SS calculator

[Martlet]

Originally posted by oboe
I am trying to look at it objectively.    It doesn't help to look at it any other way.    I reasonably expect benefits to be reduced and taxes increased.  

I don't think there is anything reasonable about that.  

I'd rather take the risk of losing some than the guarantee the government will take some.

[Toad]

Tell me this... if any SS participant invested the same monthly amount for 25 years in a simple Whole Life insurance policy, how much would he have available for withdraw at retirement IN HIS NAME?

And in the meantime, his family would have how much insurance in case of untimely death/

[oboe]

Martlet,

It is reasonable to expect some form of SS tax increase and/or some form of benefit cuts.   If nothing is done to shore up SS, it will result in a benefit cut.    In order to shore up SS, you must have increased pay-ins and/or decreased payouts.   Sorry, but I don't see any other possibilities.  Doing nothing = benefit cut.
Doing something probably means increased taxes somehow/someway.   I didn't say I liked the prospect but there it is.

Toad,

You haven't provided enough information, but in general Whole Life policies aren't real hot investment vehicles.    I did a short net search to try to find some policy illustrations but everybody wants an email address to sell something.    In general though the investments underneath life insurance policies are very conservative - 3-4% guaranteed.   "Whole Life" means the premiums are payable to age 100 usually, though some plans accelerate premium payment schedules so you can pay it in a shorter time period.   His family would of course have the death benefit if he died, but doesn't SS also provide survivor benefits?

I'll keep looking for a free, quick policy illustration and post back here when I find it.

[Martlet]

Originally posted by oboe
Martlet,

It is reasonable to expect some form of SS tax increase and/or some form of benefit cuts.   If nothing is done to shore up SS, it will result in a benefit cut.    In order to shore up SS, you must have increased pay-ins and/or decreased payouts.   Sorry, but I don't see any other possibilities.  Doing nothing = benefit cut.
Doing something probably means increased taxes somehow/someway.   I didn't say I liked the prospect but there it is.

.

I see plenty of things.  

We can start with "give me my money and let me invest it."

[Silat]

Originally posted by Martlet
You've done a lot of foot stomping, but you've yet offered up a better solution.

Did you cry when Clinton suggested we privatize aspects of SS during his term?

Foot stomping? I asked if private accounts fix the problem as the Pres insinuated. And I dont have a solution.Do you?

[Martlet]

Originally posted by Silat
Foot stomping? I asked if private accounts fix the problem as the Pres insinuated. And I dont have a solution.Do you?

Yep.  Bush's looks fine to me.

[Silat]

Originally posted by Krusher
This SS calculator shows a different POV

That is certainly bipartisan:)

The Calculator does not model the Bush reform plan, but it does estimate for comparison purposes how much you could accumulate with all your Social Security taxes in a personal retirement account.

Guess the stock market will always be going up:)

[Silat]

Originally posted by Martlet
Yep.  Bush's looks fine to me.

Bush plan??? I havent heard a Bush plan yet. Please enlighten all of us as you must know something the rest of us dont. He has only mentioned private accounts which as has been pointed out already, does nothing to fix SS.

[Martlet]

Originally posted by Silat
Bush plan??? I havent heard a Bush plan yet. Please enlighten all of us as you must know something the rest of us dont. He has only mentioned private accounts which as has been pointed out already, does nothing to fix SS.

That's what I was referring to.

Of course it does nothing to fix social security.  It can't be fixed.  It needs to be replaced.  

Hence, private accounts.

[Toad]

Originally posted by oboe
Toad,

You haven't provided enough information, but in general Whole Life policies aren't real hot investment vehicles....In general though the investments underneath life insurance policies are very conservative - 3-4% guaranteed.... His family would of course have the death benefit if he died, but doesn't SS also provide survivor benefits?

And SS is a "real hot investment" vehicle?

Checked the returns on T-bills over the last few decades? Not a "real hot investment vehicle" either. About like Whole Life, isn't it?

Yet let Bush even mention letting people put some money into their own name in the market... which HAS been a "real hot investment vehicle" for some people at some time and for a select group nearly all the time.... and people SCREAM.

So do you want a "real hot investment vehicle" or not? Because SS surely does not qualify.

Death benefits: the famous "it depends". Depends on who dies first, how old the kids are, etc., etc.  Not the case with Whole Life.

Consider this: Employer and Employee taxes are about 15% of a worker's income. So, for ease of purpose, let's say the worker makes $50,000. 15% of that is $625 per month that goes to SS.

What amount of Whole Life could you get for that kind of monthly payment?  I suggest a HUGE amount.

[lazs2]

oboe... I can't really believe you are serious.  A person can't afford a couple of bucks a week that will snowball into, not 7,000 but tens of thousands of dollars over 30 years...  they can't afford that but they can afford to piss away hundereds of dollars a month on SS??

NO ONE works 30 years for minimum wage.   Mininmum wage is not a guarentee of a living wage.  it is meant to keep from exploiting teenagers or some such..  Adults do not even think about minimum wage.

SS is simply a poor investment and thinking that having SS is your entire retirement plan is the height of stupidity.  

lazs

[oboe]

I think I misunderstood your intention regarding the WL, Toad.
No, its not a real hot investment vehicle, neither is SS.    Real hot investment vehicles imply somebody could lose their shirt.   I don't think we'd want that with a person's retirement savings.
That is why people scream about investing retirement income in the stock market, I think.   Retirement income just has to be there for us.

So no, I don't want a 'real hot investment vehicle' for my retirement income.  I want something conservative that is going to be there for me when I need it.

I take your point about the WL now.   I'll try to find out what $625/month could buy in Whole Life for a40 yr old male in good health.

[Toad]

OK, Oboe.. perhaps I wasn't very clear. I'll be interested in what you find as well.

Might run it for a 25 year old worker going up to age 62 retirement. Even averaging $400/month over all those years, $200K invested in Whole Life should be pretty impressive at retirement. Not to mention the insurance security for anydesignated heirs should the worker die before that age.

Maybe we've stumbled upon something that both the Dems and Reps could support.

 I must be drunk!

[oboe]

Here's a quick answer from an insurance agent (sorry I missed the changes from your post above):

Here's results with a large mutual (A++ / AAA) company whole life.
Male 40yo 2nd best class (select preferred n/s).

I used 12.4% of $50,000 as my premium ($6200/yr). (Didn't use the 2.9% Medicare tax). This ignores likely increases in wages (makes believe there is zero inflation).

I subtracted $1000 from the $6200, because social security provides some disability insurance, so assuming this 40yo would use the $1000 to purchase disability insurance to replace Social Security Disability Insurance.

So using $5200/yr premium into a $350,102 face participating whole life contract with waiver of premium, using non-guaranteed dividends to purchase paid up additions, values at age 65 are:

Age 65 guaranteed cash value: $144,091
Age 65 guaranteed death benefit: $350,102

Age 65 cash value including dividends: $214,637
Age 65 death benefit including dividends: $471,337


Decreasing the face amount to $200,000 and using the same $5200/yr premium results in less life insurance but more cash value as follows (this policy is a Modified Endowment Contract/MEC):

Age 65 guaranteed cash value: $158,053
Age 65 guaranteed death benefit: $332,826

Age 65 cash value including dividends: $235,766
Age 65 death benefit including dividends: $467,697

So, roughly $214,000-230,000 cash value is not a great deal of money to fund a retirement.   But that is a guaranteed value so actually it may end up higher.   And I suppose every year you could purchase additional insurance with any salary increases (although the Cost Of Insurance increases with your age).

Really, its not as much as CV I thought it would be.    It'd be higher if you started younger than 40, but I still doubt we've found a secret solution to the SS 'crisis'.

Couple of other things -

The insurance company may not be as likely to be around in 50 years as the US government.   Small chance, but still a risk.

A significant portion of people would simply choose NOT to do this with their money, and they would survive to be a burden on society in the old age.   Just human nature.    Making it required for everybody through SS is one way to solve that problem.

[Krusher]

Originally posted by Silat
That is certainly bipartisan:)

The Calculator does not model the Bush reform plan, but it does estimate for comparison purposes how much you could accumulate with all your Social Security taxes in a personal retirement account.

Guess the stock market will always be going up:)

ok you win. your facts are non-biased and proof positive that SS is here to stay and nothing should be done at all.  Its a perfect system that we all can live a middle class lifestyle with in our retirement.


I will continue to add my spare change to the stock market and my 401k and live in poverty and despair because I missed the SS boat.