Boy, I'm sorry I missed out on this discussion earlier! Too many things going on...
I agree with Gruss on the broad points here. American do not save. We need to save more. And $100K by age 30 may seem like a lot to you (and me), but bring an aspiring professional from a poor country to the U.S. at age 21, give them a decent job, and I guarantee you they will blow that $100K number out of the water by age 30. It's all about attitude. Read "The Millionaire Next Door" or watch Suze Orman (not a fan myself, but she knows what she is talking about). It's all about cutting expenses. Having said that, if everyone did that and got to where we need to be, a 10% savings rate instead of a 1% savings rate, the U.S. economy would take a beating. Consumer spending is 2/3 of our economy, so chop 10% off consumer spending and that's nearly a 7% drop in the economy. Can you spell recession? Still, we need to save more, individually and as a nation. On the question of Social Security policy, it was originally intended to help the extremely elderly who had lived beyond average life expectancy It has morphed into an entitlement bonanza- the promise the if you make it to a certain age (not all that old in fact) you don't have to work any longer. I don't think the whole story has been told as to what will make up "private accounts", but your skepticism is well warranted. Alan Greenspan is himself a skeptic of private accounts. My understanding is that private accounts would be restricted to a very small group of investment vehicles- Treasury Bonds, for instance, and perhaps some sort of index funds that track the overall NASDAQ or NYSE markets. The main point is that you would not be able to invest your private account into individual stocks, or even in general mutual funds. By tracking either the dollar (via T-Bills) or the overall U.S. markets, private accounts would be tracking the wealth of the nation. I think that is basically the intent of the program. Rather than leave all of that money stuck in a non-existent "Social Security lockbox", the government would allow you to invest a portion of it- a portion only- in some sort of private investment vehicle. If private accounts are well thought out, they could be part (but not all) of the solution for fixing Social Security for us, our children, and their children. Let's be clear about this- Social Security, without any changes, will be totally bankrupt within 40 years. It could be even sooner. I think current projections are being made based on current life expectancy, but I think life expectancy may be ten yeas higher than it is today within the next 40 years. What would that mean? Today, the average life expectancy is 77 years in the U.S. If that number were raised to 87 years, Social Security would have to almost double the number of years of benefits paid to seniors. Coupled with the declining birth rate, that spells financial disaster for future generations. IMHO, a future-proof remedy requires several things: - private accounts - indexing the age for full benefits to the average life expectancy. When Social Security was first started 60 odd years ago, the average life expectancy was 65, and that was when full benefits kicked in. But politicians know a sacred cow when they see one, and that's what they saw in Social Security. The age for full benefits will rise to 68 soon, but that means it is already lagging 9 years behind life expectancy. - indexing the increase in benefits to costs, not wages. - means testing as a last resort. Someone needs to come up with a failsafe that makes sure the poorest, most desperate people are paid out of the fund first, and everyone else gets what is left. >On Tue, 18 Jan 2005 19:38:11 -0600, Gruss Gott <[EMAIL PROTECTED]> wrote: > >> I realize the mistake I made here: per married couple, 100K by 30ish >> (less than 35). > >I still don't buy it. Not for the majority of people. > >Median household income in the U.S. is only $45k. Population between >age 25-35 is roughly 40mil. Population aged 35-70 is 118mil. My guess >is that people under 35 make less than people over 35. So if the >median household income is $45k, ages 35 and under are probably >significantly on the lower side of that. I know that was the case for >me. > >Don't get me wrong. Saving is great and more people should do it. This >whole discussion is reminding me that I need to up my retirement >contributions. I just know that I'm lucky to have something to save. > >As for Social Security, I don't know much about it and I'm not >trusting it for my future, but from what I can tell an infusion of >private investments are primarily going to make a few rich people >richer. They will ride the first wave then shuffle the new money away >from the suddenly artificially inflated stocks that will probably >collapse as they correct themselves. So the average person still gets >screwed either way. My opinion: my money is going out anyway so better >for my money to go to the underprivledged than to the exceedingly >rich. But hey, whatever. > >-Kevin ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| Sams Teach Yourself Regular Expressions in 10 Minutes by Ben Forta http://www.houseoffusion.com/banners/view.cfm?bannerid=40 Message: http://www.houseoffusion.com/lists.cfm/link=i:5:143314 Archives: http://www.houseoffusion.com/cf_lists/threads.cfm/5 Subscription: http://www.houseoffusion.com/lists.cfm/link=s:5 Unsubscribe: http://www.houseoffusion.com/cf_lists/unsubscribe.cfm?user=89.70.5 Donations & Support: http://www.houseoffusion.com/tiny.cfm/54
