Social Security Funds

dusty · Post by **dusty** » Fri Jan 11, 2013 12:51 pm

fredsheldon wrote:Dusty, I think you just made the case for Social Security. Who do you trust the most to manage your retirement money, the Bernies of the world or the government? Not sure there is a easy answer.

I'm not sure that there is a difference. I believe that if I had been given a choice to not contribute to my social security fund, I would not have. I might not have done a good job of handling that money but I would not be a taker today.

heathicus · Post by **heathicus** » Fri Jan 11, 2013 1:00 pm

Dusty, you're only "technically" a taker because of the way those smart guys Fred wants to make our decisions for us have run the Social Security program.

But, I don't consider you a "taker" and you shouldn't consider yourself one either. You paid your dues, you put your money into the system, promises were made to you in return, and those promises should be kept.

pennview · Post by **pennview** » Fri Jan 11, 2013 1:50 pm

No one receiving Social Security benefits is a "taker." They paid into the program and are owed the benefits they receive. Twas a poor choice of a word to use regarding recipients of Social Security. Another is to label the benefits as "entitlements."

pennview · Post by **pennview** » Fri Jan 11, 2013 1:56 pm

Regarding so called smart guys managing other peoples money for retirement, folks should know that every federal employee that participates in the Thrift Savings Plan (their 401k-type program) has to manage their own retirement fund by determining whether they want to invest in stocks, bonds or government securities, or some combination. So whether they are senior executive types like a cabinet secretary or a member of the housekeeping crew, they make their own choices.

fredsheldon · Post by **fredsheldon** » Fri Jan 11, 2013 3:07 pm

Art, usually the options offered to the employee are limited to a select few funds selected by a committee and are usually low risk. This is good. But once you retire from government service you are free to roll over your 401k to an IRA and choose any fund out there. Some are low risk and others are high risk. Returns are usually higher for the higher risk funds. Knowing I always had my SS to fall back on I elected to go the higher risk route for my 401k fund reinvestments in the hopes I would realize greater gains. So far I have been lucky. However, I could have lost my shirt as well. Now if all my retirement funds were to come only from funds of my choosing from day one, I'm sure I would have selected a much less risky fund and realized a much smaller gain over the years. I wished I had all that money I have contributed to SS over my 55 years of employment, but I'm not sure I would have made the right choices back then that would have provided me with a fat nest egg today. At least with SS it doesn't matter how bad of an investor I might have been, I knew I would still have something coming in and I know exactly how much it will be. Now it's time to go make some bowls. Have a great weekend.

pennview · Post by **pennview** » Fri Jan 11, 2013 3:28 pm

To make it clear, federal employees can choose safe government securities where the returns are low but there is no risk to funds invested. They can have their investments by so-called professionals. Or, they can manage their own savings. They can choose stock or bond funds in which they share the same market risks as anyone else invested in the market. They can lose their shirts as some did just a few short years ago.

They also pay into Social Security.

swampgator · Post by **swampgator** » Fri Jan 11, 2013 10:24 pm

pennview wrote:Backhertz, members of Congress and their staffs (like all federal employees) now pay into Social Security. They are not exempt. Paying into Social Security was required for all new federal employees beginning in 1986. Those hired before then had the option of paying into Social Security or continuing with the Civil Service Retirement System. Congress realized in 1986 that it couldn't continue to afford the retirement system then in place so it created the Federal Employees Retirement System with employees paying Social Security taxes and in addition having a 401K-like program as well.

Just a correction on the year. It was 1 October 1983. All those hired at the time went under Social Security. Pressure was applied to convert many of the old timers from CSRS to Social Security.

Here is a good explanation of TSP funds and management. Not an official website, just a market view.
http://sumgrowth.com/TSP/?referralId=10 ... nQodkTIAYg

Oh, for my experience, worked 35 years as a DOD employee. Worked 6 of those years in personnel when these changes came about and helped folks to decide if they wanted to stay CSRS or go to FERS (Social Security with TSP). TSP is also available to military members.

Now, just to be helpful. Those mechanics on the benches rebuilding components of tanks, ships, and planes are normally WG 7 to WG 10. You can see the wage scales here.

http://www.cpms.osd.mil/Subpage/Wage/LatestSchedules/ These folks are the blue collars and their supervisors make about $2 more per hour. Look under the crafts and trades.

For those administrative folks like social security workers, IT, and other clerical workers who normally top out about GS 11, look here. (But, know this. Since 1986, civilian workforce has been reduced from 1 federal employee to every 75 citizens to 1 federal employee for every 200+ citizens.)

http://www.opm.gov/oca/12tables/indexGS.asp

I was under the Atlanta schedule as a GS 11 programmer. Could have made twice the money outside working for a local bank or other financial business.

paulmcohen · Post by **paulmcohen** » Sat Jan 12, 2013 12:42 am

fredsheldon wrote:Paul, I agree with you on this. The problem is most common folks are not good at managing their own investments in the stock market and stand the risk of losing much of their money. It sure would be nice if there were mutual funds available that didn't have management fees or front end loads in which workers could invest to lower their investment expenses. I still have 8 shares of stock that I have been holding on to from my original oil company job for 30 years. Today, that stock is worth $53.98 per share which is $2.34 lower that what I paid for it. Had I left all my 401K in that fund, which is what the company forced us to invest in, I would be in the hole today. But, I invested all my money in Fidelity High Income Bond Funds and my investments have more than doubled in the last 10 years. Would the common worker have made the same wise investment decision? At least SS will provide them with something no matter how bad of an investor they may be.

Investing in one stock is stupid unless you picked the right stock and I would never recommend that. But you would still be better with that stock then "your investment in SS". It is unlikely anyone under 40 will ever see their investment in SS back especially if they die before the age of 70.

We would all be better being force to invest the money as we see fit, the problem is the government spent the money to grow the government, after the baby boomers stop working the system and the size of our government is unsustainable.

paulmcohen · Post by **paulmcohen** » Sat Jan 12, 2013 12:46 am

fredsheldon wrote:In order to realize a dividend payment from an IRA invested in a high income mutual fund equal to what you would receive from SS each month you would need a principle of at least 1/2 million dollars. Do you believe most low or middle income workers would have the discipline to accumulate and hold on to that much cash on their own? Now if the government forced them to not touch it that might work.

Forcing them to invest it, is what they are doing today.,Today it is not being invested, it is being spent to grow the government in a pyramid scheme.

paulmcohen · Post by **paulmcohen** » Sat Jan 12, 2013 12:56 am

dusty wrote:So the common folks should just put their faith and money with some guy who will manage it for you. Someone like Bernie Madoff. He wasn't common folk and he knew how to handle your money.

The key is diversification. Bernie scammed people who were looking for crazy returns and go what they deserved. Enron would be a better case, I lost $1,000 on Enron. I also lost $3,500 on the Facebook IPO but the same week I made $4,500 on another investment. I lost $0 through the last two market crashes since learning how to invest after the 1988 crash. But even if I lost everything I would have done no worse then my father and mother who both died before ever collecting SS after paying into it their whole life.

SS is a Pyramid Scheme that Bernie would have been proud to run.