Retirement Planning Tweaks

[craigerv]

Can This Retirement System Be Saved? - Bloomberg

Interesting article about a few fixes to our current retirement options. Some things I like are making 401(k) plans Opt-Out rather than Opt-In. I know too many middle-income folks who don't contribute at all to their retirement funds. Your younger years are THE years to contribute heftily, when you can actually afford it. I don't agree with the suggestion of making auto-enrollment into 401(k)'s mandatory, but I do think it needs to be stressed what you're losing if you opt-out.


Also, I love that they call social security a "Ponzi scheme". That is exactly what it is.

 

[Talan150]

I hate when they call Social Security a "Entitlement"!!#$!#!$#!!!

 

[RealMoneyIssues]

I hate when they call Social Security a "Entitlement"!!#$!#!$#!!!

But you paid into it your entire life, are you not "entitled" to your money back plus interest?

 

[Birchtree]

With a defined contribution plan for social security the money is yours and you plan for the investment gains - but Democrats think you are not capable enough to manage your own money.

 

[craigerv]

But you paid into it your entire life, are you not "entitled" to your money back plus interest?

Agree completely. I liked the idea also to be bought out of Social Security at an earlier age. Rather than receive a small benefit (if any for us youngsters) for the remainder of our lives, I'd rather receive a lump sum up front that I can control more effectively even if it is a smaller amount than the total that I would have received.

 

[Boghie]

This made me think, actually another post made my two brain cells slam together.

Does anyone actually realize what we save for our Golden Years. Here is mine:

• Social Security: 12% of my Gross Income
• FERS Pension: 15% of my Gross Income
• TSP: 15% of my Gross Income

A total of 42% of my gross income is actually 'invested' toward my retirement. I actually think I see the problem a bit different than the PBS interviewees in the linked article (that trashes 401(k) plans). Look at the following...

My expected retirement stream from those sources:

• Social Security: $22K
• FERS Pension: $22K
• TSP: $70K

So, 27% of my gross income is 'invested' in the 'G Fund' for me. Now, I know that only about 8% of that comes directly from me - the rest is a 'benefit'. The 'G Fund' is really a rolling slush fund for the Federal Treasury. It is also a rather crappy investment for a 25 year old. Why is 27% of a 25 year old's gross salary going toward 'investments' that earn a point and a half.

Obviously, over 60% of my retirement contributions are invested in something that offers little toward my retirement - especially when I was a 30 something. If I want safety I could invest in the 'G Fund' myself - see my crappy returns this year. I have no means of investing in a lifecycle strategy with so much heading straight to the politicians to spend. I would rather have a money market fund in a lock box I could see, manage, and legally separate from the grasping hands of Ted Stevens (may he rest in peace) and Ted Kennedy (may he rest in peace).

The rich sods in the FrontLine article have to think outside the box. The problem is that much of my income is being invested poorly - by the very entities they feel should invest the rest. I know that fees eat into investment savings, but politicians invite their whole extended family (graft, special interests, and do-gooders) to the feast - all for a 1.5% return. These rich sods view Social Security as a tax, not as a bad retirement investment. They rant and rave on a valid retirement investment instrument. Yowser...

Just asking.