If I had returns as dismal as SS, I wouldn’t want it to be compared to investments either. Let me put it this way:
If my employer, rather than the government, offered me two options for retirement savings -
something resembling Social Security or a defined benefit retirement account, with extremely low risk and commensurately low growth
something more like a 401(k) plan offered by many employers, with a variety of options but generally tending towards more risk and higher returns
I’d pick #2 all day every day and twice on Sunday. I’m sure there are people that would pick #1, and good for them, but the government doesn’t give any of us a choice in the matter. They’ve decided that it’s important that all of us put money into #1, regardless of what we think is in our best interest or what we’d freely choose to do. That loss of freedom is irksome.
“We”, not “they.” Individually SS is a bad “investment” for a lot of us, but we (as in the voters, not a faceless government) decided that it’s cheaper to overpay for a retirement plan that keeps the elderly out of abject poverty conditions than to pay for the costs of, you know, having a bunch of elderly people living in abject poverty conditions. It’s not an individual retirement plan, it’s a social retirement pool.
Which goes to the point that you don’t seem to understand what Social Security is. You are supposed to do both, as literally everyone will tell you.
I can only assume that you are so young that you haven’t gotten any education on investing, but it’s common to speak of retirement planning as using a three-legged stool: Social Security, employer retirement plans, and savings. I’m pretty sure that it would be a near-unanimous opinion of financial advisers everywhere that someone proposing to rely on just one leg is being a reckless fool.
Well, let’s look at how your option 2 worked out. Here is average 401K balance by age:
If I had only $167K in my 401K when I turned 60 I’d be real nervous. People didn’t invest. People took money out. People made bad investment decisions.
The data is from 2017, and might be worse today.
Plus this is average. Here is the median balance by age. It’s an image, but the median for ages 55 - 64 is $71,579. If I had that, I wouldn’t be sleeping.
Plus social security, unlike 401Ks, is progressive. Those with lower contributions get relatively more than those like me who have maxed out every year for the past 20 or 30 years. Which is fine with me.
Plus, would you force all employers to pay into a 401K plan, even small ones? Would you force the self-employed to invest also? Otherwise it is not the same thing.
BTW, I would sure as hell take SS if it were optional. A good investment strategy uses a mix of risks, and a super-safe one like SS should be a part of it.
I know it’s not the same thing. One is voluntary the other is forced upon us. Did you miss what I said earlier about freedom? There is relatively little that I want to “force” people to do.
You think it would be a good investment strategy to trade 12.4% of your income (well, the first $128k anyways) in exchange for what SS offers you? :dubious:
Your level of compassion for your fellow Americans is heartwarming. I’ve been living off my retirement investments for the past two years and my account balance has gone up. And I’m not even taking my full social security yet. Or taking money out of my annuity. But we’re talking about people at or below the median.
So, people living from paycheck to paycheck should “voluntarily” save for retirement? Without matches from their employers, no doubt.
401Ks today work along the lines of your “freedom” mode. Everyone, being rational players, should take it, right? Not quite.
So, what are you going to do about all those without access to a 401K (which consists of a lot of people without a lot of spare money to save.) What about those who don’t contribute? This article is from 2014, and the participation rate is probably better now that participation has been made the default.
Are you going to let them starve? Give them welfare? (Hah!)
Be careful - the radical wing of AARP will send out suicide grannies with walker bombs to go after Republicans.
Actually if you aren’t self employed you pay 6.2% of your income up to the limit. If you think your employer will just give you the 6.2% they pay, I’ve got a bridge you might be interested in.
Those people too poor to invest, whose bosses won’t give them 401Ks, are exactly the ones who need a safe retirement investment. They wouldn’t be able to afford a market downturn at the wrong time. The rest of us can build on it.
I made my mistakes during the Bubble. During the Bush recession I sold nothing, so I’m doing great, thanks.
I certainly never claimed everyone is a rational player. Hell, there are two Dopers that I used to think of as pretty smart arguing right here in this very thread that Social Security is a good investment, against all rational thought.
There are several huge differences between SocSec and personal savings. For starters, your heirs get your savings when you and your spouse die. SocSec ends with the deaths. Conversely, savings may dry up if you have a long life. SocSec keeps paying out till age 131 and beyond!
It is difficult to have useful discussion with those who don’t understand even that much.
Sounds like an excellent way to turn our backyards into WW3 battlegrounds, but what do I know. Americans aren’t built for guerrilla warfare, as much as they may fantasize about it in their video gaming.
I say that we need to look at every program from every department and start there. There are numerous, overlapping programs with the same purpose (such as recruiting and retaining teachers) in the Dept of Education. I’m sure the same could be said for every other federal bureau. Streamline them and let the money go to the purpose of the program instead of the administrators. Especially make them justify every penny of increased budget. Expenses for all renovations and redecorations must be scrutinized.
Bureaucracies exist to self-sustain and increase. The goal of a bureaucrat is to keep their job, get more employees under them and get the commensurate raises. Obtaining a government job should not be a pass to getting a high paycheck (even if delayed) without ever having to be competent.
