Motley Fool Indeed

November 30th, 2018 at 5:49:36 AM permalink
odiousgambit
Member since: Oct 28, 2012
Threads: 94
Posts: 2356
ok, what's wrong with this statement?

Quote: motley fool article see link
[we are] making out like a bandit from Social Security ... In short, [we]'re collecting far more income from Social Security than [we]'ve paid into the program...According to the Urban Institute, a single man with low earnings ... would be expected to pay $135,000 into Social Security during his lifetime ... projected to collect $193,000 in lifetime benefits, beginning at age 65. That's an expected gain of $58,000 ... [this is modified for constant dollars]
He *does* go on to admit that middle class people don't do very well and that the wealthy actually collect less than they put in, which is one counter-argument to praise for SS.

Still, I'm really disappointed. How is it possible that someone working for Motley Fool could miss the other obvious counter-argument? which is, of course, that this type of savings for retirement is woefully a waste of money compared to others. It would be OK to argue that 'it is what it has to be', and in fact I didn't think George W. Bush's idea would work - his wanting to allow people to take a portion of contributions and do traditional investment with it. But writing such a defense, "it is what it has to be", is not the same as writing a column about how great the return for SS is, yet that is what this guy has done. 

Ponder this: a program designed the way SS is needs to be able to say that on average we only get back about what we put into it ... or the program can't work. 

And ponder what this fellow in the above example could have done if he could have put that money where it would have returned a modest 4%. Using the calculator in the link below, I had him contributing $80,000 over 45 years by using $148.15 a month. Note I wouldn't know how to use constant dollars, or have a calculator that can, so I used 80,000 instead of the $135,000 in constant dollars. Our boy would wind up with $219,800.05 instead of 193,000, and all he did was barely beat projected inflation. And he would be continuing to increase that amount if he was forced to have it be doled out over time like SS forces you to.

Don't put in something like 6, 7, 8%, just don't. 

I understand the counter-argument to this counter-argument is that this person would not save the money and invest it, he would instead blow it [most often]. Putting it 'into the bank' would also be a bust. I understand that and don't write my congressman every month saying we have to end what is actually an apparently essential program. 

I just don't see why Motley Fool, which often is on the money, all of a sudden needs to carry water for SS. 


article link: https://www.fool.com/retirement/2018/11/30/are-americans-getting-their-moneys-worth-from-soci.aspx


calculator link: https://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php
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November 30th, 2018 at 7:13:26 AM permalink
AZDuffman
Member since: Oct 24, 2012
Threads: 112
Posts: 8886
Quote: odiousgambit
ok, what's wrong with this statement?


What is wrong is that it even describes a Ponzi as a savings plan.

It would have worked so much better if they had put in individual accounts from the start, and just have a sunset tax for those that collected without paying in because they were 65 when it was created.
The man who damns money has obtained it dishonorably; the man who respects it has earned it