Cotton1 (01-05-2020)
The world has moved on from a defined benefits system to a defined contribution system. My employer maybe puts in 1/3 for most. 1/7 for me. I have read that the market has averaged 9.6% per year over the last 140 years, including the Great Depression and Great Recession.
There are very few healthy defined benefits plans. My 401K has done very well. I have received a far better return than a defined benefits plan does. Social security is theft, as far as I am concerned. No return. No ownership after death. Ripoff.
Any time you give a man something he doesn't earn, you cheapen him. Our kids earn what they get, and that includes respect. -- Woody Hayes
Peter1469 (01-04-2020)
You don't understand my question so you can't answer it.
First, I said the government could insure against market losses for those retirees who get hit with a recession. That should cause you to cease with your weak argument.
Second, the return on market investments dwarf what you are going to get on social security. And if you live until 2035 expect a 35% cut in benefits- so you should take your money as soon as eligible.
I will be 62 in 2032 so if Congress hasn't fixed this issue by then I will just draw early. That will give me 3 years at the low rate before the 35% cuts kicks in. It sucks but it is not relevant. My two retirements and my investments are what matter. Social security will fund my trips to Europe- business class. There is still a lot that I want to see.
ΜOΛΩΝ ΛΑΒΕ
Cotton1 (01-05-2020)
A private pension is ideal, but not everyone is fortunate enough to have one. In the UK we have a government pension scheme. If you work it’s obligatory and a certain amount of your taxes go towards that. The more years you work, the more you get. It’s not a great amount, but enough to keep the wolves away from your door in old age. Coupled with that a universal non-profit health system and we don’t have to worry nearly as much as people in the US.
Peter1469 (01-05-2020)
You can minimize the damage of a crash or correction by doing what is known as " rebalancing". Lets say you are in a 401 but want to be cautious. Instead of allocating 100% of your capital into stocks ypu do say 50%. If and as the market rises your stocks become disproportionate to your cash and equivalents. What to do? You "rebalance". That means as the markets rise you are scaled down in your stocks to where the original 50% allocation remains at 50%. In that manner you gain say 30% and hour stocks are now 65/35 to cash and equivs. If you do not rebalance and the markets stumble you give back your gains. You are not helpless to defend your portfolio.
Peter1469 (01-05-2020)
I agree. In my career I would often be talking to a client or prospect. Often times these were highly educated or well to do people. But when it came to finance I would look across the desk at them to a blank stare. Thats when it got tricky. I knew if I got too technical theyd freeze and do nothing. It was a challenge to simplify what is really only a simple game but a game played with numbers. In all honesty you would be shocked to know how often I would have to resort to " ok, 30 days in a month. $40 x 30 is $1200 x 12 is $14,400. This is what I can tax defer for a couple etc etc. Amazing. People spend a third to half their life learning how to make money then have no clue about the money itself
FindersKeepers (01-05-2020)
Cotton1 (01-05-2020)