Union Mis-Leader: "Social Security reform: odds in Bush’s favor"

[NewHampshireDem]

http://www.theunionleader.com/articles_showa.html?article=50526

How out of touch with reality are the newspaper and Sen. John Sunnunu? Well, here we go:

<snip>
Sen. John E. Sununu, whose bill parallels the concept Bush is putting forward, expressed confidence that the 35-54 age group would be well served by the revision to allow for personal savings accounts.

“If a 42-year-old invests $1,000 annually into a personal savings account, he will have $25,000 plus interest when he retires,” Sununu said. “And if, at 42, they want to work for an additional 40 years,” as opposed to retiring at the age of 67, “they would accrue more benefits,” he said.
<more>

First of all, WTF good is $25,000 going to be when that 42-year-old retires 25 years from now? But, of course, this moron is either hiding something or extremely math-challenged. Assuming a (very favorable) 7% rate of return, the savings would actually be about $68,000. That's quite a bit more than $25,000--but hardly enough to live on for the rest of the retiree's life. If a more reasonable rate of return (3%) is used, the savings drops to about $37,000.

But, wait, it gets better ... you can live on the interest!


The major selling points of the personal accounts in both the President’s and Sununu’s proposals are the opportunity for wage earners to accrue interest at around 6-8 percent annual rates from a portion of the Social Security to live on after they retire, and the belief that the popularity of the accounts will attract enough activity to save the Social Security fund from the collapse they are projecting without the accounts.


First of all, what kind of financial advisor would have a retiree put money into an account earning 6-8 percent? If anyone knows of an investment guarateeing 6%-8%, please point me toward it! I can only assume the reporter in this case is so innocent of any knowledge of the realities of investing that he does not understand that larger returns mean larger risks, and any investment with the potential to earn those returns also has the potential to lose value. Again, no retiree planning to live on the interest of an account should be investing in stocks, and no bond worth buying offers 6%-8%.

Furthermore, the best case scenario of 8% return on $68,000 provides about $5,600 per year in interest--a whopping $107.69 per week! 25 years from now, that probably won't even keep a retiree in cat food, nevermind provide a substantive benefit.

Yes, I understand that there are some advantages to this plan, but they clearly don't outweigh the disadvantages. IMHO, however, the worst part of this plan is that it seems that its supporters are pitching it as something SS was never intended to be--a retirement plan, rather than a safety net. This assinine proposal is neither.

[paineinthearse]

1. The Union Leader is the mother of Faux and other right wing rags. nt

[zanana]

2. I've had to live with the Union Leader for 52 years.

Most people subscribe to it to get local news. After all, how do you know who's dead until you've read the obituaries?

[CindyDale]

3. These people are dumb

If 25K were enough to retire on, I'd have it made. LOL In what country can you live on 25K capital? Please tell me, and I will go there.

Don't these fools realize that most people can't work until age 82? They will be disabled long before that. My eyesight is going already, and I'm only 50. What the hell does he think I'm going to do, dig ditches? I don't think anyone would be fool enough to hire a weakling mouse potato for that.

[CindyDale]

4. The average person would need over $112K to live above "poverty level"

which is a little more than $9K per year (not easy to live on $9K per year, I would imagine--I had a hard time living on $9K a year in the early 1980s) for 12 years (the average years one lives from 65 years old until death).

Well, I will probably have that much, unless I use it up on medical, but it will be a third world lifestyle.

What kills me about these people is that they have to BS all the time. I wish they would just go sell used cars, which is the career for which their skills seem to suit them best.

[dbeach]

5. SS privatization is a defocus as all bush policy hurts middle class

And SS though hugely important gets attention while bush crimes go unanswered and bush prepares next crime..Iran N. Korea,Syria,,more tax cuts for rich...name some crime as bush and his pals at Carlyle,hallbutton and bectel reap and rape on..
"Bush offers Social Security details, but GOP doubts grow

Retirees now are guaranteed a monthly check, based largely on years worked and payroll taxes paid into the system. Under Bush's plan, workers could invest some of their payroll taxes in stocks and bonds, accumulating savings and investment returns in personal accounts that would be theirs upon retirement. In exchange, workers would accept a smaller monthly check from the Social Security Administration"


http://seattletimes.nwsource.com/html/politics/2002170347_socsec04.html