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View Diary: Republican Debate Night (Tea Party Express edition) (84 comments)

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  •  want to shut up a TPer and his privatize SS? (2+ / 0-)
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    cassandracarolina, WiddieDawg

    First of all let him figure how much someone on SSD collects who is disabled at 44 as opposed to a private investment program.
    Then show him the last 10 years of the stock market and ask him which year would he cash out and what would he do in those years that stocks and bonds did not declare a dividend or cg distribution?  After all if they dip into principal, when payouts begin again, principal is that much less, which reduces future payouts.  

    •  It's the basic difference between defined benefit (0+ / 0-)

      and defined contribution retirement plans.  Social Security is a sort of defined benefit plan.  401(k)s and SEP, IRAs, etc are all defined contribution plans.

      The big difference is that in a defined benefit plan, the beneficiary does not bear the risk.  It's one reason why SocSec is 'invested' in the safest, lowest risk vehicle - special issue government bonds.  They don't pay huge returns, but they are safe.

      In a defined contribution plan, the beneficiary bears the risk that when funds are needed they wil be there.  The return is potentially higher, but the risk of crashing is far greater.

      Big business began doing defined benefit plans several decades ago as an incentive for workers to forgo pay raises. The problem is that companies failed to adequately maintain the funds. They did use the money like it was their own. When it came time to pay the benefits, companies began to change those plans into defined contribution plans. I am concerned that the next big failure will be pensions, and ERISA will be called on to bail them out, again at taxpayer expense., because ERISA guarantees payments through PBCG. There is extremely poor compliance.

      That's what conservative Teapublicans want to do to SocSec - change it from a defined benefit to a defined contribution type plan.  It takes the burden off of Congress to make sure it's fiscal house with regard to the general treasury is in order.

      •  thanks for the extra information (1+ / 0-)
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        problem is most Americans have only a rudimentary understanding of economics and most information that is available is written at a literacy level above the average reader.  After all, what can we assume about the average TP reader, based on literacy level evaluations of their reading materials?

        •  I practised SocSec law for over 20 years. (1+ / 0-)
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          The people who were at the low end of the earnings scale and the low end of the education scale knew what social security was, how it was funded, and what it would do for them.  If something is your only lifeline, you tend to know where it is and how strong it will be.

          It was people who were at the higher end of both the earnings and education scales were the ones I had to spend inordinate amounts of time explaining how the system worked, what it did, and what it did not do.

          I found this very educational. I think this difference reflected that those who rely on something for their retirement find out what they need to know.  Those who have other means of taking care of themsleves financially are the ones with the least understanding and the most complaints about Social Security.  That is until their 401k crashes right before they retire, and they realize that their Social Security benefit has held steady.

          •  I remember an article from 2007 or so (1+ / 0-)
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            discussing a couple who had sold their business for $1M and then invested the cash.  They got in at the peak and this article was somewhere at the bottom or near to it, where their planned $100K annual income from SS and investments did not materialize and they actually found themselves cashing out principal for groceries.

            Such articles should be a cautionary tale for employees who think private retirement can provide substantial income,

            If memory serves, average family has $75K assets and average 60 year old has $120K including home equity.  I figure to maintain income of $50K would take around $1.5M but I am no actuary

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