It would be better to call traditional IRAs and 401Ks tax-deferred instead of tax free. It is true that you don't pay taxes on the money you initially invest, but you do pay taxes when you withdraw from those types of accounts.Quote:
Originally Posted by techs
Roth IRAs would be closer to tax free in my opion becuase while you do pay taxes on the money initially invested, that money grows tax free and is not taxed when it is withdrawn.
Of course you're right. But I didn't want to confuse the issue. The main advantage to using an IRA and 401k tax wise is that it is assumed you will have far lower income when you retire so you would be in a lower tax bracket.Quote:
Originally Posted by RIOT
btw I have decided I shouldn't have to pay any taxes for national defense. I feel I have earned the right to defend myself. When will the government let me control MY MONEY?
Quote:
Originally Posted by techs
If it is that bad, that pulling out only a percentage of the money (MY MONEY) that is slated for SS will immediately bankrupt the system and cause this so-called total economy mentdown, the system is apparently in pretty rough shape.
If the system has absolutely no "give" there is a more serious issue at hand that needs to be resolved, as you are stating there is no margin of flexibility within the system...
Doesn't that just scream for help?
However, I don't think this is really the case, it's just another of doom & gloom politics...GWB was electec & so the world will burn in Hell
Quote:
Originally Posted by techs
...Once again you are taking things out of context... You seem to have a really bad habit regarding this.
SS is money that you have earned while working that is being placed in a retirement fund for YOU.
National defense has noting to do with this, nor is it an applicable analogy. National defense is just that, national. It is for everyone, citizens & visitors to our counrty, there to ensure that everyone is safe from harm.
You are comparing that to a fund the goverment has setup for your benifit because they feel that you, as an individual are not capable of managing your own money.
Social Security it just that, national. It is for everyone, citizens and workers to our country, there to ensure that everyone is safe from harm.Quote:
Originally Posted by SolApathy
In your own words.
And yes SS is there because 97 percent of Americans are not capable of providing for their own retirement as I have proven.
And you are confusing apples and oranges. Because of the way SS is structured if you remove the funding it is bankrupt. And if I take out my money for national defense the US is immediately bankrupt. Oh wait, we already ARE. But in a blanced budget time for the US If even one dollar that is allocated for spending is not received by the government then it is bankrupt.Quote:
If it is that bad, that pulling out only a percentage of the money (MY MONEY) that is slated for SS will immediately bankrupt the system and cause this so-called total economy mentdown, the system is apparently in pretty rough shape.
So lets talk about how Bush has bankrupted the country.
Oh wait. As long as you have people to loan you money your not bankrupt. So if SS borrowed trillions to pay for seniors it wouldn't be bankrupt? You can't have it only your way.
(exception to this is because of the upcoming baby boom SS has been saving some money to tide us through that period.)
NO MATTER HOW YOU TRY AND PUT IT YOU ARE SAYING YOU SHOULD HAVE THE RIGHT TO BE ELDERLY AND BROKE.
SORRY, WE WILL NOT LET YOU.
97%? You have not PROVEN anything. All you use is supposition & scare tactics. If 97% of the people in the US were too stupid to provide for their own retirement then we have an even bigger problem.
the logic behind your 97% is flawed. Calculating that only 3% can manage their budgets accordingly is just ridiculous. I am young & have limited funds, with a limited amount I can put back every month while I am juggling between school & work. I am somehow going to manage though, even with my measly $370/month I put back. (Which will increase once I actually earn my degree & am capable of putting back a little more.
But lets see...Even if I only put back $370/month @ 7% that calculates to what, 1.2 million? And this is without me calculating the additional amounts I plan on putting into the fund once I am settled in a decent job. That will place me well over 2 million. Let's see...If I live to 100 I can pull out $44,000 a year
$44k/year...
no house payment
no car payment
no kids :)
If I lived to 20 years that is what...100k/year?
I think I can manage on that.
Sweet jeebus, how many people make enough and have enough arond them to where they can put away $370 a month and think they are making limited funds and live modestly?
Yeah, seems strange to me too.Quote:
Originally Posted by Cleetus
Of course he is talking about earning 7 percent a year. Wonder where he got that figure. And he makes no account for how much prices will be in 80 years. And that his supposed 7 percent is eaten up by inflation each year (last year 3.3 percent).
A better way to figure it is if you live retired for 33 years and want to draw out an amount equal to 40 percent of your working salary you would need to figure
it like this:
In actual numbers:
Earn 300,00 a year for 46 years.
Want to get 40 percent of that each year for 33 years of retirement?
Than you need to have saved 396,000.
That's means you must put away 12,000 of your 30,000 a year income.
Minus some monies you would gain thru interest that exceeded the cost of living increases.
So if your investments earn you 2 percent more than cost of living you only need to put 11,200 per year into your retirement.
You are way behind already.
FORGET ABOUT THE B.S. INTEREST RATES YOU ARE QUOTING.
Your savings only increase by the difference between what your investment percent pays each year and the cost of living increase.
Please tell me how much the DJIA went up this year? The last 5 years.
I will tell you that has gone DOWN since 1999 when it was about 11,000 and its about 10,500 today.
Your very lack of knowledge about the stock market and investing in general shows what will happen to people who try to do this themselves.
It is only very risky investments that increase substantially over the cost of living.
So I guess you would need to buy lots of Enron stock.
Oops. Now you're wiped out.
I don't know this so I'm going to ask...
How much interest, if any, do T-bills make a year?
They vary based on how long they are for. And they are auctioned on a weekly basis. Here is a a link:Quote:
Originally Posted by RIOT
http://wwws.publicdebt.treas.gov/AI/OFBills
As you can see these max out at 182 days. Most large investors just keep rolling over their bills so for them they rate is actually variable. T-bill rates are very influenced by the Prime rate which is set by the Federal Reserve board. Since the Federal Reserve board lowered rates to an unprecendented rate to try and help the bad Bush economy that rate is very low. It is now being increased.
Quote:
Originally Posted by techs
From that website, the highest Investment Rate % (which I'm assuming is how much you make in interest) was 2.708%. If inflation is around 3% (3.3% last year), aren't we losing money by putting it in SS?Quote:
Originally Posted by techs
I do understand that Prime is usually set much higher when the economy is exploding like it was in the mid to late 90s. Here is a website I found that lists the prime rate per year all the way back to 1949. Click on Interest Rates on the left, then click on Prime Loan Rate. How much interest did the T-bills make those years?
When you talk about "losing" money you are only talking about that relatively small amount that is being put away to pay for the baby boomers.Quote:
Originally Posted by RIOT
Here is another thing from the treasury dept:
FOR IMMEDIATE RELEASE Contact: Stephen Meyerhardt
January 14, 2005 (202) 504-3792
TREASURY CALLS 10 PERCENT BONDS OF 2005-10
The Treasury today announced the call for redemption at par on May 15, 2005, of the 10% Treasury
Bonds of 2005-10, originally issued May 15, 1980, due May 15, 2010 (CUSIP No. 912810CP1).
There are $2,987 million of these bonds outstanding, of which $1,811 million are held by private
investors. Securities not redeemed on May 15, 2005 will stop earning interest.
These bonds are being called to reduce the cost of debt financing. The 10% interest rate is significantly
above the current cost of securing financing for the five years remaining to their maturity. In current
market conditions, Treasury estimates that interest savings from the call and refinancing will be about
$500 million.
Now those people were getting 10 percent. But notice the Treasury had the right to call them in early. If inflation were 20 percent they would force the holders to keep them and LOSE money.
And yes SS was making some of that 10 percent interest. In fact It is most of the non-private monies referred to.
The financial markets and instruments are the most complicated institutions created by man. It is mind boggling.
For example, what is the DOW? When you hear it went up 2 percent last year what does it mean?
A quick fyi the dow is a select group of companies ONLY. Its not the whole market. And the DOW companies change. In fact as large companies fade they are replaced by stronger earning ones. So AT and T is gone and Wal-mart is in. So how can you actually say the DOW went up 2 percent. How does that factor in the companies that left?
My sister has an MBA in finance from Columbia University. She has spent hours trying to explain to me how even simple things work in the stock market. It is unbelievable.
Perhaps it might be best to remember the actual stock market, the company, exists as place for parties to buy and sell stock. For companies it is a place to raise money.
So the stock market itself has a huge interest in appearing to be a good investment.
Assuming inflation stays around 3%, $2,000,000 today would equal about $550,000 in 40 years using this calculator. Put 2000000 in for amount invested, 2045 for the year, 0 for the interest rate, and 3.3 for the rate of inflation.
$550,000 divided by 20 years would be $27,500 per year. This isn't bad at all considering that's almost what I currently make per year. Again with no house payment, car payment, and grown kids.
$550,000 divided by 30 years would be $18,333.33. This still isn't bad considering no house payment, car payment, and no kids.
The main problem with trying to factor in the inflation rate is that while inflation goes up, salaries go up to compensate, and therefore, savings go up to compensate. While right now SolApathy is saving $370 per month, each year when salaries and pay are adjusted to match inflation and cost of living he'll be putting more into savings because he is making more.
Now if inflation/cost of living and salaries/wages don't always stay the same is another debate that I won't go into.
Actually you proved my point. You didn't have the 55,000 to invest all at once. Your last savings only had one year to accrue interest. While your first years savings, which were lowest as a 21 year old, did. And with the power of compound interest removed for a large portion. So 18,000 is more like 10,000.Quote:
Originally Posted by RIOT
And it comes with risk.
And if you are trying to say if you have 55,000 dollars today you will have enough to retire on 45 years from now, well that's just silly.
Actually when I was talking about losing money, I was meaning saving money in an investment that is generating 2.708% interest at best (at least recently) while inflation is at 3%. I was hoping that you would show me how much T-bills were making when Prime was set at about 8% so that I could see how much interest they were generating at that time.Quote:
Originally Posted by techs
I'm sorry but could you dumb that down a little so I could understand it better? I'm not being rude in asking that, I just didn't understand it when I read through it quickly.Quote:
Originally Posted by techs
Long term (i.e. more that 5 years), I believe the stock market is good investment. The best long term investment a person can make. CDs, annuities, life insurance, etc. are all lousey investements when compared to the stock market.Quote:
Originally Posted by techs