursed how I want it through my Will...?

 

[Copernicus]

Question....

Why not let me manage my own money?

Social Security and pension funds do not prevent you from doing that. Pensions are (or used to be) part of your compensation for agreeing to be employed by a company. Social Security and Medicare deductions are essentially a taxes that we, as a nation, have agreed to impose on wages in order to provide a common benefit. Like any other tax, you don't really control how all of it is spent, but you do control how you spend what you earn after taxes.

Why can't my job and govt instead of taking out money for pensions, 401k or SS simply just deposit my witholdings into a separate trust "bank" account that can't be touched until I retire or released to my spouse if I die.....or even be disbursed how I want it through my Will...?

You need to ask your employer and/or union why they think you would want a pension. Employers offer them because a union negotiated for that benefit or they want to attract employees with that perk. SS is a form of national insurance that Congress established decades ago. It works essentially like all insurance. A large pool of people pay into it. Some will pay in more than they take out. Some will break even. Others will take out more than they put in. Same deal if you buy private insurance.

SS is (or has been) largely solvent for a long time, except that Congress has invested a great deal of its money in US Treasury bonds that a flaky, mendacious Congress would now like to find some way of reneging on. It seems that they borrowed the money for stuff they wanted--wars, corporate subsidies and giveaways, tax reductions for the wealthy, earmarked "pork", whatever--and now they don't have the money to make good on their debt. Naturally, they would like to forget the loan, so one way to do that is declare SS "bankrupt" and look for ways to reduce benefits it had promised earlier.

 

[Dirty Penguin]

SS is (or has been) largely solvent for a long time, except that Congress has invested a great deal of its money in US Treasury bonds that a flaky, mendacious Congress would now like to find some way of reneging on. It seems that they borrowed the money for stuff they wanted--wars, corporate subsidies and giveaways, tax reductions for the wealthy, earmarked "pork", whatever--and now they don't have the money to make good on their debt. Naturally, they would like to forget the loan, so one way to do that is declare SS "bankrupt" and look for ways to reduce benefits it had promised earlier.

Is it possible to stop the government from withholding SS and you take that money and save it yourself?

I thought there were other countries (Mexico I thought) that allowed employees to manage that money.

 

[1robin]

Is it possible to stop the government from withholding SS and you take that money and save it yourself?

I thought there were other countries (Mexico I thought) that allowed employees to manage that money.

I think there was a southwestern state or organization that got out of SS somehow and invested the money privately and saw a drastically higher return than they would have otherwise recieved. Since all my money and the people younger than me has been borrowed (stolen) by the government and will never be repaid. I think government SS is about the worst investment possible.

 

[1robin]

Question....

Why not let me manage my own money?

Because then they could not steal it and give it away on programs to buy votes.

Why can't my job and govt instead of taking out money for pensions, 401k or SS simply just deposit my witholdings into a separate trust "bank" account that can't be touched until I retire or released to my spouse if I die.....or even be disbursed how I want it through my Will...?

Ditto.

 

[Copernicus]

Is it possible to stop the government from withholding SS and you take that money and save it yourself?

No. The program is not a savings plan, but an annuity. It is an insurance program that is designed primarily to give us all at least a modest level of income after retirement. For what people pay in, it works out well for most. You only pay a relatively small portion of your income into it, and you are free to use all the rest of your income to build your wealth, if you think you are good enough at it. Chances are that you aren't. Nobody can foresee the future. It is actually quite a decent benefit for those who live beyond their mid to late 60s, which most of us do.

I thought there were other countries (Mexico I thought) that allowed employees to manage that money.

Maybe there are, and you may want to consider emigration. SS is too popular a program for you to expect that it will disappear soon and be replaced by a personal money management program. But it might be that Mexico is the type of country you would prefer to live in. If I were to emigrate, I would choose to move north or to Europe, rabid pro-Obama "socialist" that I am. I've seen how those countries work and heard what their citizens say about their welfare benefits. They do not envy us or seek to replace their system with something like ours. I think that they are just a bit more satisfied than Mexicans, but I could be wrong.

 

[T-Dawg]

His point is that social welfare programs supplant personal responsibility which should be taught and upheld.

(Seriously, how did you get THAT out of what I said?? What does welfare have to do with Social Security? "Welfare" implies something that you get a return from without paying into it.)

No, my point was that social security seems to simply take money I have now and spend it on old people, and then when I'm old, take money young people will have then and give it to me. It seems a bit purposeless from what I understand of it, unless it's being used to redistribute income instead of just shuffling it towards a person's retirement.

 

[Revoltingest]

Is it possible to stop the government from withholding SS and you take that money and save it yourself?

In the past (still true?), working for government or railroads exempted one from SS withholding.
Aerospace engineers I worked with at Northrop would accumulate hefty savings while in gov't, & then
clean up on top of that with SS. Double dipping rules!

 

[Copernicus]

No, my point was that social security seems to simply take money I have now and spend it on old people, and then when I'm old, take money young people will have then and give it to me. It seems a bit purposeless from what I understand of it, unless it's being used to redistribute income instead of just shuffling it towards a person's retirement.

T-Dawg, do you understand how insurance works? Insurance companies pool premiums and pay some of that money back against claims. Some people never recoup a cent of what they put into the insurance fund. Others get back far more than what they put in. Social Security and Medicare are a form of insurance that is administered by the government. It is predicated on the calculation that not everyone will get back what they put into it. The expectation is that some people will die before they extract as much as they contributed. It is not a bank account or 401K plan, where you get back the principal with interest. It is just a method of making sure that all citizens have a guarantee of some level of income, once they reach an age where they cannot earn enough money to meet their needs. Not everyone will make it to that age or live many years beyond it.

 

[tytlyf]

I think there was a southwestern state or organization that got out of SS somehow and invested the money privately and saw a drastically higher return than they would have otherwise recieved. Since all my money and the people younger than me has been borrowed (stolen) by the government and will never be repaid. I think government SS is about the worst investment possible.

See if you can dig up where you "heard" that. Thanks, I'd like to analyze it's validity