Quote:
Originally posted by Sidd Finch
No. I'm not talking about every year being a bear market. One very bad year will cause a whole lot of pain for people who are relying on SS as their safety net. Ask anyone what was planning to retire in 2002 what happened to their plans. Then consider what would have happened to those people if they were completely dependent on their private savings, and if those private savings, even in a good-case scenario, had been only enough to cover basic living expenses.
|
Well, those folks had a few different choices. They could put off there retirement for a year or two - unfortunate but hardly a tragedy. Or they could risk it and retire, hoping that their nest egg will grow sufficiently to cover their needs.
Again, you (and others) seem to be looking at this as if the individual retiree is getting entirely in at the beginning, and out at retirement.
Quote:
|
Once again, no. The "run-up" to which I refer is not caused by a single investor, but by the aggregate of people putting a substantial portion of their SS taxes into the market.
|
I didn't suggest that the "run-up" was the result of a single investor. I suggested that any given investor was not getting "in" during a run up. They were getting in over time with a small systematic investment. And getting out the same way. The result is substantially decreased exposure to swings in the market.
Quote:
In 2002, SS revenues were over $615 billion (and that was a relatively low year given the performance of the economy that year). I don't know what the current Bush plan is, assuming there is such a thing, but people have floated the idea of half of SS taxes going into the market -- even if it's half of the employee's contribution, that is a huge chunk of money suddenly added to the market. Particularly if the investment choices are restricted to a much smaller subset of the overall market, as many have proposed.
|
Yes. We have no disagreement that there will be a lot more money out there in the market. Nor do I think we disagree that neither of us really knows what the net effect will be. Especially as the flow of money into the markets will be relatively constant over time, rather than just a big dump on the front end.
