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

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  •  Not cherry picking - your period is meaningless (2+ / 0-)
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    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 ]

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