# Retirement Savings Accounts Draw U.S. Consumer Bureau Attention



## Trajan

I know I know, this aint Argentina, just keeping hope alive




Retirement Savings Accounts Draw U.S. Consumer Bureau Attention

Jan 2013

The U.S. Consumer Financial Protection Bureau is weighing whether it should take on a role in helping Americans manage the $19.4 trillion they have put into retirement savings, a move that would be the agency&#8217;s first foray into consumer investments.

&#8220;That&#8217;s one of the things we&#8217;ve been exploring and are interested in in terms of whether and what authority we have,&#8221; bureau director Richard Cordray said in an interview. He didn&#8217;t provide additional details. 

The bureau&#8217;s core concern is that many Americans, notably those from the retiring Baby Boom generation, may fall prey to financial scams, according to three people briefed on the CFPB&#8217;s deliberations who asked not to be named because the matter is still under discussion.

The retirement savings business in the U.S. is dominated by a group of companies that handle record-keeping and management of investments in tax-advantaged vehicles like 401(k) plans and individual retirement accounts. The group includes Fidelity Investments, JPMorgan Chase & Co. (JPM), Charles Schwab Corp. (SCHW) and T. Rowe Price Group Inc. (TROW) Americans held $19.4 trillion in retirement assets as of Sept. 30, 2012, according to the Investment Company Institute, an industry association; about $3.5 trillion of that was in 401(k) plans. 

Retirement Savings Accounts Draw U.S. Consumer Bureau Attention - Bloomberg


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## Truthmatters

yes they will try to get that money just like they went after home equity in the last mess


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## Tambellini

I hear a few different things

1) They want to do away with 401ks and IRAs (you can keep what you have though) and make you put 5 percent into a govt retirement account.

2) They want to take your 401k to pay down debt


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## Zander

Just what we need - more government intrusion!!!!


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## RightNorLeft

Many people that are ready and of age to retire cant because their 401ks lost a bundle. Retirement Accts are NOT pensions, which are guaranteed and thats why the big guys hate pensions, they dont get to play, manipulate and sometimes steal it, like Worldcom employees and Enron, where thousands of employees lost their 401ks and many that were already retired lost their income. Thats just two cases theres more.
   The assualt on pensions is all about the rich and big banks getting full control over billions and billions more....


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## mudwhistle

Social Security and Medicare are Congress's Ponzi schemes. 

They blown all of that money and now they want to go after our retirement accounts. 

Sounds like mob activity. Only difference is they can do it legally.


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## BillyV

Trajan said:


> I know I know, this aint Argentina, just keeping hope alive
> 
> 
> 
> 
> Retirement Savings Accounts Draw U.S. Consumer Bureau Attention
> 
> Jan 2013
> 
> The U.S. Consumer Financial Protection Bureau is weighing whether it should take on a role in helping Americans manage the $19.4 trillion they have put into retirement savings, a move that would be the agencys first foray into consumer investments.
> 
> Thats one of the things weve been exploring and are interested in in terms of whether and what authority we have, bureau director Richard Cordray said in an interview. He didnt provide additional details.
> 
> The bureaus core concern is that many Americans, notably those from the retiring Baby Boom generation, may fall prey to financial scams, according to three people briefed on the CFPBs deliberations who asked not to be named because the matter is still under discussion.
> 
> The retirement savings business in the U.S. is dominated by a group of companies that handle record-keeping and management of investments in tax-advantaged vehicles like 401(k) plans and individual retirement accounts. The group includes Fidelity Investments, JPMorgan Chase & Co. (JPM), Charles Schwab Corp. (SCHW) and T. Rowe Price Group Inc. (TROW) Americans held $19.4 trillion in retirement assets as of Sept. 30, 2012, according to the Investment Company Institute, an industry association; about $3.5 trillion of that was in 401(k) plans.
> 
> Retirement Savings Accounts Draw U.S. Consumer Bureau Attention - Bloomberg



They are looking at the potential for fraud at the "rollover moment"; when someone retires and rolls his entire 401K out of his employer's plan and into a private IRA or elsewhere. It would actually not be a horrible thing if they were simply looking at putting some transparency rules for investment advisors and banks and information or advice for those "rolling" their assets, but the conspiracy theorist in me wonders if the "solution" to these oldsters being defrauded out of their life savings wouldn't be a required rollover into US Treasuries or perhaps a new government "retirement bond", hence providing the government with another trillion dollars a year to play with.


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## Truthmatters

every time we deregulate out of right wing insistance the people get taken for a ride.


Regulation is not evil.

stealing peoples money with no recourse for the people is evil


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## Dont Taz Me Bro

RightNorLeft said:


> Many people that are ready and of age to retire cant because their 401ks lost a bundle. Retirement Accts are NOT pensions, which are guaranteed and thats why the big guys hate pensions, they dont get to play, manipulate and sometimes steal it, like Worldcom employees and Enron, where thousands of employees lost their 401ks and many that were already retired lost their income. Thats just two cases theres more.
> The assualt on pensions is all about the rich and big banks getting full control over billions and billions more....



No, the "assault" on pensions is what is keeping jobs in this country.  As hard as it is for you to believe, this isn't 1955 anymore.  We live in a country that is part of a global economy now and we have trouble as it is competing with nations where the cost of doing business is drastically less let alone having the burden of paying pensions to someone who is retired for thirty years.


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## Zander

A fool and his money are soon parted.....anyone who trusts the government to "take care of them" is a fool.  Government regulations that are designed to "protect" fools invariably create more fools and lots more fraud. 

 State licensing laws are a perfect analogy.  If you are "licensed" by the state to perform some service, lazy consumers do not bother to check your references, why would they? You are "licensed".....


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## Rozman

Tambellini said:


> I hear a few different things
> 
> 1) They want to do away with 401ks and IRAs (you can keep what you have though) and make you put 5 percent into a govt retirement account.
> 
> 2) They want to take your 401k to pay down debt




Some government agency will eventually take the IRA accounts and the 401 K plans...
Elizabeth Warren will again make her argument that we didn't earn these retirement accounts on our own.Government is the sole reason we have been able to put this money away over the years and they want it back.

They will dole out a pittance to us come the day we retire.
The democrats will love this idea.


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## Rozman

I said in another post that the government will take over the retirement accounts because they are looking out for us.


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## American_Jihad

The U.S. Consumer Financial Protection Bureau is weighing whether it should take on a role in *helping Americans manage *the $19.4 trillion they have put into retirement savings

*ROLMAO​*


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## Joe Steel

Tambellini said:


> I hear a few different things
> 
> 1) They want to do away with 401ks and IRAs (you can keep what you have though) and make you put 5 percent into a govt retirement account.



I don't know if it's true but it would be an excellent idea.  The vast, vast majority of workers are not qualified to handle their retirement savings.


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## martybegan

Joe Steel said:


> Tambellini said:
> 
> 
> 
> I hear a few different things
> 
> 1) They want to do away with 401ks and IRAs (you can keep what you have though) and make you put 5 percent into a govt retirement account.
> 
> 
> 
> 
> I don't know if it's true but it would be an excellent idea.  The vast, vast majority of workers are not qualified to handle their retirement savings.
Click to expand...


And the idiots at CalPERS who predict a 8% return and only get 3% are, right?


The only thing keeping public pensions alfoat is tax money.


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## martybegan

RightNorLeft said:


> Many people that are ready and of age to retire cant because their 401ks lost a bundle. Retirement Accts are NOT pensions, which are guaranteed and thats why the big guys hate pensions, they dont get to play, manipulate and sometimes steal it, like Worldcom employees and Enron, where thousands of employees lost their 401ks and many that were already retired lost their income. Thats just two cases theres more.
> The assualt on pensions is all about the rich and big banks getting full control over billions and billions more....



Pensions can be run just fine, as long as thier contributions are adequate, and the planners use the right formulas. Many pensions, like the ones in the construction industry work well because the planners know if they screw up there will be no money left. 

The problem with public pensions is they seem to think anytime there is a shortfall they can just raid the state or local area's general fund and all is well. They also seem to predict very high rates of return that never seem to materialize.

I prefer a 401k as I can see what I have, I can choose how to invest, and I can get advice on how to invest it. Plus, it is MY money.


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## Joe Steel

martybegan said:


> Joe Steel said:
> 
> 
> 
> 
> 
> Tambellini said:
> 
> 
> 
> I hear a few different things
> 
> 1) They want to do away with 401ks and IRAs (you can keep what you have though) and make you put 5 percent into a govt retirement account.
> 
> 
> 
> 
> I don't know if it's true but it would be an excellent idea.  The vast, vast majority of workers are not qualified to handle their retirement savings.
> 
> Click to expand...
> 
> 
> And the idiots at CalPERS who predict a 8% return and only get 3% are, right?
> 
> The only thing keeping public pensions alfoat is tax money.
Click to expand...


I don't know anything about CalPERS but I assume they've invested in stocks, bonds and mutual funds and have to deal with Wall Street brokers and traders.  If that's the case, they're doomed to poor performance.  Everyone associated with Wall Street is a thief.


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## martybegan

Joe Steel said:


> martybegan said:
> 
> 
> 
> 
> 
> Joe Steel said:
> 
> 
> 
> I don't know if it's true but it would be an excellent idea.  The vast, vast majority of workers are not qualified to handle their retirement savings.
> 
> 
> 
> 
> And the idiots at CalPERS who predict a 8% return and only get 3% are, right?
> 
> The only thing keeping public pensions alfoat is tax money.
> 
> Click to expand...
> 
> 
> I don't know anything about CalPERS but I assume they've invested in stocks, bonds and mutual funds and have to deal with Wall Street brokers and traders.  If that's the case, they're doomed to poor performance.  Everyone associated with Wall Street is a thief.
Click to expand...


The issue is they assume a 9% rate of return, and end up with a 3% rate of return. So any shortfall in thier anticipated return is made up by the state and local general funds.

Where else do you think ALL pensions invest? 401k's and pensions invest in the same place. 

But typical progressive response is to "blame wall street"


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## Joe Steel

martybegan said:


> Joe Steel said:
> 
> 
> 
> I don't know anything about CalPERS but I assume they've invested in stocks, bonds and mutual funds and have to deal with Wall Street brokers and traders.  If that's the case, they're doomed to poor performance.  Everyone associated with Wall Street is a thief.
> 
> 
> 
> 
> The issue is they assume a 9% rate of return, and end up with a 3% rate of return. So any shortfall in thier anticipated return is made up by the state and local general funds.
> 
> Where else do you think ALL pensions invest? 401k's and pensions invest in the same place.
> 
> But typical progressive response is to "blame wall street"
Click to expand...


We only blame Wall Street because Wall Street is guilty.

Retirement income should be guaranteed by the government.  We shouldn't have to rely on capitalists and their stooges.


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## Toro

This is a horrific idea.  

Liberals, if you want to know why the term "liberal" is often used a pejorative, its for things like this.

I do believe that most people cannot optimally run their own money.  But the 401k was created as a savings vehicle for individuals to save tax-free investing in higher earning assets.  People already are invested in government debt through SS.  They don't need the government forcing people into government debt at near multi-century lows in rates at the end of a 30 year bull market in bonds.

Just a terrible idea.


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## Toro

martybegan said:


> Joe Steel said:
> 
> 
> 
> 
> 
> martybegan said:
> 
> 
> 
> And the idiots at CalPERS who predict a 8% return and only get 3% are, right?
> 
> The only thing keeping public pensions alfoat is tax money.
> 
> 
> 
> 
> I don't know anything about CalPERS but I assume they've invested in stocks, bonds and mutual funds and have to deal with Wall Street brokers and traders.  If that's the case, they're doomed to poor performance.  Everyone associated with Wall Street is a thief.
> 
> Click to expand...
> 
> 
> The issue is they assume a 9% rate of return, and end up with a 3% rate of return. So any shortfall in thier anticipated return is made up by the state and local general funds.
> 
> Where else do you think ALL pensions invest? 401k's and pensions invest in the same place.
> 
> But typical progressive response is to "blame wall street"
Click to expand...


CalPERS uses a 7.5% actuarial return.  They recently lowered it from 7.75%.  And over time, the fund has earned about that amount.  They earned more in the 90s during the equity bull market and earned less in the equity bear market.


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## Foxfyre

I would not have a problem with a competent review board who would rate financial investment firms as 1)  Honest and transparent  2) Competent.  Wait.  We already have that with Morning Star and other rating systems.

All the government has to do is educate the public on how to access those ratings and encourage them to invest only in the most solid and conservative ones if loss of their savings is a big issue.

And that is ALL the government should do.


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## martybegan

Joe Steel said:


> martybegan said:
> 
> 
> 
> 
> 
> Joe Steel said:
> 
> 
> 
> I don't know anything about CalPERS but I assume they've invested in stocks, bonds and mutual funds and have to deal with Wall Street brokers and traders.  If that's the case, they're doomed to poor performance.  Everyone associated with Wall Street is a thief.
> 
> 
> 
> 
> The issue is they assume a 9% rate of return, and end up with a 3% rate of return. So any shortfall in thier anticipated return is made up by the state and local general funds.
> 
> Where else do you think ALL pensions invest? 401k's and pensions invest in the same place.
> 
> But typical progressive response is to "blame wall street"
> 
> Click to expand...
> 
> 
> We only blame Wall Street because Wall Street is guilty.
> 
> Retirement income should be guaranteed by the government.  We shouldn't have to rely on capitalists and their stooges.
Click to expand...


And how would the government create wealth without investment?  We already have people working now paying for retirees now, its called social security. its stating to lose money. You propose more of that?

Again the typical "Wall Street Bad, unga bunga" leftist mantra.


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## Joe Steel

Toro said:


> ...People already are invested in government debt through SS.  They don't need the government forcing people into government debt at near multi-century lows in rates at the end of a 30 year bull market in bonds.



I've never heard SS described as an investment in government debt.  Probably because it isn't entirely accurate.  Most of the benefit comes from, and will come from, FICA collections.

However, even if what you suggested were true, low government returns are better than no returns.  Remember Enron?  Enron employees had a 401(k) heavily invested in Enron stock.  When it tanked, they got nothing.


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## Foxfyre

Joe Steel said:


> Toro said:
> 
> 
> 
> ...People already are invested in government debt through SS.  They don't need the government forcing people into government debt at near multi-century lows in rates at the end of a 30 year bull market in bonds.
> 
> 
> 
> 
> I've never heard SS described as an investment in government debt.  Probably because it isn't entirely accurate.  Most of the benefit comes from, and will come from, FICA collections.
> 
> However, even if what you suggested were true, low government returns are better than no returns.  Remember Enron?  Enron employees had a 401(k) heavily invested in Enron stock.  When it tanked, they got nothing.
Click to expand...


The same thing happens if you stuff your money under a mattress and your house burns down.  Or if your kids have reached majority and you die before you collect social security, the money belongs to the government and your heirs have no claim on it.  You can't give it away, bequeath it to anybody, and have no means to increase its value.  You have no say in how the money is invested or spent and no recourse when it loses value year after year after year.

All that is needed to protect 401K and other retirement accounts is to make it illegal and impossible for an unethical company to touch those funds.  Make them the property of the employee that the employer cannot access and the problem is solved without costing the taxpaper a single dime.


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## martybegan

Joe Steel said:


> Toro said:
> 
> 
> 
> ...People already are invested in government debt through SS.  They don't need the government forcing people into government debt at near multi-century lows in rates at the end of a 30 year bull market in bonds.
> 
> 
> 
> 
> I've never heard SS described as an investment in government debt.  Probably because it isn't entirely accurate.  Most of the benefit comes from, and will come from, FICA collections.
> 
> However, even if what you suggested were true, low government returns are better than no returns.  Remember Enron?  Enron employees had a 401(k) heavily invested in Enron stock.  When it tanked, they got nothing.
Click to expand...


When SS starts paying out more than it takes in, it has to cash in these special government bonds. Guess where the money comes from to pay off the bonds?


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## Toro

Joe Steel said:


> I've never heard SS described as an investment in government debt.  Probably because it isn't entirely accurate.  Most of the benefit comes from, and will come from, FICA collections.



This is very basic stuff.



> By law, income to the trust funds must be invested, on a daily basis, in securities guaranteed as to both principal and interest by the Federal government. All securities held by the trust funds are "special issues" of the United States Treasury. Such securities are available only to the trust funds.



Trust Fund FAQs

aka "non-marketable" debt



> The fund is required by law to be invested in non-marketable securities issued and guaranteed by the "full faith and credit" of the federal government.



Social Security Trust Fund - Wikipedia, the free encyclopedia



> However, even if what you suggested were true, low government returns are better than no returns.  Remember Enron?  Enron employees had a 401(k) heavily invested in Enron stock.  When it tanked, they got nothing.



Since social security began in 1939, government debt has returned 3,700% while the stock market has returned 144,900%.  Now, I don't know about you, but I'd rather have 144,900% than 3,700%.

I agree that stocks are not always the best investment under all circumstances.  However, it's not for you to decide what's best for me.  If you want to invest in government debt, fine.  But forcing people to invest in government debt near the end of a 30 year bull market in government debt is a bad idea.  

FTR, a generation ago, a 30 year government bond yielded 10%.  Today, it yields 3.2%.  If interest rates rise to 10% over the next 10 years, the price of that "safe" 30 year government bond falls by 58%.  I'm betting you didn't know that.


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## Foxfyre

And the final ugly little secret is there is nothing in the Constitution or the law to protect your investment in social security debt.  The Congress, with a simple majority vote and a swipe of the President's pen, could eliminate the Social Security program this afternoon, pronounce the fund empty and that there would be no further payments, and you would have zero recourse to do one damn thing about it.

Now admittedly, no politician in Washington is about to commit that kind of political suicide right now.  But as the government acquires more and more power and becomes ever bolder in circumventing the Constitution, is it possible that at some point they have enough power to declare the Constitution null and void and set in practice something else?  It couldn't happen here?   Don't bet on it.  The Founders knew it could which is why they encouraged us to be ever vigilent to protect and defend our liberties, or we would absolutely without any doubt lose them.

The more power we give to government to give us what we want, the more power we give them to take anything they want.


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## Toro

Foxfyre said:


> And the final ugly little secret is there is nothing in the Constitution or the law to protect your investment in social security debt.  The Congress, with a simple majority vote and a swipe of the President's pen, could eliminate the Social Security program this afternoon, pronounce the fund empty and that there would be no further payments, and you would have zero recourse to do one damn thing about it.



^^^^
That.

I think that eventually, they will raise the age which you can collect SS.


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## Dugdale_Jukes

How great is it that federal pensions and most state government pensions are guaranteed on the backs of taxpayers?

A surprising number of state constitutions guarantee state employee pensions regardless of hardship to state taxpayers. In California, for example, something over 12,000 of these grifters have pensions above $100,000. 

George Washington wasn't worth $100,000 a year to American taxpayers in retirement. Who believes some 20th century bureaucrat or cop is?


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## BillyV

Toro said:


> FTR, a generation ago, a 30 year government bond yielded 10%.  Today, it yields 3.2%.  If interest rates rise to 10% over the next 10 years, the price of that "safe" 30 year government bond falls by 58%.  I'm betting you didn't know that.



Some bond brokers will tell you that you can only lose money if you sell them prior to maturity.......


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## Joe Steel

Toro said:


> Joe Steel said:
> 
> 
> 
> I've never heard SS described as an investment in government debt.  Probably because it isn't entirely accurate.  Most of the benefit comes from, and will come from, FICA collections.
> 
> 
> 
> 
> This is very basic stuff.
> 
> 
> 
> 
> By law, income to the trust funds must be invested, on a daily basis, in securities guaranteed as to both principal and interest by the Federal government. All securities held by the trust funds are "special issues" of the United States Treasury. Such securities are available only to the trust funds.
> 
> Click to expand...
Click to expand...


Apparently not that basic.  You seem to have misunderstood.  The investment will cover only the difference between benefits due and FICA collections.  That will amount to less than 30% of the total.


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## BillyV

Joe Steel said:


> Toro said:
> 
> 
> 
> 
> 
> Joe Steel said:
> 
> 
> 
> I've never heard SS described as an investment in government debt.  Probably because it isn't entirely accurate.  Most of the benefit comes from, and will come from, FICA collections.
> 
> 
> 
> 
> This is very basic stuff.
> 
> 
> 
> 
> By law, income to the trust funds must be invested, on a daily basis, in securities guaranteed as to both principal and interest by the Federal government. All securities held by the trust funds are "special issues" of the United States Treasury. Such securities are available only to the trust funds.
> 
> Click to expand...
> 
> 
> 
> Click to expand...
> 
> 
> Apparently not that basic.  You seem to have misunderstood.  The investment will cover only the difference between benefits due and FICA collections.  That will amount to less than 30% of the total.
Click to expand...


Yes, but those new collections are also invested on a daily basis. The benefits will still be paid from those investments.


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## Joe Steel

Foxfyre said:


> Joe Steel said:
> 
> 
> 
> However, even if what you suggested were true, low government returns are better than no returns.  Remember Enron?  Enron employees had a 401(k) heavily invested in Enron stock.  When it tanked, they got nothing.
> 
> 
> 
> 
> ...
> 
> All that is needed to protect 401K and other retirement accounts is to make it illegal and impossible for an unethical company to touch those funds.  Make them the property of the employee that the employer cannot access and the problem is solved without costing the taxpaper a single dime.
Click to expand...


How do you protect the money from market risk?  In October 2008 many 401(k)s lost 40-50% of their value.


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## Foxfyre

Joe Steel said:


> Foxfyre said:
> 
> 
> 
> 
> 
> Joe Steel said:
> 
> 
> 
> However, even if what you suggested were true, low government returns are better than no returns.  Remember Enron?  Enron employees had a 401(k) heavily invested in Enron stock.  When it tanked, they got nothing.
> 
> 
> 
> 
> ...
> 
> All that is needed to protect 401K and other retirement accounts is to make it illegal and impossible for an unethical company to touch those funds.  Make them the property of the employee that the employer cannot access and the problem is solved without costing the taxpaper a single dime.
> 
> Click to expand...
> 
> 
> How do you protect the money from market risk?  In October 2008, many 401(k)s lost 40-50% of their value.
Click to expand...


You cannot protect people from all risk.  How do you protect the money from a government determined to spend us into bankruptcy?  401k or IRA contributions don't have to go into the market for that matter, though anybody who doesn't utilize conservative investment in the market for part of their retirement is losing a ton of money over the years.  We took that 50% hit in 2008 too, and our investments are STILL in much better shape than they would have been in the social security fund.

But if you want no risk, then invest in FDIC insured CDs or Savings Bonds or some other guaranteed vehicle that will of necessity produce less yield but will still be worth more than the money the government takes for Social Security.

And man what a buying opportunity that 2008 crash was.  The Dow closed at a low of 7449.  It closed yesterdy right at 14,000.   The average performing stock would have pretty much doubled in value if you had bought it at the 2008 low.  And that's in what most of us are frustrated with as a fairly flat market lately.  Meanwhile inflation whittles away at your social security investment nickle by nickle every day.


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## Toro

Joe Steel said:


> Toro said:
> 
> 
> 
> 
> 
> Joe Steel said:
> 
> 
> 
> I've never heard SS described as an investment in government debt.  Probably because it isn't entirely accurate.  Most of the benefit comes from, and will come from, FICA collections.
> 
> 
> 
> 
> This is very basic stuff.
> 
> 
> 
> 
> By law, income to the trust funds must be invested, on a daily basis, in securities guaranteed as to both principal and interest by the Federal government. All securities held by the trust funds are "special issues" of the United States Treasury. Such securities are available only to the trust funds.
> 
> Click to expand...
> 
> 
> 
> Click to expand...
> 
> 
> Apparently not that basic.  You seem to have misunderstood.  The investment will cover only the difference between benefits due and FICA collections.  That will amount to less than 30% of the total.
Click to expand...


Link?

I understand how the trusts work.  I work in the business.  It is structured as a pooled government bond fund, where benefits and liabilities are credited and debited based on income, years worked, interest accrued, etc.  That money goes in and out of the trusts is not the issue because every defined benefit pension fund works that way also.


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## martybegan

Joe Steel said:


> Foxfyre said:
> 
> 
> 
> 
> 
> Joe Steel said:
> 
> 
> 
> However, even if what you suggested were true, low government returns are better than no returns.  Remember Enron?  Enron employees had a 401(k) heavily invested in Enron stock.  When it tanked, they got nothing.
> 
> 
> 
> 
> ...
> 
> All that is needed to protect 401K and other retirement accounts is to make it illegal and impossible for an unethical company to touch those funds.  Make them the property of the employee that the employer cannot access and the problem is solved without costing the taxpaper a single dime.
> 
> Click to expand...
> 
> 
> How do you protect the money from market risk?  In October 2008, many 401(k)s lost 40-50% of their value.
Click to expand...


Over time you move your funds in the 401k from stock based funds to bond based funds and money markets. Before you hit 50 most of your $$ should be in high risk items (stocks). Over time you move money to bonds, then money markets.

At my age (38) recessions dont mean much. While I lose share VALUE, I can buy shares of the fund at a lower cost, increasing my COUNT. The key is to move out of the volatile funds near a peak to safer funds for maximum return.

It really isnt that hard.


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## Dugdale_Jukes

Zander said:


> A fool and his money are soon parted.....anyone who trusts the government to "take care of them" is a fool.  Government regulations that are designed to "protect" fools invariably create more fools and lots more fraud.
> 
> State licensing laws are a perfect analogy.  If you are "licensed" by the state to perform some service, lazy consumers do not bother to check your references, why would they? You are "licensed".....



The only people less likely to make the Nobel list than folks who believe licensing equals competence are people who believe that markets are inherently EITHER efficient or trustworthy. 

There has never in history NOT been some regulation of commerce including finance; claims to the contrary are absolute proof of the ignorance of claimants. Further, regulation is always stacked against consumers; all that has ever varied is which interest group does the stacking.

Next.


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## Joe Steel

BillyV said:


> Joe Steel said:
> 
> 
> 
> 
> 
> Toro said:
> 
> 
> 
> This is very basic stuff.
> 
> 
> 
> 
> Apparently not that basic.  You seem to have misunderstood.  The investment will cover only the difference between benefits due and FICA collections.  That will amount to less than 30% of the total.
> 
> Click to expand...
> 
> 
> Yes, but those new collections are also invested on a daily basis. The benefits will still be paid from those investments.
Click to expand...


Only the difference between collections and current benefits, the surplus, is invested.  That surplus was created precisely because of the shortfall the actuaries predicted.


----------



## Foxfyre

Joe Steel said:


> BillyV said:
> 
> 
> 
> 
> 
> Joe Steel said:
> 
> 
> 
> Apparently not that basic.  You seem to have misunderstood.  The investment will cover only the difference between benefits due and FICA collections.  That will amount to less than 30% of the total.
> 
> 
> 
> 
> Yes, but those new collections are also invested on a daily basis. The benefits will still be paid from those investments.
> 
> Click to expand...
> 
> 
> Only the difference between collections and current benefits, the surplus, is invested.  That surplus was created precisely because of the shortfall the actuaries predicted.
Click to expand...


FICA collections, however, are NOT invested in anything.  They are spent as soon as they are collected and anticipated future revenues are borrowed against.  They aren't banked so that they even collect interest, much less invested.


----------



## Joe Steel

Foxfyre said:


> Joe Steel said:
> 
> 
> 
> 
> 
> Foxfyre said:
> 
> 
> 
> ...
> 
> All that is needed to protect 401K and other retirement accounts is to make it illegal and impossible for an unethical company to touch those funds.  Make them the property of the employee that the employer cannot access and the problem is solved without costing the taxpaper a single dime.
> 
> 
> 
> 
> How do you protect the money from market risk?  In October 2008, many 401(k)s lost 40-50% of their value.
> 
> Click to expand...
> 
> 
> ...
> 
> And man what a buying opportunity that 2008 crash was.  The Dow closed at a low of 7449.  It closed yesterdy right at 14,000.   The average performing stock would have pretty much doubled in value if you had bought it at the 2008 low.  And that's in what most of us are frustrated with as a fairly flat market lately.  Meanwhile inflation whittles away at your social security investment nickle by nickle every day.
Click to expand...


This illustrates my point.  The majority of 401(k) owners don't have the market acumen to manage their 401(k)s.  Their employers withhold money, give it to the 401(k) administrators and the employee trusts both of them.  That trust is misplaced.  The employer and the administrators are profit-seekers.  They're not interested in the employee's welfare.


----------



## Joe Steel

Foxfyre said:


> Joe Steel said:
> 
> 
> 
> 
> 
> BillyV said:
> 
> 
> 
> Yes, but those new collections are also invested on a daily basis. The benefits will still be paid from those investments.
> 
> 
> 
> 
> Only the difference between collections and current benefits, the surplus, is invested.  That surplus was created precisely because of the shortfall the actuaries predicted.
> 
> Click to expand...
> 
> 
> FICA collections, however, are NOT invested in anything.  They are spent as soon as they are collected and anticipated future revenues are borrowed against.  They aren't banked so that they even collect interest, much less invested.
Click to expand...


That's not so.

FICA rates were set in the early '80s to create collections which exceed benefits.  The portion which exceeds benefits, the surplus, _is_ invested -- in interest-paying US Treasury securities.  When benefits exceed FICA collections, the Treasuries will be liquidated to supplement the collections so benefits can be paid at 100%.


----------



## Foxfyre

Joe Steel said:


> Foxfyre said:
> 
> 
> 
> 
> 
> Joe Steel said:
> 
> 
> 
> How do you protect the money from market risk?  In October 2008, many 401(k)s lost 40-50% of their value.
> 
> 
> 
> 
> ...
> 
> And man what a buying opportunity that 2008 crash was.  The Dow closed at a low of 7449.  It closed yesterdy right at 14,000.   The average performing stock would have pretty much doubled in value if you had bought it at the 2008 low.  And that's in what most of us are frustrated with as a fairly flat market lately.  Meanwhile inflation whittles away at your social security investment nickle by nickle every day.
> 
> Click to expand...
> 
> 
> This illustrates my point.  The majority of 401(k) owners don't have the market acumen to manage their 401(k)s.  Their employers withhold money, give it to the 401(k) administrators and the employee trusts both of them.  That trust is misplaced.  The employer and the administrators are profit-seekers.  They're not interested in the employee's welfare.
Click to expand...


Then perhaps that should be incentive for educators to educate people in how to manage their money?  That was once taught pretty competently in U.S. schools.  We learned how to balance a check book, how to calculate interest earnings, and calculate yields on other investments.  We learned the difference between profit and loss.

But again, you don't HAVE to invest in the market if you own your own 401K or IRA which everybody should do.   That should be mandated by law as a requisite for getting the tax deferrment.  These should not be under the control of or managed by the employer which does put them at higher risk.   There is nothing to keep people from putting all their retirement contributions into risk free vehicles such as interest bearing savings accounts or CDs or savings bonds.  They won't yield much in such vehicles but the only risk to their value will be inflation.

And for those willing to accept reasonable risk to secure their financial future but don't feel competent to do that themselves, there are a lot of businesses with good track records who can manage those funds for them.

It all comes down to whether we have the freedom to be smart or stupid or whether we allow the government to make all our decisions for us.   I prefer the freedom to be stupid if that is how it turns out.


----------



## Joe Steel

martybegan said:


> Joe Steel said:
> 
> 
> 
> 
> 
> Foxfyre said:
> 
> 
> 
> ...
> 
> All that is needed to protect 401K and other retirement accounts is to make it illegal and impossible for an unethical company to touch those funds.  Make them the property of the employee that the employer cannot access and the problem is solved without costing the taxpaper a single dime.
> 
> 
> 
> 
> How do you protect the money from market risk?  In October 2008, many 401(k)s lost 40-50% of their value.
> 
> Click to expand...
> 
> 
> Over time you move your funds in the 401k from stock based funds to bond based funds and money markets. Before you hit 50 most of your $$ should be in high risk items (stocks). Over time you move money to bonds, then money markets.
> 
> At my age (38) recessions dont mean much. While I lose share VALUE, I can buy shares of the fund at a lower cost, increasing my COUNT. The key is to move out of the volatile funds near a peak to safer funds for maximum return.
> 
> It really isnt that hard.
Click to expand...


It is if you don't have financial background.

And the average 401(k) owner doesn't.  He might drive a truck or install heating and air conditioning or do anyone of a million of other things which don't give him much time to study market trends and share offerings.


----------



## martybegan

Joe Steel said:


> Foxfyre said:
> 
> 
> 
> 
> 
> Joe Steel said:
> 
> 
> 
> Only the difference between collections and current benefits, the surplus, is invested.  That surplus was created precisely because of the shortfall the actuaries predicted.
> 
> 
> 
> 
> FICA collections, however, are NOT invested in anything.  They are spent as soon as they are collected and anticipated future revenues are borrowed against.  They aren't banked so that they even collect interest, much less invested.
> 
> Click to expand...
> 
> 
> That's not so.
> 
> FICA rates were set in the early '80s to create collections which exceed benefits.  The portion which exceeds benefits, the surplus, _is_ invested -- in interest-paying US Treasury securities.  When benefits exceed FICA collections, the Treasuries will be liquidated to supplement the collections so benefits can be paid at 100%.
Click to expand...


Its the government paying the government. There is no outside investment, and thus the remainder has to come from the government's general funds. 

So no more surplus FICA money into the general budget, and now in addition to interest, principal has to be paid back into the FICA fund.

That is called being "not solvent"


----------



## martybegan

Joe Steel said:


> martybegan said:
> 
> 
> 
> 
> 
> Joe Steel said:
> 
> 
> 
> How do you protect the money from market risk?  In October 2008, many 401(k)s lost 40-50% of their value.
> 
> 
> 
> 
> Over time you move your funds in the 401k from stock based funds to bond based funds and money markets. Before you hit 50 most of your $$ should be in high risk items (stocks). Over time you move money to bonds, then money markets.
> 
> At my age (38) recessions dont mean much. While I lose share VALUE, I can buy shares of the fund at a lower cost, increasing my COUNT. The key is to move out of the volatile funds near a peak to safer funds for maximum return.
> 
> It really isnt that hard.
> 
> Click to expand...
> 
> 
> It is if you don't have financial background.
> 
> And the average 401(k) owner doesn't.  He might drive a truck or install heating and air conditioning or do anyone of a million of other things which don't give him much time to study market trends and share offerings.
Click to expand...


I have an engineering background, and Im usually terrible with money. They even have funds that do the transition FOR you. 

It takes a few hours a quarter to handle your investment.


----------



## Foxfyre

martybegan said:


> Joe Steel said:
> 
> 
> 
> 
> 
> martybegan said:
> 
> 
> 
> Over time you move your funds in the 401k from stock based funds to bond based funds and money markets. Before you hit 50 most of your $$ should be in high risk items (stocks). Over time you move money to bonds, then money markets.
> 
> At my age (38) recessions dont mean much. While I lose share VALUE, I can buy shares of the fund at a lower cost, increasing my COUNT. The key is to move out of the volatile funds near a peak to safer funds for maximum return.
> 
> It really isnt that hard.
> 
> 
> 
> 
> It is if you don't have financial background.
> 
> And the average 401(k) owner doesn't.  He might drive a truck or install heating and air conditioning or do anyone of a million of other things which don't give him much time to study market trends and share offerings.
> 
> Click to expand...
> 
> 
> I have an engineering background, and Im usually terrible with money. They even have funds that do the transition FOR you.
> 
> It takes a few hours a quarter to handle your investment.
Click to expand...


Anybody of normal intelligence can learn the basics of investing with an hour of teaching.  You don't have to be an expert at it to learn how to read the ratings and risk level of any particular stock and, if you don't want to have to follow it all closely, mutual funds are the safest and easiest way to go.

And if you don't want any risk then go savings bonds, interest bearing savings, or CDs.

One thing is for sure, if you start young and put away 10% of your take home pay into a tax deferred retirement account, most especially if your employer will match some or all of your contributions, you will retire a millionaire.  If you depend in social security alone you will retire a pauper well below the poverty line.


----------



## Joe Steel

Foxfyre said:


> Joe Steel said:
> 
> 
> 
> This illustrates my point.  The majority of 401(k) owners don't have the market acumen to manage their 401(k)s.  Their employers withhold money, give it to the 401(k) administrators and the employee trusts both of them.  That trust is misplaced.  The employer and the administrators are profit-seekers.  They're not interested in the employee's welfare.
> 
> 
> 
> 
> Then perhaps that should be incentive for educators to educate people in how to manage their money?  That was once taught pretty competently in U.S. schools.  We learned how to balance a check book, how to calculate interest earnings, and calculate yields on other investments.  We learned the difference between profit and loss.
> 
> But again, you don't HAVE to invest in the market if you own your own 401K or IRA which everybody should do.   That should be mandated by law as a requisite for getting the tax deferrment.  These should not be under the control of or managed by the employer which does put them at higher risk.   There is nothing to keep people from putting all their retirement contributions into risk free vehicles such as interest bearing savings accounts or CDs or savings bonds.  They won't yield much in such vehicles but the only risk to their value will be inflation.
> 
> And for those willing to accept reasonable risk to secure their financial future but don't feel competent to do that themselves, there are a lot of businesses with good track records who can manage those funds for them.
> 
> It all comes down to whether we have the freedom to be smart or stupid or whether we allow the government to make all our decisions for us.   I prefer the freedom to be stupid if that is how it turns out.
Click to expand...


I don't think the answer is that easy.  We just say "more education" and "hire someone."  The policy-makers have an affirmative duty to ensure the general welfare is served.  That includes retirement security.  They can't just say everyone should be responsible for himself.  They have to take steps to ensure everyone is protected from destitution.  They have to provide some minimum level of income.


----------



## Dont Taz Me Bro

Joe Steel said:


> I don't think the answer is that easy.  We just say "more education" and "hire someone."  The policy-makers have an affirmative duty to ensure the general welfare is served.  That includes retirement security.



No it doesn't.  



> They can't just say everyone should be responsible for himself.



Yes, they can.



> They have to take steps to ensure everyone is protected from destitution.  They have to provide some minimum level of income.



No, they don't.


----------



## Foxfyre

Joe Steel said:


> Foxfyre said:
> 
> 
> 
> 
> 
> Joe Steel said:
> 
> 
> 
> This illustrates my point.  The majority of 401(k) owners don't have the market acumen to manage their 401(k)s.  Their employers withhold money, give it to the 401(k) administrators and the employee trusts both of them.  That trust is misplaced.  The employer and the administrators are profit-seekers.  They're not interested in the employee's welfare.
> 
> 
> 
> 
> Then perhaps that should be incentive for educators to educate people in how to manage their money?  That was once taught pretty competently in U.S. schools.  We learned how to balance a check book, how to calculate interest earnings, and calculate yields on other investments.  We learned the difference between profit and loss.
> 
> But again, you don't HAVE to invest in the market if you own your own 401K or IRA which everybody should do.   That should be mandated by law as a requisite for getting the tax deferrment.  These should not be under the control of or managed by the employer which does put them at higher risk.   There is nothing to keep people from putting all their retirement contributions into risk free vehicles such as interest bearing savings accounts or CDs or savings bonds.  They won't yield much in such vehicles but the only risk to their value will be inflation.
> 
> And for those willing to accept reasonable risk to secure their financial future but don't feel competent to do that themselves, there are a lot of businesses with good track records who can manage those funds for them.
> 
> It all comes down to whether we have the freedom to be smart or stupid or whether we allow the government to make all our decisions for us.   I prefer the freedom to be stupid if that is how it turns out.
> 
> Click to expand...
> 
> 
> I don't think the answer is that easy.  We just say "more education" and "hire someone."  The policy-makers have an affirmative duty to ensure the general welfare is served.  That includes retirement security.  They can't just say everyone should be responsible for himself.  They have to take steps to ensure everyone is protected from destitution.  They have to provide some minimum level of income.
Click to expand...


What DTMB said.   The authors of the Constituton, the Founders, never intended it to be the function of government to 'take care of anybody'.   The function of government was to secure our rights so that we would have the freedom to take care of ourselves and would have protection against those who would do violence to us.   The General Welfare was defined as a structure allowing maximum freedom and ability to prosper.  It damn sure was not intended for the government to make some people less prosperous so they could buy votes by transferring wealth to those who did not earn it.

If you are too stupid to learn how to save your money and manage it for a reasonable rate of return, you should at least be smart enough to turn it over to somebody to manage it for you.  Or if you want to, I have no problem with you handing it to the government to manage for you if you trust government enough to do that.  But I don't trust government to be the most effective, efficient, or trustworthy agent to do much of anything that is not Constitutionally mandated, so please allow me the freedom to keep and manage my own assets to my best advantage.  Thank you very much.


----------



## boedicca

This consistent with moving to the Teresa Guilarducci plan:

_How Guaranteed Retirement Accounts work

*Structure. Guaranteed Retirement Accounts are like universal 401(k) plans except that the government, as befits a large and enduring institution, will invest and manage the pooled savings.*

Participation. Participation in the program is mandatory except for workers participating in equivalent or better employer defined-benefit plans where contributions are at least 5% of earnings and benefits take the form of life annuities.

Contributions. Contributions equal to 5% of earnings are deducted along with payroll taxes and credited to individual accounts administered by the Social Security Administration. The cost of contributions is split equally between employer and employee. Mandatory contributions are deducted only on earnings up to the Social Security earnings cap,2 and workers and employers have the option of making additional contributions with post-tax dollars. The contributions of husbands and wives are combined and divided equally between their individual accounts.

Refundable tax credit. Employee contributions are offset through a $600 refundable tax credit, which takes the place of tax breaks for 401(k)s and similar individual accounts and is indexed to wage inflation. Eligibility for the tax credit is extended to part-time workers, caregivers of children under age six, and those collecting unemployment benefits. If an individual&#8217;s annual contributions amount to less than $600, some or all of the tax credit is deposited directly into the account in order to ensure a minimum annual deposit of $600 for all participants.

*Fund management. The accounts are administered by the Social Security Administration and funds are managed by the Thrift Savings Plan or similar body. Though funds are pooled, workers are able to track the dollar value of their accumulations, as with 401(k)s and other individual accounts.*

Investment earnings. The pooled funds are conservatively invested in financial markets. However, participants earn a fixed 3% rate of return adjusted for inflation, guaranteed by the federal government. If the trustees determine that actual investment returns have been consistently higher than 3% over a number of years, the surplus will be distributed to participants, though a balancing fund will be maintained to ride out periods of low returns.

Retirement age. Participants begin collecting retirement benefits at the same time as Social Security, and therefore no earlier than the Social Security Early Retirement Age. Funds cannot be accessed before retirement for any reason other than death or disability.

Retirement benefits. Account balances are converted to inflation-indexed annuities upon retirement to ensure that workers do not outlive their savings. However, individuals can opt to take a partial lump sum equal to 10% of their account balance or $10,000 (whichever is higher), or to opt for survivor benefits in exchange for a lower monthly check. A full-time worker who works 40 years and retires at age 65 can expect a benefit equal to roughly 25% of pre-retirement income, adjusted for inflation, assuming a 3% real rate of return (see Table 1). Since Social Security provides the average such worker with an inflation-adjusted benefit equal to roughly 45% of pre-retirement income, the total replacement rate for this prototypical worker will be approximately 70%. _

Guaranteed Retirement Accounts: Toward retirement income security | Agenda for Shared Prosperity


The government is going to go after the capital saved by private citizens in 401Ks and IRAs...under the pretext of savings us from the financial services industry.


----------



## martybegan

boedicca said:


> This consistent with moving to the Teresa Guilarducci plan:
> 
> _How Guaranteed Retirement Accounts work
> 
> *Structure. Guaranteed Retirement Accounts are like universal 401(k) plans except that the government, as befits a large and enduring institution, will invest and manage the pooled savings.*
> 
> Participation. Participation in the program is mandatory except for workers participating in equivalent or better employer defined-benefit plans where contributions are at least 5% of earnings and benefits take the form of life annuities.
> 
> Contributions. Contributions equal to 5% of earnings are deducted along with payroll taxes and credited to individual accounts administered by the Social Security Administration. The cost of contributions is split equally between employer and employee. Mandatory contributions are deducted only on earnings up to the Social Security earnings cap,2 and workers and employers have the option of making additional contributions with post-tax dollars. The contributions of husbands and wives are combined and divided equally between their individual accounts.
> 
> Refundable tax credit. Employee contributions are offset through a $600 refundable tax credit, which takes the place of tax breaks for 401(k)s and similar individual accounts and is indexed to wage inflation. Eligibility for the tax credit is extended to part-time workers, caregivers of children under age six, and those collecting unemployment benefits. If an individuals annual contributions amount to less than $600, some or all of the tax credit is deposited directly into the account in order to ensure a minimum annual deposit of $600 for all participants.
> 
> *Fund management. The accounts are administered by the Social Security Administration and funds are managed by the Thrift Savings Plan or similar body. Though funds are pooled, workers are able to track the dollar value of their accumulations, as with 401(k)s and other individual accounts.*
> 
> Investment earnings. The pooled funds are conservatively invested in financial markets. However, participants earn a fixed 3% rate of return adjusted for inflation, guaranteed by the federal government. If the trustees determine that actual investment returns have been consistently higher than 3% over a number of years, the surplus will be distributed to participants, though a balancing fund will be maintained to ride out periods of low returns.
> 
> Retirement age. Participants begin collecting retirement benefits at the same time as Social Security, and therefore no earlier than the Social Security Early Retirement Age. Funds cannot be accessed before retirement for any reason other than death or disability.
> 
> Retirement benefits. Account balances are converted to inflation-indexed annuities upon retirement to ensure that workers do not outlive their savings. However, individuals can opt to take a partial lump sum equal to 10% of their account balance or $10,000 (whichever is higher), or to opt for survivor benefits in exchange for a lower monthly check. A full-time worker who works 40 years and retires at age 65 can expect a benefit equal to roughly 25% of pre-retirement income, adjusted for inflation, assuming a 3% real rate of return (see Table 1). Since Social Security provides the average such worker with an inflation-adjusted benefit equal to roughly 45% of pre-retirement income, the total replacement rate for this prototypical worker will be approximately 70%. _
> 
> Guaranteed Retirement Accounts: Toward retirement income security | Agenda for Shared Prosperity
> 
> 
> The government is going to go after the capital saved by private citizens in 401Ks and IRAs...under the pretext of savings us from the financial services industry.



If they try to take the $135k I have in my 401k i may NEED a gun to revolt against the government. 

HELL NO.


----------



## boedicca

They nationalized private pension accounts in Argentina in 2008.   If we stay on our present course, it's only a matter of time before our thoroughly corrupt government does the same.


----------



## uscitizen

Just who is the US consumer finiancial protection bureau?

It was passed in 2010, so the republicans must approve of it's creation.


----------



## Scorpion

Foxfyre said:


> I would not have a problem with a competent review board who would rate financial investment firms as 1)  Honest and transparent  2) Competent.  Wait.  We already have that with Morning Star and other rating systems.
> 
> All the government has to do is educate the public on how to access those ratings and encourage them to invest only in the most solid and conservative ones if loss of their savings is a big issue.
> 
> And that is ALL the government should do.



If citizens relied on the government for investment advice, we'd all be shareholders in Solyndra type companies.
I'll do my own research, thank you very much.


----------



## MHunterB

Joe Steel said:


> Foxfyre said:
> 
> 
> 
> 
> 
> Joe Steel said:
> 
> 
> 
> This illustrates my point.  The majority of 401(k) owners don't have the market acumen to manage their 401(k)s.  Their employers withhold money, give it to the 401(k) administrators and the employee trusts both of them.  That trust is misplaced.  The employer and the administrators are profit-seekers.  They're not interested in the employee's welfare.
> 
> 
> 
> 
> Then perhaps that should be incentive for educators to educate people in how to manage their money?  That was once taught pretty competently in U.S. schools.  We learned how to balance a check book, how to calculate interest earnings, and calculate yields on other investments.  We learned the difference between profit and loss.
> 
> But again, you don't HAVE to invest in the market if you own your own 401K or IRA which everybody should do.   That should be mandated by law as a requisite for getting the tax deferrment.  These should not be under the control of or managed by the employer which does put them at higher risk.   There is nothing to keep people from putting all their retirement contributions into risk free vehicles such as interest bearing savings accounts or CDs or savings bonds.  They won't yield much in such vehicles but the only risk to their value will be inflation.
> 
> And for those willing to accept reasonable risk to secure their financial future but don't feel competent to do that themselves, there are a lot of businesses with good track records who can manage those funds for them.
> 
> It all comes down to whether we have the freedom to be smart or stupid or whether we allow the government to make all our decisions for us.   I prefer the freedom to be stupid if that is how it turns out.
> 
> Click to expand...
> 
> 
> I don't think the answer is that easy.  We just say "more education" and "hire someone."  The policy-makers have an affirmative duty to ensure the general welfare is served.  That includes retirement security.  They can't just say everyone should be responsible for himself.  They have to take steps to ensure everyone is protected from destitution.  They have to provide some minimum level of income.
Click to expand...


Grow up and grow a pair!  Seriously - the government has already protected the elderly from absolute destitution and misery via SS and Medicare.  How much more 'help' do you think functioning adults really need?

There are any number of sites online run by NON-PROFIT groups to help people understand investing and savings....  it's not rocket science, yanno.

I have absolutely NO training in financial or economic topics.  And I've gotten a 2.8% return on our 401K *since 1 Jan 2013*  How?  Simply by plugging in the numbers in the financial planning program at Fidelity and - more or less - following their recommendations for distribution of investments into the option available through our 'company' plan.  

If you're smart enough to find a job and do it, and to keep your bills paid on time and get the oil in your car changed on schedule - you're smart enough to figure out how to save for retirement, too.   It's just another part of 'taking care of business'.  

I like to play an online game called 'Civ 4' - when your society discovers new things, they have a sound file giving you a quote on the topic.  For 'Economics', the quote is *"Compound interest is the most powerful force in the universe"  - Albert Einstein*

He *was* a rocket scientist, and he was right about compound interest.  If you've socked away ten grand by the time you're 28, when you retire at 65, that'll be worth about a million.  At a 4% withdrawal rate (remember the rest is still growing!), that gives you a $40,000/year supplement to your Social Security.  Just do NOT put all your money in one investment, and do NOT invest in anything you don't really understand.....  Now, how hard was that?


----------



## uscitizen

And 40k per year when you are 65 will be worth what then?
3 months living expenses?


----------



## martybegan

uscitizen said:


> And 40k per year when you are 65 will be worth what then?
> 3 months living expenses?



Thats based on current dollars or a general understanding of inflation.

A better thing to look at is what your plan says should be your calculated payout per year (using a standard interest plus x% principal withdrawral rate) and see what you are on target for.

For example at 38 years old I have $142k in my 401k, and my anticipated yearly withdrawl amount at retirement is $112k a year. Thier suggested target is $66k, so I am well ahead of what I should be doing. 

Again, it isnt that hard.


----------



## MHunterB

uscitizen said:


> And 40k per year when you are 65 will be worth what then?
> 3 months living expenses?



  That is in addition to SS and a pension or two:  it's not intended to be the entire income - plus that $40K/year is basically skimming off the interest on a million dollars.  If you simply took out $50/year and it didn't earn any interest, it'd take you 20 years to go through it all......

It helps, though, if you can put a cap on living expenses:  that's why 'life care' retirement communities are so very popular now, and have been for the past 30+ years.  The waiting lists are 4-5 years long for many places, and they keep expanding.


----------



## MHunterB

martybegan said:


> uscitizen said:
> 
> 
> 
> And 40k per year when you are 65 will be worth what then?
> 3 months living expenses?
> 
> 
> 
> 
> Thats based on current dollars or a general understanding of inflation.
> 
> A better thing to look at is what your plan says should be your calculated payout per year (using a standard interest plus x% principal withdrawral rate) and see what you are on target for.
> 
> For example at 38 years old I have $142k in my 401k, and my anticipated yearly withdrawl amount at retirement is $112k a year. Thier suggested target is $66k, so I am well ahead of what I should be doing.
> 
> Again, it isnt that hard.
Click to expand...


Yes, it's necessary to remember that you're going to BE retired for possibly 25-35 years, and to plan for combatting inflation.  SS and one of our pensions have COLA (cost of living increases), but it's trickier with programmed withdrawals from the 401K.  Of course, we don't expect to be using ALL our income for living expenses at first:  it'll be more like half, which puts additional thousands per month back into investments. 

At least for women, if we make it to 50 without a major health issue, we've got a 50% chance of making it to 90......  Of course as you get less active or competent, your activities tend to decline, and you tend to need less space to live in without all that hobby stuff to play with.  So you can expect to 'downsize' at least once during retirement - which should cut your living expenses.


----------



## BillyV

Joe Steel said:


> BillyV said:
> 
> 
> 
> 
> 
> Joe Steel said:
> 
> 
> 
> Apparently not that basic.  You seem to have misunderstood.  The investment will cover only the difference between benefits due and FICA collections.  That will amount to less than 30% of the total.
> 
> 
> 
> 
> Yes, but those new collections are also invested on a daily basis. The benefits will still be paid from those investments.
> 
> Click to expand...
> 
> 
> Only the difference between collections and current benefits, the surplus, is invested.  That surplus was created precisely because of the shortfall the actuaries predicted.
Click to expand...


No, _*all*_ collections are invested immediately in special issue government securities, and all benefits are paid through the sale of those securities.



> *If all the income is invested, how do benefits get paid each month?*
> 
> Money to cover expenditures (mainly benefit payments) from the trust funds comes from the redemption or sale of securities held by the trust funds. When "special-issue" securities are redeemed, interest is paid. In fact, the principal amount of special issues redeemed, plus the corresponding interest, is just enough to cover an expenditure.
> 
> The amount bought in 2011 was $1,015 billion, while the amount sold was $946 billion. See investment transactions for more detail and earlier years.
> 
> Trust Fund FAQs


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## MHunterB

In case this hadn't become obvious:  We are successful investors  - and will fight tooth, nail, and whatever to prevent our assets from being seized and tossed into a common pool so that the fools and idiots who never bothered to plan for retirement can mooch off of us.

Folks, we really need that 'patch' from Congress - the rule that says whatever they afflict J.Q. Public with, is what they have to take for themselves.  No more Congressional exemptions!


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## boedicca

Foxfyre said:


> martybegan said:
> 
> 
> 
> 
> 
> Joe Steel said:
> 
> 
> 
> It is if you don't have financial background.
> 
> And the average 401(k) owner doesn't.  He might drive a truck or install heating and air conditioning or do anyone of a million of other things which don't give him much time to study market trends and share offerings.
> 
> 
> 
> 
> I have an engineering background, and Im usually terrible with money. They even have funds that do the transition FOR you.
> 
> It takes a few hours a quarter to handle your investment.
> 
> Click to expand...
> 
> 
> Anybody of normal intelligence can learn the basics of investing with an hour of teaching.  You don't have to be an expert at it to learn how to read the ratings and risk level of any particular stock and, if you don't want to have to follow it all closely, mutual funds are the safest and easiest way to go.
> 
> And if you don't want any risk then go savings bonds, interest bearing savings, or CDs.
> 
> One thing is for sure, if you start young and put away 10% of your take home pay into a tax deferred retirement account, most especially if your employer will match some or all of your contributions, you will retire a millionaire.  If you depend in social security alone you will retire a pauper well below the poverty line.
Click to expand...




And importantly, one's private investments can't be spent by the government and replaced with IOUs to be paid by future taxpayers.


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## boedicca

uscitizen said:


> And 40k per year when you are 65 will be worth what then?
> 3 months living expenses?




Maybe our government should quit debasing our currency and destroying the value of savings.


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## martybegan

MHunterB said:


> In case this hadn't become obvious:  We are successful investors  - and will fight tooth, nail, and whatever to prevent our assets from being seized and tossed into a common pool so that the fools and idiots who never bothered to plan for retirement can mooch off of us.
> 
> Folks, we really need that 'patch' from Congress - the rule that says whatever they afflict J.Q. Public with, is what they have to take for themselves.  No more Congressional exemptions!



I started contributing at 25, as soon as I was elegible and working full time. Never contributed below 8% and some years up to 12%. 

Company matches 1st 3%. 

That money is mine, no one elses.


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## Foxfyre

The most important fact to remember is that whatever taxpayer money for whatever purpose the government takes, it spends immediately and borrows against future tax revenues.  And when they finally manage to effectively bankrupt the treasury and America unfriend places like China are no longer willing to underwrite our excessive spending, the Congress and President can end Social Security and Medicare with a simple majority vote.   If they print enough money to keep it up, those dollars will be worth no more than a Mexican peso -currently worth about 7.5 cents to the American dollar.

Because they are spent the minute they hit the treasury, Social Security and Medicare contributions don't even earn a tiny bit of interest.  Certain they aren't invested so that they can grow.  Instead they drain vitality from the economy--every dollar taken in taxes is a dollar not invested in the private sector to hire people, increase wages and benefits, and expand the economy.

Depending on the government to take care of you in your old age is a pretty risky business these days.  Far more risky than investing your own money in solid investments.


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