A Forum for Grinches and Ho-Ho-Hoes

[ltl/fb]

Originally posted by Gattigap
Wait. Don't Mormons go to fancy schools too?

Professional schools aren't fancy schools, even if you are at a place whose undergrad portion is a fancy school. You learn about odouoiuausyussys at them liberal arts placeses. Mormons do UG at BYU, baby, and major in pre-law, pre-med, and stuff.

I generalize.

[Sidd Finch]

Originally posted by Mmmm, Burger (C.J.)
And, btw, go do a compouding calculator and see the difference between a 2% and 4% return over 40 years. It's a pretty big nut by the time you're done.

Using the rule of 72 as a guide, 2% return means your money will double in 36 years, then grow a bit more by year 40. 4% means it will double in 18 years, redouble at 36, and grow a bit more by year 40.

So the 5k you put away in Year 1 goes to around 11k, or to around 24k. The difference is substantial.

Unfortunately, you can't assume steady growth in the stock market. We've all heard how stocks outperform -- but that is historically, over time, past performance that does not guarantee future results, yadda yadda yadda. If Year 40 in this scenario is comparable to, say, 2001... ouch. Or 1987 -- you don't have to use the "Depression/1929" scenario for it to be scary.

Moreover, no one that I know of has done a study of stock market returns in years following big in-flows. I would think, though I don't know all the numbers, that any PRA program worth the effort would result in a pretty substantial inflow, one large enough to puff up share prices. And that creates a dangerous situation -- the investor who gets in during a run-up is always the most vulnerable.

People who have substantial amounts in the market already will benefit from the run-up. People who depend on SS, supposedly the ones this program is supposed to help, will be the most vulnerable and may ultimately be screwed.

[sgtclub]

Originally posted by Mmmm, Burger (C.J.)
Here's the problem with that argument--by keeping the percentage in private accounts low, you lose most of their purported benefits. If they're the real cheese, why not go all in?

And, btw, go do a compouding calculator and see the difference between a 2% and 4% return over 40 years. It's a pretty big nut by the time you're done.

Your points conflict.

[sgtclub]

Originally posted by Mmmm, Burger (C.J.)
And just like that, 290M people stopped paying for your retirement, your health care, your roads, your defense, your air traffic control. And so on.

I don't want people paying for MY retirement or MY health care.
I don't need 290M paying for my roads. The 700K in SF are plenty.
We all benefit from defense.

[Mmmm, Burger (C.J.)]

Originally posted by sgtclub
Your points conflict.

How? They're related only by the general subject. One goes to the merit of the accounts, posited bu you. The other goes to the potential risks of them.

[Mmmm, Burger (C.J.)]

Originally posted by Tyrone Slothrop
If it's revenue neutral, why would anyone bother to save more?

Are we talking about different things?

IRAs are revenue neutral, they just time shift the taxing.

Roth conversions move up the taxation event for those who chose it.

Having either--creating some tax advantage, encourages savings.

But I'm talking about how to pay now for a reduced tax base resulting from increased IRA/401k savigns. So, having increased the deferral of taxes by liberalizing IRAs, you claw back that money by giving others an incentive to pay the taxes now.

[Tyrone Slothrop]

Originally posted by Mmmm, Burger (C.J.)
Are we talking about different things?

IRAs are revenue neutral, they just time shift the taxing.

Roth conversions move up the taxation event for those who chose it.

Having either--creating some tax advantage, encourages savings.

But I'm talking about how to pay now for a reduced tax base resulting from increased IRA/401k savigns. So, having increased the deferral of taxes by liberalizing IRAs, you claw back that money by giving others an incentive to pay the taxes now.

I thought you were suggesting that raising the cap on IRA contributions might be revenue-neutral for the government, in that contributions are taxes later, though perhaps at a different rate. I don't think this is likely, nor do I think you think it is likely. But if it is, wouldn't that mean there would be no incentive for taxpayers to put additional $$$ into their IRAs?

Agree that you could offset the IRA thing with the Roth thing, and have nothing useful to say about that. Except that you would be deterring people from putting money into Roths, but you know this.

[ltl/fb]

Originally posted by Mmmm, Burger (C.J.)
Are we talking about different things?

IRAs are revenue neutral, they just time shift the taxing.

Roth conversions move up the taxation event for those who chose it.

Having either--creating some tax advantage, encourages savings.

But I'm talking about how to pay now for a reduced tax base resulting from increased IRA/401k savigns. So, having increased the deferral of taxes by liberalizing IRAs, you claw back that money by giving others an incentive to pay the taxes now.

Having lots of conversions to Roths would produce a windfall now but would have a detrimental effect on overall tax revenues, even if rates stay the same, because any post-conversion earnings would never be taxed.

Which is, I think, why they limit Roth IRAs and conversions to people who would on the whole be expected to have smaller accounts.

[sgtclub]

Originally posted by Mmmm, Burger (C.J.)
If you were in that situation, I would not be willing to take the chance that you invest wisely. Why do you think we give food stamps instead of cash money to the poor?

Presumably, given the limited investment choices and limitations, there would be no way to invest unwisely.

[ltl/fb]

Originally posted by sgtclub
Presumably, given the limited investment choices and limitations, there would be no way to invest unwisely.

Over what time frame? If you are only going to allow investments in truly guaranteed investments (like money market/stable value), the returns will likely be only very slightly higher than inflation -- so unless people are saving roughly the same amount they are living on currently, it won't suffice for retirement.

[sgtclub]

Originally posted by Mmmm, Burger (C.J.)
How? They're related only by the general subject. One goes to the merit of the accounts, posited bu you. The other goes to the potential risks of them.

Because in the first you say the benefit is low, and in the next you imply that it's not low.

[sgtclub]

Originally posted by ltl/fb
Over what time frame? If you are only going to allow investments in truly guaranteed investments (like money market/stable value), the returns will likely be only very slightly higher than inflation -- so unless people are saving roughly the same amount they are living on currently, it won't suffice for retirement.

Time frame depends on how far away you are from retirement.

[ltl/fb]

Originally posted by sgtclub
Because in the first you say the benefit is low, and in the next you imply that it's not low.

Large proportionally does not mean actually a lot of money.

[sgtclub]

Originally posted by ltl/fb
Large proportionally does not mean actually a lot of money.

Honest question: Did you even read the thread we were discussing or did you just feel like arguing?

[Hank Chinaski]

Originally posted by ltl/fb
Over what time frame?

time frames require consideration of slope and Ty says we can't consider it.

you know the science lite guys who take the "physics w/o calculus being necessary" classes- sure they know physics- hell they got a 3.0!