What’s In Store For Your 401(k)?
Nov 6, 2008 Political
…Or as Congress would ask; What’s in your wallet?
Socials Security has been a disaster. The money that people put into it is pooled together and then redistributed. Regardless of how much one makes, there is a cap as to how much one can receive. One of the problems is, the money is not put into an account in your name. It is put in the general fund and Congress spends it. Then, every four years Congress cries about Socials Security going bankrupt. If a person dies then the money is not passed on to heirs. There are some benefits but basically the money goes to others who did not die. If a single person works for 40 years and dies before reaching retirement age then all his hard work pays for someone who outlived him.
The 401(k) retirement was set up so that people could save money for retirement. The money is theirs and they would be able to use it for retirement. Those who saved more would be able to retire a bit better off than those who did not save or saved very little. There is a tax benefit to contributing as the money is tax deferred and reduces taxable income.
This is not good for the Democrats because they are losing 80 billion dollars a year because of the tax break. There is now a plan to forcibly take your 401(k) money and put it in your Social Security “account” and then pay that out to you when you retire. This will allow the government to pool your money and redistribute it as it sees fit. If you were fortunate to put away a great deal of money you will retire with the same amount as someone who paid much less. The government will decide how you get to live your retirement years. Rush Limbaugh explained the plan, as it is right now. I heard the audio of the person he discusses and she said exactly what he reports.
She wants to basically eliminate the 401(k), and the way she wants to do it is she wants to go to people who have a 401(k), who have seen its asset value plummet because of the market plunge. So she wants to go back to August levels. Everybody that has a 401(k), we’ll take you back and we’ll give you money. We’ll restore the value. The government will. We’re just going to print some money here, and we’re going to restore your 401(k) to its August amount. Then we’re going to take it. We’re going to take your 401(k), and we will put it in your Social Security account that the government is monitoring for you, and we will invest every year 3% in government bonds. We’ll buy government bonds so that your 401(k) will grow at 3% every year adjusted for inflation. The most that you will be able to contribute to your 401(k) every year is 5% of what you earn.
Read the rest of the article and see how things will work. This is highly irregular and amounts to nothing more than theft. It is a socialistic policy designed to redistribute wealth and it should cause alarm for anyone who is saving for his future. The moochers out there probably can’t wait to get another piece of your earnings so they will like it but this is pure evil.
Keep a close eye on this. If they pass legislation to confiscate your money then I recommend you see a broker before they implement it so that you can close your account and put it somewhere where it will be protected from the thieves in DC. There is probably a penalty associated with early withdraw but I am willing to pay it to move my money to other investment vehicles so that I will have what I earned when I retire.
People should decide on their own investments and they should not have to worry about their government confiscating their money. This is what they do in Socialist countries and it keeps the masses in poverty while government elitists live like kings. Social Security should be abolished and people allowed to decide where their money is invested.
We get to decide how to save and how we want to retire. It is up to us to provide for ourselves and our families. It is our decision as to how much we want to have when we retire and our future should not depend on a government bean counter deciding how much we need to live.
I don’t know if Obama will buy off on this but given he is a Socialist and wants to spread the wealth, I have no doubt he will be more than happy to take your money and spread it around.
Our future should be based on our own sound decisions and not those of people who do not know what fiscal responsibility is. You know better what to do with your money than they do.
You can’t rob a bank to get money so why should they be allowed to rob you to improve their flow of cash?
Tags: 401k, confiscation, Congress, robbery, social security, taxes
Privatize Social Security, Absolutely
Sep 21, 2008 General, Political
Ever since the instability in the market started last week with its subsequent government bail outs I have heard a number of Democrats blame the entire mess on Republicans. I am not going to pretend that the problems belong solely to one party. There is enough blame to go around but Democrats can’t seem to understand that. While blaming George Bush and John McCain they conveniently forget that Clinton Administration policies that relaxed the requirements to get loans led to a lot of people borrowing more than they could ever hope to afford. Democrats also seem to have forgotten that it is hard to manage a business when it is shoveling truckloads of money in your direction and when your friends are making millions because they are bilking the system.
In the last week I have also heard that George Bush and John McCain supported privatizing Social Security and then that statement was usually followed by, “Imagine where your money would be right now after this market collapse.” Yes, we are led to believe that Bush and McCain’s idea of privatizing Social Security was to invest it in the highly volatile housing market and hedge funds (where Chelsea Clinton could manage them) when the fact is, the plan has always been to allow investment in a range of securities from those with no risk to those with moderate risk. The government already allows investment in those kinds of funds for its workers. The program is called the Thrift Savings Plan (TSP) and there are five funds in the family of investments. Workers are able to allocate their money between the funds and to determine how their earnings are invested. There are also life cycle funds which incorporate the five funds in an automatically adjusting format that goes from higher risk when one is younger to little risk as one gets older.
What does all this mean? First, there are risks with everything. The federal government cannot insure that people will get their Social Security checks. There is no guarantee that the money you paid in will ever be paid to you. The program can be reduced or increased at any time and Congress can continue to raise taxes in order to fund a program that earns less than 1% interest. Congress can also pilfer from the money at any time. In fact, Social Security is in bad shape because Congress has raped it over the years.
So there is risk even with the government. But there is also the injustice that the money is taken from you and if you die before you can collect, it goes away. There might be survivor benefits but if you had been able to invest the money yourself you would have made more and could have passed it to your heirs.
How does all this square up with the volatility in the market this week? The price of the shares in the TSP have remained steady since the problems began. There have been minor fluctuations in price as there are in any stocks but the change was less than a dollar. This chart at the TSP website shows the daily price for each fund in the program. Notice that the five individual funds and the life cycle funds remained constant.
Of course, almost all investments carry risk. The G Fund is the only one that is protected from market changes but even with the potential risks the other funds did not fall. So for those who say that if we had privatized Social Security we would have a bunch of bankrupt old people eating cat food, they are just plain wrong. Old people will still receive money under the current plan and younger people would transition into a TSP kind of plan over time. As the elderly die off the current system would gradually fade. It will work and those who believe otherwise are wrong.
Social Security is a system that allows the government to have control over your money and your lives. It is a weapon used to scare old people during elections and it is a socialistic system where money is redistributed. People who believe in this system are use to having the government take care of them instead of taking care of themselves. Social Security is not guaranteed and it is no safer being controlled by the government than it would be controlled by you. It is your money. You should be able to say where it is invested and where it goes when you die.
Just to drive the point home, the G Fund is the safest fund in the portfolio therefore it has the lowest rate of return. The 10 year monthly average for the G Fund is 5.12% and it has not been negative in that period of time. So people would have the opportunity to invest in a fund like this paying just over 5% or they could just stick with the government run program that gets less than 1% return on its money.
People work to grow personal wealth and by letting invest their own money and take control of their own destiny we will have a whole lot more they retire. Additionally, there would be little need to have a retirement age that continues to rise in order to meet the needs of Social Security. The government should not be able to keep raising the retirement age, you should decide when you will retire. As it stands now, the government controls YOUR money so it can make the rules. If you controlled your own money, you could make the rules.
To further illustrate the point, assume a person starts working at 20 and will retire at 60. This person has $100 taken from his check for Social Security each month. At 0.08% (best guess for the less than 1% return) the person will have $48,774 when he reaches 60. If that person invested in a fund like the TSP G Fund the amount after 40 years would be $157,469. A hundred dollars a month would equate to an income of $10,000 a year. Certainly no one will make that amount of money for an entire working career. Besides, minimum wage is $4000 higher than this. The point is, while it would be unreasonable to think a person could retire on $157,469 it is also unreasonable to think that the same person would only make 10 grand a year for 40 years. It is also unrealistic to think that a person would even see an increase under Social Security. They have formulas to determine how much you get. If you invest your own money, you get to keep what you make.
There are safe market investments and those who are trying to make an issue out of the current market and how Social Security would have been affected are not paying attention or don’t understand.
I will make a deal though. I am willing to take the risk. Let me keep the money I would be required to pay into Social Security and I will invest it myself. I have no worry that I will not retire a wealthy man and I will absolve the government of any responsibility should I fail.
UPDATE: Newsbusters reports that Newsweek has caught Obama in a blatant lie while trying to scare the elderly in Florida:
[OBAMA] And I’ll protect Social Security, while John McCain wants to privatize it. Without Social Security half of elderly women would be living in poverty – half. But if my opponent had his way, the millions of Floridians who rely on it would’ve had their Social Security tied up in the stock market this week. Millions would’ve watched as the market tumbled and their nest egg disappeared before their eyes. Millions of families would’ve been scrambling to figure out how to give their mothers and fathers, their grandmothers and grandfathers, the secure retirement that every American deserves. So I know Senator McCain is talking about a “casino culture” on Wall Street – but the fact is, he’s the one who wants to gamble with your life savings.
~snip~
That’s not true. The plan proposed by President Bush and supported by McCain in 2005 would not have allowed anyone born before 1950 to invest any part of their Social Security taxes in private accounts. All current retirees would be covered by the same benefits they are now.
Obama is pulling the same scam I discussed earlier; lie to seniors about Social Security in order to scare them into voting for Democrats. Obama is a liar. I wonder if the liberals will hold him to the same standard they demand of McCain?
Tags: higher return, privatize, safe, social security, steady rates
Obama Will Force on Employers What he Opposes for Feds
Jun 15, 2008 Political
Barack Obama was making the rounds through Pennsylvania and he gave the familiar stump speech of lowering taxes on the middle class, raising taxes on the rich and spending untold billions in programs. The he said he would require employers to set up retirement accounts for their employees:
He said employers should be required to set up retirement saving plans for workers even if they contribute no money to them. Workers would automatically be enrolled unless they choose to opt out, he said. That way, he said, “most people will save more.” Breitbart
Why is it he will force employers to do something that he will not allow the federal government to do and that he strongly opposes? Why is it that he will not allow our Social Security, the government extorted retirement system, to be privatized so each employee has a say in how his money is invested? The reason is simple. Politicians have been taking the money they force us to pay and they have been spending it on everything but Social Security. They limit how much people can receive regardless of income or how much they paid and then they go after more of our money when they spend our retirement money.
Imagine if these employers set up accounts and then spend the money on their business or for their personal items. Obama and the Congress would be trying to put them in jail (and rightly so) but these people will have done nothing more than what Congress does with the money it takes.
We have seen the Democrats admit that keeping more of our money is good for the economy (in the “rebate” program) and now Obama is admitting that retirement accounts for each employee would force us to save and thus allow us to have money in retirement.
How about Mr. Obama and the federal government lead by example here and allow us to set up our own accounts with our Social Security money so that we can retire with wealth?
I don’t agree with forcing employers to do these things. It is not the government’s business or duty to mandate how businesses or individuals plan for retirement. The government has already gotten its hands on our money and screwed up the entire Social Security system. It is high time we were able to control OUR money and to decide how it is invested.
Most people know better how to handle their money without the government telling them. Considering how poorly the government does with fiscal issues it is ludicrous to expect them to handle our retirement with any sort of responsibility.
What say you Mr. Obama? Are you ready to privatize Social Security? Seems you like the idea of saving so what better way to do it than allowing us to actually save OUR money?
Tags: Obama, privatization, retirement accounts, social security
Obama Will Screw The Wealthy
Jun 13, 2008 Political
I know the idea of screwing the wealthy appeals to many people though I personally don’t understand that mentality. With regard to Social Security and retirement, the idea always appeals to liberals. Social Security is a mechanism with which the government keeps people in poverty because the government controls the fund (which is a misnomer because there is no dedicated fund). The government gets less than a 1% return on the money in Social Security and yet they refuse to consider privatizing at least a portion of it. The presumptive nominee Barack Obama used the current stock market tumbles to stress the point that if retirement money had been tied up in the market people would be hurting right about now. The fact is, they still would have earned more than SS does and they would have the potential to earn unlimited amounts and to receive unlimited amounts in retirement. With SS, one is capped no matter how much income the person made in his lifetime.
Obama wants to increase the amount of Social Security taxes one pays if income is over $250,000. He also wants to raise the cap on the amount that is subject to SS deduction. Obama believes that it is unfair for people making under the cap amount to pay SS on 100% of their income while those who earn more than the cap don’t pay on the portion of income above it. This sounds fair but it is not. People who make a lot of money and who do not begin drawing benefits early are capped on how much they may receive. At about $150,000 the monthly benefit (for 2008) is $2381. It stays at this number regardless of how much money a person makes above the $150,000 so a person who makes $250,000 (or even a million dollars) still only gets $2381. If Obama wants to talk about fairness, how fair is it that they are capped on what they may receive when those who make below $150,000 will get a benefit based upon 100% of their earnings?
As far as privatizing Social Security goes, it is the only proper thing to do. As it stands right now, money is collected from workers and paid to those who are currently drawing benefits. Workers who die prior to retirement lose what they have paid in. Reduced benefits can be paid to spouses but this does not take away from the fact that when you pay it in you lose it, it is no longer yours and you cannot pass it on to your heirs as you could with money you put away in savings or in the stock market. Workers who put a portion of their SS deductions into a private account would make more money and be able to retire on more than $2381 a month. They would also be able to pass the money on to their heirs. The government does not like this because people who are financially independent do not depend on the government and have no need for more social programs. Politicians can’t scare old people for votes if those people are well off.
Obama is a Socialist who believes in redistribution of wealth. He talks about fairness but his ideas are no where near fair. Wealthy people pay almost all the taxes in this country and the liberals keep tapping them for more and more. It is not right and it should not be tolerated.
If only people in this country learned the value of saving and how they could take care of themselves we could all retire in better shape and without government intrusion. Unfortunately, people have come to rely on government for everything. Social Security to the elderly is like crack cocaine to a junkie. Once they get it they are so tied to it they will vote for anyone who promises to protect it.
If they had been able to invest in their youth they would not have an addiction to government.
Source:
WBAL (via AP)
Quick Benefits Calculator (SSA)
Tags: Obama, rich people, social security, socialism, taxes
Obama Pulling Old Dem Line on Social Security
May 18, 2008 Political
Barack Obama might say he is a new kind of politician and he might say that he is not part of the DC cabal that runs the country from smoke filled back rooms but one thing is for sure, Obama is a typical liberal and uses their tired old arguments.
Obama is warning senior citizens that their Social Security is in trouble if they elect John McCain because he favors privatization. Oh heavens no, not Social Security. Isn’t that the same program that Al Gore and then John Kerry (he served in Vietnam) said would be threatened if seniors were foolish enough to elect (and then reelect) George Bush? Amazingly, no one has missed a Social Security check in the last eight years.
This is all part of the Democrat’s very simplistic game plan. Every four years they trot out the same crap and try to scare one group or another into voting for them because the evil Republicans will take away everything. Social Security is always a hot button issue around election time and politicians love to tell us how they are going to make it better blah, blah. The truth is, the day after the election they forget about it. They continue to kick the can down the road until the next election and then they play the same game. Barack Hussein Obama is a typical politician and he is lying to the American people in order to get elected.
No, Obama is not lying about McCain favoring privatization but he is lying when he says that Social Security would be in jeopardy under a McCain presidency. Social Security is already in danger and it is because it is run by the government. The politicians confiscate money from us (for our own goo) and yet they will not let us decide how OUR money should be invested. They throw it into one big pool and then redistribute it to the retired.
Years ago there was plenty of money and SS took in more than it spent each month. However, the politicians took that money and spent it on social programs and now the system is going broke and will be out of money in the not too distant future. The Democrat’s solution is to take more of your money and let them handle it. They earn less than 1% on any money that is left after they raid the cash box and that is supposed to make us feel good. Additionally, SS has been designated a government benefit by the SCOTUS and that benefit can be stopped at any time. We are not entitled to what we paid in and in most cases we will be lucky to get it.
Privatization is the only way to make SS work. The money would go into accounts in each worker’s name. Those accounts would belong to the worker and no one could take any of the money and that means that politicians could not spend it on other programs. If a worker died prior to retirement then the account could be passed to his heirs thus keeping it out of the hands of those in government who have proven time and again that they are not fiscally responsible. Social Security is in a mess because it is run by the government. That is the plain and simple truth. They have it and they control it which means they are responsible.
Senator Obama is playing the same old tired game because he refuses to face the fact that Americans deserve a retirement savings plan that is as good as the one every federal employee, including all members of Congress, have. This is particularly true since the money that funds SS is taken from workers. Allowing people to invest their money would make them well off when they retire and it would keep them from being dependent upon the government. This is what scares Obama and the Dems. If people retire wealthy then they will not be affected by scare tactics like those being employed by Obama.
It is amazing that the very people who say Republicans are divisive and use scare tactics in order to get elected are using scare tactics and being divisive in order to get elected.
Source:
My Way News
Why the Dems do not want you to control your money:
Assumptions. Annual salary of $35,000 and it does not change. A worker starting at 22 and working until 67. Social Security rate of 12.5% (6.25 worker and 6.25 employer). Assuming a 1% rate on the SS invested monthly for 45 working years an employee would have $248,999. Assuming the average market rate of 6% the employee would have $1,010,967. The worker would be about 5 times as wealthy and this would not bode well for the task master in government. Keep in mind that salaries usually go up and that the market only averages 6% and is usually better. If you can support yourself the government is unhappy. The whole idea behind welfare and other social programs is to keep people enslaved to the government.
Tags: liberal malfeasance, lies, McCain, Obama, privatization, social security