What the hell are people like this giving advice on retirement plan designs. The UK is probably the most thought out and sound retirement planning in the world. It also was where I first started working for an Actuarial consulting firm – so factor that into my comments. Traditional plans were based on assumptions of 40 years working, a defined benefit plan, funded by the company with assets put into a Trust from which no crazy government or employer could take away. The target pension was 2/3 of your final 3 year average earnings after the 40 years. That Target of 66.7% included Social Security benefits and a normal retirement age of 65. Why 67%? It was assumed that taxes would be lower, expenditures would be less in retirement. Plus, they didnt have to pay much for health care because, like every other country but America, has a national healthcare benefit as a right. Americas system was based on the not so clever 3 legged stool. Social Security, company pension, personal savings. Along with the failure of Unions, Defined Benefit(DB) retirement plans became rare because companies with millions and billions in assets decided to put the investment risk on individuals. There was also the facilitation of moving companies without complicated valuations of accrued benefits and defined contribution plans(DC) actually accrued faster in the earlier years. What was fucked up was the rate of contirubtions from companies was too low. Way too low compared to other countries. They should be putting in around 8% of your pay each year and employees 4%.
Other design mistakes included all the loopholes that allowed employees to withdrawal or borrow against their 401(k) plan balances. When that law was passed, I remember having a debate with out ERISA attorney and others that we should not allow it in our plans because it is the biggest piece of the retirement pie. But they opened it up to help emergencies along the way including buying a house or college. Then the inevitable result of a shortage of savings given the cuts in real incomes and increases in benefit costs all put on the backs of the regular employees.
What the hell are people like this giving advice on retirement plan designs. The UK is probably the most thought out and sound retirement planning in the world. It also was where I first started working for an Actuarial consulting firm – so factor that into my comments. Traditional plans were based on assumptions of 40 years working, a defined benefit plan, funded by the company with assets put into a Trust from which no crazy government or employer could take away. The target pension was 2/3 of your final 3 year average earnings after the 40 years. That Target of 66.7% included Social Security benefits and a normal retirement age of 65. Why 67%? It was assumed that taxes would be lower, expenditures would be less in retirement. Plus, they didnt have to pay much for health care because, like every other country but America, has a national healthcare benefit as a right. Americas system was based on the not so clever 3 legged stool. Social Security, company pension, personal savings. Along with the failure of Unions, Defined Benefit(DB) retirement plans became rare because companies with millions and billions in assets decided to put the investment risk on individuals. There was also the facilitation of moving companies without complicated valuations of accrued benefits and defined contribution plans(DC) actually accrued faster in the earlier years. What was fucked up was the rate of contirubtions from companies was too low. Way too low compared to other countries. They should be putting in around 8% of your pay each year and employees 4%.
Other design mistakes included all the loopholes that allowed employees to withdrawal or borrow against their 401(k) plan balances. When that law was passed, I remember having a debate with out ERISA attorney and others that we should not allow it in our plans because it is the biggest piece of the retirement pie. But they opened it up to help emergencies along the way including buying a house or college. Then the inevitable result of a shortage of savings given the cuts in real incomes and increases in benefit costs all put on the backs of the regular employees.
Press Release SSA.GOV
he Social Security Board of Trustees today released its annual report on the long-term financial status of the Social Security Trust Funds. The combined asset reserves of the Old-Age and Survivors Insurance, and Disability Insurance (OASDI) Trust Funds are projected to become depleted in 2034, the same as projected last year, with 77 percent of benefits payable at that time. The DI Trust Fund will become depleted in 2028, extended from last years estimate of 2023, with 93 percent of benefits still payable.
So, let us be clear, this is a projection of 17 years in the future. Nobody, even I have no idea of what will happen in those 17 years. Yet, everyone speaks as if this was a fact that Social Security(SocSec) is broke today. And most people have never learned Mark Twain’s quip that it is better to keep quite and let people think you are stupid then to open it and prove it.
The reason is because Wall Street and their politician puppets want the money. The $2.85 trillion dollar surplus, that has built up over the many years of yearly ontributions exceeding the benefits paid, is current invested in government bonds. Minimum risk but also funding the Republican deficit spending. Wall street would like to have that invested with them so they can get a piece of the action. Let’s imagine what might be a bigger problem for America before 2034.
Pollution. Warming climate. Higher death rates from heat. Power grid failures either naturally or via Russian hackers. A week of no power in Phoenix in August? 80 in May in boundary waters. Massive collapse of financial casino caused by the removal of any required reserves to cover risk. Republicans continue to allow the public to finance their friends gambling loses but not participate in the rewards. Continued job loss due to technology with no help for those unlucky workers like lawyers, doctors, truck drivers, taxis, call center reps, customer service, banking, IT, analysts. Meanwhile, the rest of the world works out a national income program that anticipates a world with work done by machines and individuals can advance onto high-level goals that sages have been telling us for 1000’s of years.