Retirees lose in bear markets!

[Fmr jarhead]

Hey AA, why is it any concern of yours? You are collecting your social security now, and will 'til ya die (or the system craps out).

Don't you want your kids or grandkids to do better than you did? There is more than enough facts around to realize that by investing even 4% of your income at a min hourly wage for 30 years, at a modest 6% return, you would have more than your 1200 per month that SS kicks out now.

What is your beef?

You have an aversion to risk, and don't know squat about the stock market or investing (as you have so eloquently pointed out for the last few weeks), and you want to deny today's workforce the opportunity to achieve greater financial security because of ignorance?

Nice try....you have no voice in the discussion, since it has no affect on you whatsoever.

 

[Avatar4321]

:chillpill Ok guys enough of the partisan politics...lets get real here...forget the vodoo math from Wall Street...Heres the facts..basic math 101:For those of you who have forgotten...If a working man or woman managed to save say$120,000.00 during their work life(after living expenses)...and could somehow find a bank that would pay 12%apr...well their annunity upon retirement would be some $1200.00 per-month....before taxes...now if you consider the SSA maximum benefit is $1200.00 per-month without taxes...I for one would say this is a pretty good investment!

Ya all are starting to sound like those great investors of times past..who jumped outta the windows after the great crash at the end of the roaring 20's....maybe...just maybe...this is why SSA was born...end of story old wise men!

You know, your math doesnt even make sense. How do you get 1200 from 120,000 at 12% apr? Im dying to know.

Besides, interest compounds over a lifetime. Ben Franklin put 3 dollars in the back and a few decades ago that three dollars had enough money to build a bridge that now bears his name. And that wasnt nearly at 12% interest.

 

[Comrade]

You know, your math doesnt even make sense. How do you get 1200 from 120,000 at 12% apr? Im dying to know.

Besides, interest compounds over a lifetime. Ben Franklin put 3 dollars in the back and a few decades ago that three dollars had enough money to build a bridge that now bears his name. And that wasnt nearly at 12% interest.

He has absolutely no clue how to compute such an annuity.

Fortunately, I am a Fellow in the Society of Actuaries. :read:

Actuaries are specifically the same people employed by the government to determine the future cost of Social Security. My last job was at the largest private actuarial consulting firm in the world, Milliman Global.

Our mathematical poser ArchAngel spits out a solution to a formula for determining the present value of a life contingent annuity at 12% without using life expectancy tables.

The fact that he failed to mention a period of time for such payments, or moreover even an age of reference to begin payments at retirement from, demonstrates he doesn't even understand which necessary inputs are required to work out such a simple formula using interest accumulation only, let alone the more complex math behind the fact that Social Security annuitization does not operate on the simple principle of interest alone.

With interest as the only factor in computing the present value of an annuity without any life contingencies, the formula for solving this equation is already complicated enough. The unitized formula for the present value of an interest bearing annuity payment, of say, N number of monthly payments of $1, or conversely, the amount of each interest bearing monthly payment from a set present value of $1, is going to make ArchAngels eyes google out and his head explode.

The P.V. of a monthly annuity of $1, at 'i' interest and over 'n' periods, without life contingencies, is:

(1-V^n)/d

Where i = .12 (average annual rate of return)
i(adjformonthlypayments) = [(1+i)^(1/12)] - 1
d = i(adjformonthlypayments)/[1+i(adjformonthlypayments)]
V = 1/[1+i(adjformonthlypayments)]
n = # of months of certain annuity payment

So you would then take the unitized result and multiply it by the the actual amount in question, in this case a present value of 120,000.

Does it equal $1,200 @ 12% annual interest (or more appropriately (1.12^(1/12)) -1 % = .948879% monthly interest?

The problem is ArchAngel doesn't specify 'n', the number of expected payment before the person recieving social security payments dies and no longer will require them. In fact, he discards this essential input into the formula for life expectancy, as if paying out 1,200 monthly is the same regardless of whether its for 10 years or 20 years!

You need an 'n'. In the business, a certain immediate annuity is one which pays money out regardless of whether or not the orginal benefactor is still alive, and 'n' is known for certain.

But that's not the way personal social security benefits pay out. All of the above concerns a formula where 'n' is known for certain, and can be simplified greatly. You can compute this only if you disregard the fact that under social security, when a person dies, the payments stop.

But social security payments are what we call life annuities. And the present value of a life annuity requires that you not only discount for interest, but for mortality. That opens up an entirely new can of mathematical worms which took me a full 300 hours to study and pass one of the many, intensely grueling exams to become a Fellow in the Society of Actuaries. (and a jolly good one!)

In the case of a large group like SS retirees, you have to also account for the various spreads of average life expectancy, depending upon multiple decrement factors like the distributions of sexes, smokers/non-smokers, retirement ages, etc... the math gets rapidly much more complex and requires multiple published life expectency tables and a formulated spreadsheet to calculate the true cost of a retirement annuity for any particular person (or more appropriately the average cost of an entire cohort of grouped retirees who share that persons retirement age, sex, smoking habits, etc...).

This is the kind of math FAR beyond his capabilities.

In other words, our math wizard wanna be, ArchAngel, is completely full of it.

P.S. All the mathematically credible information on the future balance of social security depends on actuaries, which are a very, very rare breed in this country. The scope and complexity behind the subject is far too complex for the average person to really get into, and therefore the math nerds own this debate.

P.S.S. If you read this far, you are maybe as nerdy as I am. :hail:

P.S.S.S. Anybody who pisses me off, remember, I may just be in a situation someday to personally slash your benefits when you're old and crippled. :teeth:

 

[Merlin1047]

He has absolutely no clue how to compute such an annuity.

Fortunately, I am a Fellow in the Society of Actuaries. :read:

Actuaries are specifically the same people employed by the government to determine the future cost of Social Security. My last job was at the largest private actuarial consulting firm in the world, Milliman Global.

Our mathematical poser ArchAngel spits out a solution to a formula for determining the present value of a life contingent annuity at 12% without using life expectancy tables.

You're being far too kind to call him a mathematical poser. Even his math is wrong. He purports that a 12% return on 120k would yield $1,200 per month. Actually, that only requires a 10% apr to provide that return. But that's simply carping on my part.

The fundamental flaw in his argument is that he views social security as an "investment". It is nothing of the sort. It is a tax. And the government spends the money as it sees fit. The money you pay in is gone even before your check hits the federal coffer.

Archangel has the same selfish, self-centered view of your typical AARP member - they love anything that they can make someone else pay for. So Archangel ignores the fact that in the very forseeable future this "investment" is going to run into trouble. I suppose that people with this kind of attitude see Ponzi as a financial genius.

 

[archangel]

Comrades economic math formula for annuities was outstanding..may I remind the rest who jumped on the band wagon of attack..My basic math 101 was just injected to make a simple point and to inspire further comment..I cannot see the need by some to take this as a invitation to attack the messenger and not the analogy presented...personal attacks by some make me wonder about their true intentions in this forum...

 

[archangel]

Hey AA, why is it any concern of yours? You are collecting your social security now, and will 'til ya die (or the system craps out).

Don't you want your kids or grandkids to do better than you did? There is more than enough facts around to realize that by investing even 4% of your income at a min hourly wage for 30 years, at a modest 6% return, you would have more than your 1200 per month that SS kicks out now.

What is your beef?

You have an aversion to risk, and don't know squat about the stock market or investing (as you have so eloquently pointed out for the last few weeks), and you want to deny today's workforce the opportunity to achieve greater financial security because of ignorance?

Nice try....you have no voice in the discussion, since it has no affect on you whatsoever.

No voice in the discussion..and what is up with that?So I cannot voice my opinion...only you have that right? We may disagree on SSA but to say I have no voice smacks of communism! I denie no one the opportunity to invest in Wall Street, if that is what they want to do..all I am against is messing with a safety valve...why don't you attack the politicians who raided the account instead of the receipients...who are entitled to it?

 

[Fmr jarhead]

Comrades economic math formula for annuities was outstanding..may I remind the rest who jumped on the band wagon of attack..My basic math 101 was just injected to make a simple point and to inspire further comment..I cannot see the need by some to take this as a invitation to attack the messenger and not the analogy presented...personal attacks by some make me wonder about their true intentions in this forum...

DEFINITION OF A TROLL! (see above)

If only you were voicing your opinion...you are baiting, and trolling.

Since when did anyone around here need inspiration for discussion? I guess the valid points already made are not enough for you, huh?

You have your "safety valve" in place, and are collecting (so you've already told us). Yet, you want to deny younger workers in the marketplace a chance to have ANY retirement fund, at all, by your inability to accept the historical record of investments in indexed funds as a viable option for the monies the US government STEALS from taxpayers to fund the building of rainforests in Iowa.

By letting workers KEPP their own money, rather than giving it to the legislators, we are free to make all the stupid mistakes we want with our investment portfolios, and not pay for all the crap that every politician wants to fund in thier own district with our money.

Please don't bait the conversation...it only make syou look bad (and limits any credibility you may be able to bring to this forum)

 

[Merlin1047]

You have your "safety valve" in place, and are collecting (so you've already told us). Yet, you want to deny younger workers in the marketplace a chance to have ANY retirement fund, at all, . . .

I think you've hit on something there. Some of the people who are collecting social security want to make sure that there are plenty of taxpayers available to sustain their benefits. They don't give a rat's ass about the next generation of recipients. So long as they have their monthly dole, they can go play shuffleboard and bingo and be happy. They have no care beyond the narrow parameters of how changes might affect them.

I think that if truth be told, these codgers want you to keep paying into the system just long enough to keep their cost of living increases coming until they die off. Certainly people like Archangel view the social security system as an excellent "investment". That's because they are getting more out in benefits than could possibly be justified by the amount many of them paid in.

And if there's nothing left for you at your retirement age, well that's just tough cookies. They got their's and that's all that counts.

 

[archangel]

I think you've hit on something there. Some of the people who are collecting social security want to make sure that there are plenty of taxpayers available to sustain their benefits. They don't give a rat's ass about the next generation of recipients. So long as they have their monthly dole, they can go play shuffleboard and bingo and be happy. They have no care beyond the narrow parameters of how changes might affect them.

I think that if truth be told, these codgers want you to keep paying into the system just long enough to keep their cost of living increases coming until they die off. Certainly people like Archangel view the social security system as an excellent "investment". That's because they are getting more out in benefits than could possibly be justified by the amount many of them paid in.

And if there's nothing left for you at your retirement age, well that's just tough cookies. They got their's and that's all that counts.

You missed the point of my post entirely..also i am not a old "codger"who plays bingo and shuffleboard..This is the last time I will say this...the point is Wall Street propogated this privatization concept...read all the comments in my post not just the parts you want to tear apart..The system is not broken and there will be money for all who paid in providing no more misuse of the funds are allowed..money collected on the IOU's is replaced....and outsourcing of jobs is stopped..Why don't you all whine and complain about the billions we seem to have to rebuild third world countries...payments to the UN and the world aids program...billions spent here from the general fund,which was appropriated from the SSA funds...not to mention billions spent on the war effort from the general fund as well...now you are saying the hell with seniors we raided the coffer and it is their fault!

I am not against anyone who wants to invest in the stock market..I do have a problem when the blame is placed on seniors and not the real cause...is that so hard to understand? :scratch:

 

[Fmr jarhead]

AA, I think your tinfoil hat must be in the closet, go put it on, and don't forget your white sneakers, either!

There is word of a comet coming soon, to take you to where the babble you are spewing makes sense.

Best of luck to you in your retirement, I don't have the patience for your nonsense, and inability to understand anything outside of your own little world.

 

[Comrade]

You're being far too kind to call him a mathematical poser. Even his math is wrong. He purports that a 12% return on 120k would yield $1,200 per month. Actually, that only requires a 10% apr to provide that return. But that's simply carping on my part.

You're correct. In fact, you can plug this into the formula above, where 'n' is infinity (this is what's called a pepetuity). V is always less than 1, and taken to the power of infinity, it becomes zero.

Therefore P.V. annuity = (1-V^n)/d = (1-0)/d = 1/d

And as we know, social security payments are not a pepetuity. So that payments of 1,200 over life from age 65 from a balance of 120,000 will require a return that is significantly less than 10%.

 

[ScreamingEagle]

You're correct. In fact, you can plug this into the formula above, where 'n' is infinity (this is what's called a pepetuity). V is always less than 1, and taken to the power of infinity, it becomes zero.

Therefore P.V. annuity = (1-V^n)/d = (1-0)/d = 1/d

And as we know, social security payments are not a pepetuity. So that payments of 1,200 over life from age 65 from a balance of 120,000 will require a return that is significantly less than 10%.

So therefore... social security payments are not a perpetuity (as pmts are made only until death) but with the new plan the payments are in perpetuity (or at least can be)… right?

Meaning, for instance, with the new plan a person who saves $120k during his worklife and then only uses the interest earned on it during retirement (say at 10% getting $1200/mo) the principal would not be touched.

This principal amount, now belonging to the worker, can be passed on to his children. For instance, if there is only one child and the child also saved $120k during his worklife, he would have double the amount of income per month during retirement. (assuming same interest rate and usage of only the interest)

If this private fund is built-up enough over generations, the heirs would be very well off! And if the government allowed early access to the funds they possibly might never have to work - just live off the interest.

 

[Fmr jarhead]

So therefore... social security payments are not a perpetuity (as pmts are made only until death) but with the new plan the payments are in perpetuity (or at least can be)… right?

Meaning, for instance, with the new plan a person who saves $120k during his worklife and then only uses the interest earned on it during retirement (say at 10% getting $1200/mo) the principal would not be touched.

This principal amount, now belonging to the worker, can be passed on to his children. For instance, if there is only one child and the child also saved $120k during his worklife, he would have double the amount of income per month during retirement. (assuming same interest rate and usage of only the interest)

If this private fund is built-up enough over generations, the heirs would be very well off! And if the government allowed early access to the funds they possibly might never have to work - just live off the interest.

...and accomplishing the American dream!

....you gotta problem with that?

Of course, the government would see to it, that all inherited monies are taxed drastically (as they are now) so that 120K that was supposed to be passed along, would really only be 30K.

 

[ScreamingEagle]

...and accomplishing the American dream!

....you gotta problem with that?

Of course, the government would see to it, that all inherited monies are taxed drastically (as they are now) so that 120K that was supposed to be passed along, would really only be 30K.

Exactly! Liberals should LOVE this stuff! They could be "taken care of" forever!

(yeah, i'm sure a liberal government would find a way to pilfer it...not to mention there are some other inherent issues)

 

[Merlin1047]

You missed the point of my post entirely..also i am not a old "codger"who plays bingo and shuffleboard..This is the last time I will say this...the point is Wall Street propogated this privatization concept...read all the comments in my post not just the parts you want to tear apart..The system is not broken and there will be money for all who paid in providing no more misuse of the funds are allowed..money collected on the IOU's is replaced....and outsourcing of jobs is stopped..Why don't you all whine and complain about the billions we seem to have to rebuild third world countries...payments to the UN and the world aids program...billions spent here from the general fund,which was appropriated from the SSA funds...not to mention billions spent on the war effort from the general fund as well...now you are saying the hell with seniors we raided the coffer and it is their fault!

I am not against anyone who wants to invest in the stock market..I do have a problem when the blame is placed on seniors and not the real cause...is that so hard to understand? :scratch:

No, it's not at all hard to understand. But it IS hard to accept, since you offer little support for the overwhelming majority of your assertions. You continue with the same old tune that social security is not broken. Bullshit. Even the most ardent leftist will only hazard such a denial by attaching a very finite date to his assertion. Most claim that social security is sound until sometime beyond 2030. So I have to conclude that they view anything that will work for another twenty five years before it collapses as a "no problem" situation. Of course your view is even shorter than that. Since you're collecting, you are happy as long as social security remains viable until you die. I'm trying to take a longer term view.

You keep dancing around the facts that don't suit you. At it's conception there were approximately sixteen contributors for every social security recipient. That ratio is due to get down to two point something to one. That means that two wage earners and their employers will be robbed of $600 to $750 per MONTH to sustain the system. The Bush administration is trying to face up to the unpleasant fact that the contributor-recipient ratio is going to hit disastrous proportions - and it's not far off.

The administration seeks to supplant government payouts with investment dividends so that recipients can continue to receive benefits equivalent to current levels, but with fewer federal dollars. So let me turn your own silly question on you - Is that so hard to understand?

If people want to voluntarily place some of their money into stock market investments, that is their responsibility. Why do you automatically assume that this will result in a net loss? If you take the time to do the most rudimentary research on stock market performance you would know that the DJIA has outpaced conventional savings during any five year period.

Pres. Bush is attempting to give working people another option. Yet somehow you think that these people are too stupid to manage their own money and will be ripped off by rapacious Wall Street swindlers. Here's a thought - simply because you seem to be completely ignorant of investment performance and methods does not mean that the average person is incapable of managing his or her own finances.

So my evaluation of your attitudes remains unchanged. I believe you are motivated solely by selfishness. You worry that less money coming in to the social security coffers may affect your future benefits. You deny that a problem exists because there is no problem for YOU. I believe, based on your comments and your irrational demand to deny people the opportunity to shape their own financial destiny, that you want to force unwilling people to continue to contribute into a bankrupt system solely so that you can continue to collect.

 

[Merlin1047]

The system is not broken and there will be money for all who paid in providing no more misuse of the funds are allowed

Baloney. Where did you get that little tidbit? Do you just make up your own stats to suit yourself?

money collected on the IOU's is replaced

What IOU's? And where will this money come from? You planning to raise taxes on every wage earner to come up with this mythical IOU collection?

....and outsourcing of jobs is stopped..

What a load of hooey. Show me how outsourcing the minimum wage jobs that go overseas has any significant impact on social security revenues. Then tell me how you're going to stop outsourcing. I believe I kicked your butt on this once before.

Why don't you all whine and complain about the billions we seem to have to rebuild third world countries...payments to the UN and the world aids program...billions spent here from the general fund,which was appropriated from the SSA funds

I DO whine about that - a lot. Does no damn good. Didn't do any good under Johnson, Nixon, Carter, Reagan, Bush Sr., Clinton and it's not doing any good now. If you can figure out a way to stop this money hemorrage I'd love to hear it. This is about the only thing I agree with you on. I'd LOVE to see us stop pumping billions down the foreign aid rathole.

billions spent here from the general fund,which was appropriated from the SSA funds...not to mention billions spent on the war effort from the general fund as well...now you are saying the hell with seniors we raided the coffer and it is their fault!

Costs of war are paid from the general fund or money is diverted from the fund to military-specific budgets. That's just the way it is. Personally, I think THAT's a good "investment". The other "raiding" of social security money - the single event mostly responsible for the condition of social security finances today - was Lyndon Johnson's theft of those funds. And I believe that it was YOUR generation who had the most votes back then. So you'll excuse me if I don't shed a whole lot of tears at the fact that you have to sweat some of them chickens coming back home to peck your ass.

Please - get your head out of the AARP magazine and come up for air.

 

[Comrade]

So therefore... social security payments are not a perpetuity (as pmts are made only until death) but with the new plan the payments are in perpetuity (or at least can be)… right?

Meaning, for instance, with the new plan a person who saves $120k during his worklife and then only uses the interest earned on it during retirement (say at 10% getting $1200/mo) the principal would not be touched.

This principal amount, now belonging to the worker, can be passed on to his children. For instance, if there is only one child and the child also saved $120k during his worklife, he would have double the amount of income per month during retirement. (assuming same interest rate and usage of only the interest)

If this private fund is built-up enough over generations, the heirs would be very well off! And if the government allowed early access to the funds they possibly might never have to work - just live off the interest.

I haven't read enough on the new plan to state precisely under what conditions the private account will transfer, but I believe the way it works is that upon reaching retirement age, one can use the money that built up in this account to purchase your own annuity. Most people get more security by purchasing a life annuity, so therefore upon their death there would be nothing left to transfer to their descendents. However, I think that if you die before you retire and purchase that annuity, the balance in the account may be transferred to ones' beneficiary (which you cannot do with Social Security).

 

[archangel]

Baloney. Where did you get that little tidbit? Do you just make up your own stats to suit yourself?



What IOU's? And where will this money come from? You planning to raise taxes on every wage earner to come up with this mythical IOU collection?



What a load of hooey. Show me how outsourcing the minimum wage jobs that go overseas has any significant impact on social security revenues. Then tell me how you're going to stop outsourcing. I believe I kicked your butt on this once before.



I DO whine about that - a lot. Does no damn good. Didn't do any good under Johnson, Nixon, Carter, Reagan, Bush Sr., Clinton and it's not doing any good now. If you can figure out a way to stop this money hemorrage I'd love to hear it. This is about the only thing I agree with you on. I'd LOVE to see us stop pumping billions down the foreign aid rathole.



Costs of war are paid from the general fund or money is diverted from the fund to military-specific budgets. That's just the way it is. Personally, I think THAT's a good "investment". The other "raiding" of social security money - the single event mostly responsible for the condition of social security finances today - was Lyndon Johnson's theft of those funds. And I believe that it was YOUR generation who had the most votes back then. So you'll excuse me if I don't shed a whole lot of tears at the fact that you have to sweat some of them chickens coming back home to peck your ass.

Please - get your head out of the AARP magazine and come up for air.

Typical statement"I kicked your butt before on this one" In your dreams...Also I did not vote for Johnson too young had to be twenty one back then! As for outsourcing well you just made my point when you asserted the ratio has declined from 16 to one to 3.3 now and will be 2.0 in the future...what caused this...humm you tell me..and don't throw out the claim oldies are living longer now..won't hold water..this was figured in at conception...And for your information all Presidents have raided the coffer from conception to date....including GW...And again I am not a AARP member and do not read their magazine...I survive on SSA,a small VA penshion and everything I own is paid for by good management skills.How many CC bills do you pay each month bright one?I have zero..So quit with the personal attacks already..Are you that insecure you need to resort to name calling to make your point...whatever that is..Now find another post to make your rude remarks...

PS: I am not a Demo or liberal...Reistered American Independent(Conservative) so quit with typecasting while you are at it!

 

[Fmr jarhead]

As for outsourcing well you just made my point when you asserted the ratio has declined from 16 to one to 3.3 now and will be 2.0 in the future...what caused this...humm you tell me..and don't throw out the claim oldies are living longer now..won't hold water..this was figured in at conception...

The ratio has changed, due to the fact that there were more bodies working, then....people having fewer children after the Korean War....have you heard of the Baby Boom generation (or the greatest generation?) There is a reason why they are called that.

I am certain you will find that the number of children in families has been declining over the last few decades (just another example of you not being aware of factual information...or are you baiting, and trolling to add to the discussion, again?)

Outsourcing is not the cause of the change in ration from 16 payees to recipients (if you really believe that....you have drunk too much of the koolaid!)

Why am I even wasting my time with this (rhetorical question, in case you want to address it, don't bother)

 

[archangel]

The ratio has changed, due to the fact that there were more bodies working, then....people having fewer children after the Korean War....have you heard of the Baby Boom generation (or the greatest generation?) There is a reason why they are called that.

I am certain you will find that the number of children in families has been declining over the last few decades (just another example of you not being aware of factual information...or are you baiting, and trolling to add to the discussion, again?)

Outsourcing is not the cause of the change in ration from 16 payees to recipients (if you really believe that....you have drunk too much of the koolaid!)

Why am I even wasting my time with this (rhetorical question, in case you want to address it, don't bother)

Uh well...never mind..I won't take the bait...Mr.Troll.."Koolaid",humm maybe you listen to Rush Limbaugh way too much!Now go play somewhere else...you are starting to bore me...