The real reason why the GOP wants to kill SS

[C. Ross]

Norman, I get your points.

But there is a Social Security Trust fund with $2.8 trillion in reserves. By law those must be invested in Treasury bonds.

Periodically someone notices that big public pension funds invest in balanced portfolios. CALPERS has $15.8 billion in reserves, with almost exactly half invested in equities. https://www.calpers.ca.gov/page/empl...bt-fund-values Treasury bonds lag the broader market. Ibbotson has shown that market sector performance is quite predictable over long periods of time.

657D6D2E-4BDF-48E2-B745-E2C486B8FEC7.jpg

It’s not insane to wonder why what works well for almost all public pension funds couldn’t work for Social Security. It’s just politically infeasible.

( And, we can debate whether it is insurance or a pension. Its creators were ambiguous on that subject. But even if it’s 100% insurance it still has a reserve fund which is invested less productively than almost all other public employee benefit funds.)

[gypsie]

What returns do your not-for-profit funds achieve? How do they compare to whatever index you prefer? What returns do your "professionals" achieve? What return would you expect on money you invested for the long term?

It is thread drift, if related so i won;t dwell on it.
Quick google for comparisons; https://blog.stockspot.com.au/best-p...r-funds/#worst
You'll see the three worst; an insurance company, formerly a Commonwealth bank fund recently sold to American investment company KKR, and an AMP Bank fund (all "professionals").
Three best all industry funds (profit to members), including my own which tries to only invest ethically (if you can define it - but at least they try).
You'll also see there are bandwidths of risk, from aggressive high risk investments, to moderate or low risk - and obviously the returns match. 'Balanced', i believe, is the most commonly held type.

[Paul Pless]

“Killing SS” or proposing it would be political suicide. To believe that “the GOP” wants to kill it you would have to believe that they want to commit political suicide. Whether or not you agree with their politics, one would have to be pretty foolish to believe they would attempt this. The statements made by Democrats claiming that the GOP wants to do this have been pretty thoroughly debunked by GOP leadership.


Sent from my iPhone using Tapatalk

these gop politicians, among many others, have all called for both the 'privatization' of social security as well as a reduction in the employer's contribution to social security, as well as increasing the age at which benefits may be paid, as well as using social security funds for other purposes

mitch mcconnell
paul ryan
john mccain
george w bush
dick cheney
mitt romney
john boehner
kevin mccarthy

are these individuals not gop leaders?

[Bill Griffin]

Keep in mind that the "GOP" that people most often think of, that of the 1950s and the liberal consensus mindset, is long dead.
The current gqp leaders are liars, through and through. One would have to be pretty foolish to believe them.

[Norman Bernstein]

Norman, I get your points.

But there is a Social Security Trust fund with $2.8 trillion in reserves. By law those must be invested in Treasury bonds.

And for good reason, Cris... more on that in a bit.

Periodically someone notices that big public pension funds invest in balanced portfolios. CALPERS has $15.8 billion in reserves, with almost exactly half invested in equities. https://www.calpers.ca.gov/page/empl...bt-fund-values Treasury bonds lag the broader market. Ibbotson has shown that market sector performance is quite predictable over long periods of time.

I agree about the lag in performance of Treasury bonds.. which is why I don't own any bonds, and never have... and likely never will (although the current return on short term CD's lately are very attractive, for stashing any excess cash for periods as short as 3 months).

It’s not insane to wonder why what works well for almost all public pension funds couldn’t work for Social Security. It’s just politically infeasible.

Except that not all public pension funds do that well... some do poorly, and on occasion, a few actually fail.

( And, we can debate whether it is insurance or a pension.

It's in the name of the program, Cris... .

Its creators were ambiguous on that subject. But even if it’s 100% insurance it still has a reserve fund which is invested less productively than almost all other public employee benefit funds.)

You sort of have to imagine what might have happened, had SS tried to invest 'more productively'... that means 'management', with some human beings somewhere making decisions on which equities to buy, hold, and sell. Whether they would make good decisions, or not, is problematic, but we can be assured that some percentage of those equity investments would be generating fees and commissions, and lobbyists would be worked up into a lather, trying to influence the 'management' as to where the money should go. There's nothing wrong with having a managed portfolio or pension plan; the beneficiary presumably understands the risk/reward ratio, and accepts the fact that their fortunes may rise or fall with the economy and the management's abilities.

I guess the big difference has to do with whether the 'return' on the 'investment' (even though those words don't fit SS appropriately) are guaranteed by the 'full faith and credit' clause of the Constitution. The nation's substantial debt is, at least partially, a consequence of the fact that the US never defaults on its debt obligations (although we periodically come close), which is why the US dollar is the world's reserve currency.

But the far more important point is this: with 40% of citizens relying on SS for some or all of their income... and from 12 to 15% COMPLETELY relying on SS for their income, there needs to be a program which, to the greatest extent possible, is risk free.

Remember, the SS reserve fund exists only as a 'buffer' to cope with periodic demographic shifts in the population. The initial objective was to pay retiree benefits from the 'premiums' (ie, SS taxes) collected from working people... just like insurance. The 'reserve' you speak of is just a buffer. In the best possible example of bipartisanship, Ronald Reagan and Tip O'Neil, in 1983, came together to plan for the inevitable distortion that would be caused by the baby boomers... and established the trust fund, as well as increased taxes, to prepare for it. Unfortunately, they undershot the need a bit, which is why we need a fix soon.

Successful pension programs are great, and as you more than adequately point out, many of them do well, and seem to be adequately isolated from short term drops in the market... but trying to convert SS into something like a pension plan is not, I believe, the objective of the radical GOP'ers. I believe they want individual privatization... a recipe for enormous opportunities for fraud, deception, and profiteering. As I pointed out in an earlier post, few Americans are experienced in investing, and the ones with NO experience, education, or fiduciary guidance, will be easy marks for the people who are like Bernie Madoff, Elizabeth Holmes, etc.

Every American has the ability to invest 'more productively' for their retirement, via IRA's, 401(k)'s, and the like... assuming they have the means to do so. For people at the lower economic margins of society, SS is a life preserver, just enough to keep one's head above water, and for those people, risking the program is simply not an option.

[sandtown]

SS is also distinct from normal investing in that, when one passes away with no dependents prior to retirement, the SS funds go back into the system.

SS is insurance.

[Landrith]

Another reason, there was no immigration reform as promised by the Democrats and no guest worker program as promised by the Big Business controlled Republicans. There are not now enough workers to run US businesses and an insufficient employee tax base to sustain the growing SS beneficiaries. Another age of eligibility increase to keep more workers in the workforce will probably be in the cards.

I love our Bilge alternate reality where C. Ross can observe that the payments are secure with "Social Security Trust fund with $2.8 trillion in reserves. By law those must be invested in Treasury bonds." Or Norman Bernstein "Every American has the ability to invest 'more productively' for their retirement, via IRA's, 401(k)'s, and the like... assuming they have the means to do so." The USA is inches away from a "Bank Holiday" we are all just surviving day to day on overnight multi Billion dollar midnight Fed Window withdraws. Just like sanctions on a supplier nation like Russia are working (all Russia has is energy and Gold and GMO free food- they are doomed in the bilge alternate reality).

The uniparty does not care about SS recipients, they care about the dollar and when C. Ross' Treasury bonds were in trouble A New Concern: Falling U.S. Treasury Demand https://seekingalpha.com/article/455...reasury-demand, So they raised rates choking off the growth of employment and therefore employee SS payments. In the short term, the inflation destroying elderly fixed income buying power, caused by Uniparty wasteful spending was slowed as they realized the need to strengthen the dollar with interest rate increases. But their short term fixes are not longterm solutions.

Other Bilge mates have posted their troubles about changing their citizenship from Western developed nations (Countries that don't have Gold backed currencies), they don't realize they are the collateral for their failed nation's spending. However, the consensus in the Bilge is still that more government spending can improve the standard of living.

[George Jung]

Nice diatribe.

One observation - '... there was no immigration reform, as promised by the Democrats...'

True - sort of. Any 'idea' why that hasn't been addressed by Congress?

[Too Little Time]

SS is also distinct from normal investing in that, when one passes away with no dependents prior to retirement, the SS funds go back into the system.

Do you understand annuities?

Your own knowledge of many economic issues, student debt was one I recall, is skimpy.

There are certainly a lot of things I lack knowledge in. Perhaps you could be more specific.

[sandtown]

Another reason, there was no immigration reform as promised by the Democrats .

That is not correct. Back in 2006 Dubya Bush proposed a half-way reasonable immigration reform which was shot down by his own party. The GOPPERS did (and do) not want to solve the problem because (like abortion for many of them) they want to be able to demogogue the issue, wihich they have done ever since.

But Obama should have blown up the filibuster to do it in 2008-10.

[George Jung]

Ah, ya let him off too easy!

But yep - it's the Repubs, refusing to bring it up for a vote. The Dems have made a proposal.

[Too Little Time]

I guess the big difference has to do with whether the 'return' on the 'investment' (even though those words don't fit SS appropriately) are guaranteed by the 'full faith and credit' clause of the Constitution. The nation's substantial debt is, at least partially, a consequence of the fact that the US never defaults on its debt obligations (although we periodically come close), which is why the US dollar is the world's reserve currency.

But the far more important point is this: with 40% of citizens relying on SS for some or all of their income... and from 12 to 15% COMPLETELY relying on SS for their income, there needs to be a program which, to the greatest extent possible, is risk free.

Every American has the ability to invest 'more productively' for their retirement, via IRA's, 401(k)'s, and the like... assuming they have the means to do so. For people at the lower economic margins of society, SS is a life preserver, just enough to keep one's head above water, and for those people, risking the program is simply not an option.

The Social Security program is a government program with no guarantee. Certainly not a "full faith and credit" type of guarantee. Congress as has been pointed out decides how the money is invested and what your share is. Congress has the power to defund the entire program if it wishes. And put the trust fund into the general fund. There are Republicans who might want to do that.

The phrase "relying on" is a large misstatement. It might be accurate to say that 40% of the citizens get payments from the Social Security system, but a good number of them have no need for the money. The 12-15% who have no other income are much more reliant on the benefits.

You should realize that by taking money from the working poor in FICA taxes one leaves them with little to no money to invest.

SS is a life preserver, just enough to keep one's head above water,

Coupled with your comments about the insufficiency of $1-2 million in investments (post #28), I would expect you to be in favor of greater benefits for those at the bottom. Rather than indicating that keeping their head above water is sufficient.

[George Jung]

I don't believe you are correct, tlt.

Your record remains intact.

[Norman Bernstein]

The Social Security program is a government program with no guarantee. Certainly not a "full faith and credit" type of guarantee.

The special US Treasury bonds in the SS program certainly DO have the 'full faith and credit' clause in effect.

Congress as has been pointed out decides how the money is invested and what your share is. Congress has the power to defund the entire program if it wishes. And put the trust fund into the general fund. There are Republicans who might want to do that.

Congress could do any number of things... of course, considering the pitchforks and torches in the hands of senior citizens that would arise, should Congress do anything to affect their SS benefits, it's not even remotely likely that they will... but you're right, Republicans would like nothing better than to destroy SS, and their reasoning is crystal clear: the benefits going to investment managers and banks would dramatically increase their contributions to the politicians. Let's not be so naïve here.

The phrase "relying on" is a large misstatement. It might be accurate to say that 40% of the citizens get payments from the Social Security system, but a good number of them have no need for the money. The 12-15% who have no other income are much more reliant on the benefits.

Anyone, regardless of income or wealth, deserves those payments, if they have spent their working lives paying into the system... it's purely a matter of fairness; it doesn't matter if they need the money or not. I paid into the system for 50 years, and have earned those payments. In my case, it will be only a part of my income in retirement... but it's still an 'earned' benefit.

Those 12-15% aren't merely 'much more reliant', as you claim... they are COMPLETELY reliant on those benefits.

You should realize that by taking money from the working poor in FICA taxes one leaves them with little to no money to invest.

Actually, the FICA tax structure is just like an employer match in a 401(k)... employee and employer pay equally. The question is whether those who end their working lives, with nothing invested for retirement, would have invested on their own. Clearly, they didn't, and in many cases, because the $7.25/hr minimum wage doesn't leave a lot of cash left over for savings. SS is 'enforced savings', yes... but it can be the difference between eating and having a roof over your head, or sleeping in a doorway and begging for spare change.

Coupled with your comments about the insufficiency of $1-2 million in investments (post #28), I would expect you to be in favor of greater benefits for those at the bottom, rather than indicating that keeping their head above water is sufficient.

I never said I wasn't in favor of greater benefits, and I never said that merely keeping one's head above water was 'sufficient'... you made that up. I did try to get across the point that SS was necessary.

[C. Ross]

#40. I agree with you on almost everything Norman, as usual.

I don’t think “privatization” ideas are wise.

But - right now retirees are already exposed to risk. (1) There’s risk that inflation will exceed returns, meaning the trust fund value falls below expectations. (2) They are exposed to demographic risk. I’ve paid FICA taxes for 47 years which flowed through the trust fund to retirees - the bet is that enough young workers will come along to do the same for me, which is uncertain. (3) There’s risk the law changes. There were no formula-driven COLAs in Social Security until 1975 coming from 1972 legislative changes. What’s guaranteeing that congress wont add richer disability benefits, for example?

It’s been proven over 80 years that congress will guarantee benefits to seniors (by raising taxes and making some modest changes as needed). They could continue to guarantee benefits just the same if the trust fund had more market risk.

So I think it’s true that social security beneficiaries are at risk, depending upon the federal governments ability to match outflows with taxation inflows plus investment returns. Increasing investment returns meaningfully changes the risk components like increased market risk but would reduce risk that the fund depletes without raising taxes.

Either way, the taxpayers are on the hook for whatever promises have been made to retirees plus any changes in demographics or benefit payment. Considered in total, a MODEST and WELL-MANAGED portion of the Trust fund being invested in non-treasury investments would, I think, reduce future tax burden by a smidge while only jostling risk a little bit.

But - it’s politically impossible.

[George Jung]

If it was invested, but not as a 'private' management, that could be an option. Not much political hay in that one, though, so likely no interest/support.

[C. Ross]

George, exactly. Just good government.

[Too Little Time]

Anyone, regardless of income or wealth, deserves those payments, if they have spent their working lives paying into the system... it's purely a matter of fairness; it doesn't matter if they need the money or not. I paid into the system for 50 years, and have earned those payments.

I never said I wasn't in favor of greater benefits, and I never said that merely keeping one's head above water was 'sufficient'... you made that up. I did try to get across the point that SS was necessary.

And yet you made a claim that it is a matter of fairness that you get more and they get less. After all you earned more and paid more in. That makes it appear that you are in favor ...

considering the pitchforks and torches in the hands of senior citizens that would arise

And now you invoke an army as you have in the past that you are certain will ensure that some will merely keep their heads above water.

Those 12-15% aren't merely 'much more reliant', as you claim... they are COMPLETELY reliant on those benefits.

The term income has many meanings. I am certain that income in the source of your claim did not include help from neighbors or family; or those who have a garden that produces their food.

But it is easier to state the obvious: 12-15% expresses an uncertainty as to how many have Social Security as their only income. That allows that some of the 12-15% have other income and are not completely reliant on Social Security.

In addition, I am sure that my mother-in-law, if asked about sources of income, would have said 100% Social Security. But her kids and local relatives also contributed. There is a lot of survey error.

[Too Little Time]

Either way, the taxpayers are on the hook for whatever promises have been made to retirees plus any changes in demographics or benefit payment. Considered in total, a MODEST and WELL-MANAGED portion of the Trust fund being invested in non-treasury investments would, I think, reduce future tax burden by a smidge while only jostling risk a little bit.

Social Security published a paper, "INTERNAL REAL RATES OF RETURN UNDER THE OASDI PROGRAM FOR HYPOTHETICAL WORKERS".

It is just a great paper for those are interested in what the rate of return on the Social Security benefits are. The best I can say is they tend to be 3-4%.

[Norman Bernstein]

#40. I agree with you on almost everything Norman, as usual.

I don’t think “privatization” ideas are wise.

Agreed.

But - right now retirees are already exposed to risk. (1) There’s risk that inflation will exceed returns, meaning the trust fund value falls below expectations. (2) They are exposed to demographic risk. I’ve paid FICA taxes for 47 years which flowed through the trust fund to retirees - the bet is that enough young workers will come along to do the same for me, which is uncertain. (3) There’s risk the law changes. There were no formula-driven COLAs in Social Security until 1975 coming from 1972 legislative changes. What’s guaranteeing that congress wont add richer disability benefits, for example?

Unfortunately, there is nothing to prevent congress from acting stupidly... as history has demonstrated countless times.

One would hope that Congress would recognize the demographically-induced shortfall, and take action to deal with it. Just as unfortunate that this will invariably take at least SOME increase in taxes... and Republicans will oppose any and all tax increases. I once read an article by an economist who claimed that if we merely raised the retirement age by one month, per year, for 12 years, SS would be solvent into perpetuity. I don't know if this is true or not. Biden's idea of creating a donut hole in the FICA system, by re-imposing FICA for those earning over $400,000, will probably fail, as well, since rich folks have long understood that it's far better to avoid 'earned income', and rely on passive income, which is not taxed for FICA.

It’s been proven over 80 years that congress will guarantee benefits to seniors (by raising taxes and making some modest changes as needed). They could continue to guarantee benefits just the same if the trust fund had more market risk.

They could... but they'd have to 'eat' the losses in a down market. Admittedly, bear markets, as history demonstrates, are far shorter than bull markets... but not always, and the possibility of a recession deep enough to be called a depression is ever-present.

So I think it’s true that social security beneficiaries are at risk, depending upon the federal governments ability to match outflows with taxation inflows plus investment returns. Increasing investment returns meaningfully changes the risk components like increased market risk but would reduce risk that the fund depletes without raising taxes.

Either way, the taxpayers are on the hook for whatever promises have been made to retirees plus any changes in demographics or benefit payment. Considered in total, a MODEST and WELL-MANAGED portion of the Trust fund being invested in non-treasury investments would, I think, reduce future tax burden by a smidge while only jostling risk a little bit.

Well, there is the problem, in a nutshell. Can we trust politicians to take heart to the idea of a 'MODEST and WELL-MANAGED' trust fund portfolio? Especially when powerful financial interests have got their greedy little eyes on a massive potential revenue source, for their 'management'?

I'm highly skeptical... and I think the Republicans aren't interested in solutions that DON'T raise the possibility of ever-bigger contributions to their campaign war chests from those investment folks who smell blood in the water.

[George Jung]

Yup. And it's always in the fine print.

[Keith Wilson]

. . .since rich folks have long understood that it's far better to avoid 'earned income', and rely on passive income, which is not taxed for FICA.

A Modest Proposal. Tax all income for FICA; no limits. Do we really want a regressive tax on earned income? Yeah, yeah, sparkly pink unicorns, since the majority party in the House maintains as its one single bedrock non-negotiable principle 'lower taxes for the rich'.

[Dan McCosh]

A Modest Proposal. Tax all income for FICA; no limits. Do we really want a regressive tax on earned income? Yeah, yeah, sparkly pink unicorns, since the majority party in the House maintains as its one single bedrock non-negotiable principle 'lower taxes for the rich'.

If you taxed all income at FICA rates, it would exceed all federal taxes today, include "income", corporate and payroll taxes. Unlikely to happen.

[Keith Wilson]

If you taxed all income at FICA rates, it would exceed all federal taxes today, including "income", corporate and payroll taxes. Unlikely to happen.

Certainly, but I didn't say 'at FICA rates'. If all income were included, rather than just the first $160K of wages, the rate could be a small fraction of what it is now. Still unlikely to happen, because it would shift the tax burden up the income scale quite a lot, and the Republicans will vote to legalize pedophilia before they vote for that.

[Landrith]

Certainly, but I didn't say 'at FICA rates'. If all income were included, rather than just the first $160K of wages, the rate could be a small fraction of what it is now. Still unlikely to happen, because it would shift the tax burden up the income scale quite a lot, and the Republicans will vote to legalize pedophilia before they vote for that.

I am game for fica taxing passive income. Lets just call it a comprehensive flat tax.

[sandtown]

If you taxed all income at FICA rates, it would exceed all federal taxes today, include "income", corporate and payroll taxes. Unlikely to happen.

Yeah, but I still like the way he thinks

[Too Little Time]

They could... but they'd have to 'eat' the losses in a down market. Admittedly, bear markets, as history demonstrates, are far shorter than bull markets... but not always, and the possibility of a recession deep enough to be called a depression is ever-present.

Well, there is the problem, in a nutshell. Can we trust politicians to take heart to the idea of a 'MODEST and WELL-MANAGED' trust fund portfolio? Especially when powerful financial interests have got their greedy little eyes on a massive potential revenue source, for their 'management'?

You keep claiming a "downturn". You use the short term to characterize it. Then you extrapolate to the long term in error. You claim to have been an investor for a long time. One would expect that you have looked at the return on your investments. You might even compared them to the indexes. Show us a period of 20 (30) years or more where your investments or the SP 500 has returned less than 7% (10%). Social Security money is not invested for the short term. It is invested for the long term. And has not been a "downturn" in the long term. (One might look at the long term charts at https://awealthofcommonsense.com/201...-stock-market/ )

I am sure the federal government is responsible for managing pension funds of at least its employees. The state and local governments have done managing.


Claiming that there are greedy little eyes out there who might take 5% off the 10% long term returns is better than the government producing 3% long term returns is about as silly as one can get.

[Norman Bernstein]

Certainly not worth responding to… maybe someone else might want to try.

[robm]

TLT doesn't seem to realize that one has to eat in the short term, for a long time. It is not something one can put off until market conditions improve. If invested in the market he recommends, at some point one will be eating one's capital.

And remember that if investments drop by 25%, they have to go up by 33% to get back to where they started. Even harder to do, if one has had to reduce the amount invested in order to survive.

I like Norman's ideas of investing to reduce fluctuation in value and maintain income, even if this results in less value in the long term.

Another thing to remember is, in the long term, we are all dead.

[Norman Bernstein]

TLT doesn't seem to realize that one has to eat in the short term, for a long time. It is not something one can put off until market conditions improve. If invested in the market he recommends, at some point one will be eating one's capital.

And remember that if investments drop by 25%, they have to go up by 33% to get back to where they started. Even harder to do, if one has had to reduce the amount invested in order to survive.

I like Norman's ideas of investing to reduce fluctuation in value and maintain income, even if this results in less value in the long term.

Another thing to remember is, in the long term, we are all dead.

Thats right, Rob. Once again, when we are talking about retirees, the object, in my view, is simple. The most important thing is to find a way to invest that will guarantee an income necessary to meet your needs, regardless of market conditions. The best way to do that, once again, in my opinion, is to invest in strong large cap companies with long unbroken records of dividend payments and dividend increases… dividend kings and dividend aristocrats, in market parlance. Doing that, it’s not hard to generate a 3 or 4 percent return, and it’s a return unaffected by stock price… it is cash in your pocket that you can live on.

How well does that strategy work, overall? Well, it’s not a contest… this strategy trades off a relatively small amount of ‘gain’ for a vastly more secure result. I my case, my compound return since 1/1/09, when I began tracking It, was only about 1.7% less than the S&P 500 over the same period… BUT, my portfolio over the past year is down less than half the losses in the S&P… and best of all, my dividend income has not dropped a penny during the entire time.

The object, as I see it, is to 1) generate a sufficient income for one’s personal needs, 2) preserve capital as best as possible for the likelihood that we will all probably need some expensive health care in our final years, and 3) hope to leave enough behind to guarantee the education of my grandchildren… and great-grandchildren, if I can be that lucky.

[David G]

.


Please Don’t Feed the Debt Scolds


https://www.nytimes.com/2023/01/23/o...t-deficit.html

Nonetheless, the debt scolds are trying to make a comeback. Partly that’s because, as I said, ranting about federal debt sounds serious and hardheaded. Partly it’s because deficit rants are all too often deployed in the service of an ideological agenda, a push to cut Social Security, Medicare and Medicaid (but not, of course, giving the Internal Revenue Service the resources to crack down on tax evasion).

[Too Little Time]

TLT doesn't seem to realize that one has to eat in the short term, for a long time. It is not something one can put off until market conditions improve. If invested in the market he recommends, at some point one will be eating one's capital.

And remember that if investments drop by 25%, they have to go up by 33% to get back to where they started. Even harder to do, if one has had to reduce the amount invested in order to survive.

As I have said: Bill Bengen did a reasonable analysis and showed that one can spend 4% initially and then adjusted for inflation and be 100% certain of not running out of money for 30 years. (Actually he gave a range of years with a related percent for spending.) Few dispute his math. I find the simple 4% rule to be good enough to support my position. Remember it is the worse case. One always does better.

I did not make a recommendation. But, yes, one draws down one capital until the end. But that is the root of the 4% rule: How much can you take out for how long until your capital is gone.

You should realize that if the market goes down, one 25% effectively takes out 5% rather than the 4%. The change from having a 95% v. 96% of what was expected is not significant as the 4% takes that into account.

If you look at Bengen's numbers, you will see that the longer one plans on having their money last the greater need for a higher percentage in stocks. But equally important: the expected surplus at the end of that time period is greater as the percentage in stocks increases.

Bengen used the S&P 500 as his stock investment. There is much data available on the S&P 500. It is just foolish to use any other investment in supporting my points. It is certainly not a bad investment.


Norman and you appear to have a different philosophy than my wife and I do about money. We made a choice to live our day to day lives on our Social Security. Our savings are used to give us a little better life style and to pay for the unexpected things that will come up. We expect most of our savings will go tour kids and grandkids.

[Too Little Time]

...

You might notice that Norman is rather complex.

So, what do you need invested in the S&P in order to maintain an annual withdrawal needed for life’s expenses, as well as conserving your assets to pay for that nursing home? One million? Two million? That’s only $40-80K per year, at the 4% rate…

Yes, it all works if you live at an economic level Best described as ‘sparingly low’, which, except for a very few people, is far below what they may have hoped for, in retirement. Very few people have anything close to $1M invested at retirement,

... long unbroken records of dividend payments ...

Doing that, it’s not hard to generate a 3 or 4 percent return, and it’s a return unaffected by stock price… it is cash in your pocket that you can live on.

How well does that strategy work, overall? Well, it’s not a contest… this strategy trades off a relatively small amount of ‘gain’ for a vastly more secure result.

It is hard to believe that 3 or 4 percent in dividends is significantly different than a 4% withdrawal rate. If $40-80K is a ‘sparingly low’ economic level in either case, Norman gives the impression that he is doing much better than that. But he is "middle class".

[kbowen]

I am recently retired and LOVE social security! And one thing I love the most is the social contract In which I paid for other members of our society while I could work, and now younger folks are paying for me. I volunteer at Northwest Maritime Center in Port Townsend, I spend money at the Shipwrights Co-op, the Port Townsend Foundry and all the grocery, lumber, and hardware stores here, and all those workers pay some of what I spend back to me. We are all in this freaking world, and I love a system that reinforces that connectedness. I would HATE a system based on the stock market which hinges on quarterly reports, short-sighted decisions, and skimming by people who love to game the system.

Ken

[sandtown]

I am recently retired and LOVE social security!

Very well put, my friend.

The Reich does not get that we are all in this thing together.