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View Diary: States starting to take action on retirement security (42 comments)

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  •  In the here and now, eating, a roof over your head (3+ / 0-)
    Recommended by:
    whaddaya, jbsoul, barbwires

    and clothing are more important than retirement savings.

    Especially when so many of us went so far behind in retirement savings during the crash of 2008. Only recently have we come back so we've lost years of retirement savings.

    John Roberts? Melville Fuller?? WTF is the difference???.

    by Walt starr on Fri Jul 05, 2013 at 11:21:07 AM PDT

    •  The market goes up and down (1+ / 0-)
      Recommended by:
      whaddaya

      But over the long term has averaged around 10% return. That including big downturns such as the Great Depression and 2008.

      The folks truly negatively impacted by the downturn are those who sold during that period because they were either scared out of the market or they are of an age where the averages don't matter anymore.

      We were not ahead of our time, we led the way to our time.

      by i understand on Fri Jul 05, 2013 at 12:02:09 PM PDT

      [ Parent ]

      •  Very Bad Analysis (4+ / 0-)
        Recommended by:
        jbsoul, barbwires, blueoasis, antirove

        In July 1982, following the recession of 1981 but before the strongest years of the 1980s and 1990s kicked in, the Dow closed at 1,000.  In July 1999, the Dow closed at 11,000.  For this 17 year period, the dow grew at an average annual rate of 28%.  

        In the last 14 years, the Dow has gone from 11,000 to 15,000, for this period, the growth is about 2.5%.

        That's 14 years in which the market has returned nothing more than the rate of inflation. How many college savings plans were torched in 2000 and again in 2008? Fact is, there is nothing to suggest that from this point forward the Dow will do any better than 2 or 3% growth similar to the economy for the rest of Obama's term.

        So, an 18 year old will have grown up watching college costs rise at an annual rate of about 6% while his college savings plan returned only 2.5%.

        Or take a 35 year-old in 1999 who was diligent in paying student loans off, saving a down payment for a house, saving to start a family, and start a college savings plan.  So, then at 35 began to save 10% for retirement as well - and has 14 years of shit returns to show for it.

        Or a 42 year-old in 1999 who turns 56 this year - half of his remaining working years are over, and he earned just 2.5% on his 401(k) plan for these past 14 years.  How does he make this up? Is the market really going to return 17.5% for the next 14 years so that he'll average 10%? No.

        In fact, is it even going to return 7.5% per year for the next 14 years so that he'll average 5%? Maybe, but that's the best he can hope for.  

        All those pension plans that had 10% returns factored in; all those 401(k) plans that told you 6% was a conservative return to expect - for 14 years it hasn't happened.

        Fact is, we have lost too much for too long - both college and retirement are beyond too many people's means.  Social mobility is mostly gone, and the jobs we are creating don't pay enough to save enough in the first place, let alone deal with such low returns.

        Welcome to the future - 1% well off and 99% headed towards serfdom.

        Liberalism is trust of the people tempered by prudence. Conservatism is distrust of the people tempered by fear. ~William E. Gladstone, 1866

        by absdoggy on Fri Jul 05, 2013 at 01:27:00 PM PDT

        [ Parent ]

        •  I'm sure any shorter period can be cherry picked (0+ / 0-)

          To validate any analysis you want.

          We were not ahead of our time, we led the way to our time.

          by i understand on Fri Jul 05, 2013 at 01:38:10 PM PDT

          [ Parent ]

          •  Not cherry picking - your period is meaningless (2+ / 0-)
            Recommended by:
            barbwires, blueoasis

            I don't care what the market has done over 100 years - that period is meaningless.

            First, the return over the past 100 years is more like 7.5%, not 10%.

            Let's look at the long history over 3 generations and where we are now:

            1913 - 1943: Because of the effect of the Great Depression and WWII, the Dow went from 90 - 110 during that period, an average increase of less than 1%.  

            1943 - 1973: Grows from 150 to 850, about 6.3%.

            1973 - 2003:  Grows from about 1,000 to 11,500, about 8.5% per year.

            1983 - 2013:  For this generation, we had 19.5% growth over the first 15 years, then 3% over the last 15 years.

            The question is: can we count on the 1980s and 1990s happening again? No, not at all.

            Now that defined benefit plans are out the window and government help for college is lower and lower and the cost of college higher and higher, if all we have is 3% growth over the next 15 years, it will decimate us.

            Also, compared to the past, there is so much volume in the market due to 401(k)s and due to pension plans investing a higher % of their holdings in stocks.  To say nothing of the effect of hedge funds and derivatives.

            We cannot put our retirement and college savings eggs in the basket of the stock market and expect this to work.  We need more programs like social security and non-profit annuity plans.

            Liberalism is trust of the people tempered by prudence. Conservatism is distrust of the people tempered by fear. ~William E. Gladstone, 1866

            by absdoggy on Fri Jul 05, 2013 at 02:44:15 PM PDT

            [ Parent ]

        •  btw, I have no idea why you would look at the dow (0+ / 0-)

          We were not ahead of our time, we led the way to our time.

          by i understand on Fri Jul 05, 2013 at 01:38:47 PM PDT

          [ Parent ]

      •  Other reaon people lost (2+ / 0-)
        Recommended by:
        i understand, antirove

        You lost a job during the downturn (like so many others) and had to dip into those already depleted retirement savings to get by until you found another job.

        Believe me, I am intimately acquainted with this double loss scenario.

        John Roberts? Melville Fuller?? WTF is the difference???.

        by Walt starr on Fri Jul 05, 2013 at 03:31:35 PM PDT

        [ Parent ]

        •  That's certainly a good point. (0+ / 0-)

          We were not ahead of our time, we led the way to our time.

          by i understand on Fri Jul 05, 2013 at 03:44:12 PM PDT

          [ Parent ]

        •  Or forced retirement (0+ / 0-)

          Raise your hand if you had planned to work longer but were laid off and couldn't find a job.

          These forced IRAs are just the privatization of Social Security with us taking all the risk.  And like Adjustable Rate Mortgage where the home owner takes all the interest rate risk.  Just as you can bet the market will crash sometime during your earning years, interest rates will peak sometime during that period.  And home owners / wage earners will be left holding the bag.  I was a millionaire once.  On paper.  Now I'm wondering if my savings will last my retirement or if there will be anything for my surviving spouse.  I may have to get a divorce to protect her.

          Even Democrats can be asses. Look at Rahm Emanuel.

          by Helpless on Sun Jul 07, 2013 at 05:32:05 AM PDT

          [ Parent ]

          •  Forced IRA contributions (0+ / 0-)

            is just privatized Social Security under another name.  We need to fix Social Security with its guaranteed benefits.  And the only way to fix it is to take more from the rich.  That's why these plans are floating out of the air.

            Even Democrats can be asses. Look at Rahm Emanuel.

            by Helpless on Sun Jul 07, 2013 at 05:36:16 AM PDT

            [ Parent ]

    •  Worse than that, really. (0+ / 0-)

      This is just another example of completely regressive policy.

      Those who most need to augment their (nonexistent) retirement savings will be unable to afford to do this, and will therefore get no benefit from it.

      And, since this is forced pre-tax savings, the higher your top tax bracket, the better the advantage.

      Finally, since those people who are not now saving for retirement but will under this regime are generally quite naive investors, expect them to do poorly in the market. Which, coupled with the fees which are all but certain to be present, means that if the economy stays crappy for the foreseeable future, as more and more economists are beginning to say looks likely, then they may well end up earning less than the rate of inflation on their money.

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