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Originally Posted by C4 Diesel
HOLY CRAP!!! Well, I surprised myself... At a steady 70 k income, the individual would have a T-note worth $746,603.27 at retirement. If the employer was matching his SS taxes, this note would be worth double this, or $1,493,206.54! Now let's figure an inflation rate... Taking a 58-yr average (2004 - 1947) we get... uh... 3.38% This means that the total inflation from when the individual started working until he retired would be... 526%. This would make the present-day value of his retirement funds (that is, if the present-day assumption is made for when the individual is 20) $141,939 or $283,879. Not half bad.
In the current system, if one expected a $2000 monthly SS payout (a good assumption?), with a 2%/yr cost of living adjustment, even if one did not retire until 70, and lived to be 92, that person would still only recieve $864,832.
Well... There's my math. Seems like a resonably good system. I still don't think it's worth the cost of transition right now, but perhaps in a time of lower defecit I could support a program like this one.
What do you guys think?
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This sounds pretty good on the surface. I believe unlike most others that the retirement age will be forced downward as time goes by due to company policies of laying off and/or early retiring high paid older workers. This plan seems to have a nice nest egg for those in their 50s as well.
The type of plan I would like to see should return even more than that and be similar to what the government workers get today. They have 5 different investment funds to put their money into instead of SS. One of these plans is the C fund (stock fund) which has done very well:
1988 11.84%
1989 31.03%
1990 -3.15%
1991 30.77%
1992 7.70%
1993 10.13%
1994 1.33%
1995 37.41%
1996 22.85%
1997 33.17%
1998 12.44%
1999 20.95%
2000 -9.14%
2001 -11.94%
2002 -22.05%
2003 28.54%
2004 10.82%
As you can see it won't take long to build up quite a retirement nest egg and as you get older you can move into one of the bond funds to reduce risk as you get close to retirement age.
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Begun in 1987, the Thrift Savings Plan, which as of December 2004 had assets of $152 billion, is a retirement-savings plan open to all civilian federal employees, including senators, and all members of the uniformed services.
They can invest as much as 14 percent of their salaries in one of five retirement funds. Consider the rate of return of C Fund, one of the five. It is a common-stock fund, so it should represent the risks that Reid thinks should terrify Americans:
In only four of 17 years has the rate of return been negative. But in 11 years the rate has been greater than 10 percent, in eight years it has been greater than 20 percent, in four years it has been greater than 30 percent. The compound annual rate of return for the last 10 years has been 12 percent, and the return over the 17 years has been 12.1 percent.
Reid participates in the plan, but opposes allowing all Americans the comparable opportunity that Bush is proposing. But if the numbers just cited are the result of roulette, the legislators should let the rest of us into the game in which they are prospering. Harry Reid's Roulette'
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