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Old 01-16-2013, 10:03 AM   #316
eliza61

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Originally Posted by preschoolmom View Post
I believe that Social Security will change, and those of us that have built a healthy retirement in 401Ks and IRAs will not qualify for Social Security. That's what I mean by means tested.

I hope you're right. I hope that it is still there (my husband and I have been paying in all our working lives) - but I'm not counting on it.
Which is an excellent way to go about it because the system was never meant to be anyone's source of living and comfort.

Myself and many other economist (I'm not an economist, I just read non stop because I'm entering into aarpville so any thing washington does concerning social security, medicare or elder care I follow like a stalker) don't think ss will go away, like I said it's funded by workers so unless every one just simply stops working some thing will be in the pool BUT you are right due to various reasons it will be underfunded if some thing doesn't change.
Remember social security is a bill, a law so even if you make a gazillion dollars, the formulation (as it stands today) will generate you a check. Warren Buffett is eligible and would receive a check and he's rich as all get out. I have heard he has not applied. Bill Gates will be eligible, Oprah, Beyounce will all get a check.

I think though in order to change the formulation, let's say make it need base we would need a congressional act. I'm not 100% sure on how they make changes, I gotta research that. I'm a little more optimistic about it not happening simply because look how hard it was for them to even move the eligibility age.
and late word is even with a debt ceiling meltdown, rumor has it that social security will not undergo a cut.

I think though we (country) are emphasing the wrong goal. Like I said SS was never meant to fund anyones retirement especially now that we are living so long. I think we should really kick up how to get more people to save, how to get more young workers to learn about compounding interest.
When I was a kid you got reward for saving (monetarily). you got toasters, green stamps, prizes for saving. How do we increase the rate of 401K contributions (I think only some thing like 30% participate).


Truthfully I think they should have a reality show, sort of like scared straight. Show people how seniors living solely on ss really live. If that didn't scare some one into savings nothing would. It ain't pretty.
Just my ramblings.
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Old 01-16-2013, 10:15 AM   #317
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Originally Posted by eliza61 View Post
Which is an excellent way to go about it because the system was never meant to be anyone's source of living and comfort.

Myself and many other economist (I'm not an economist, I just read non stop because I'm entering into aarpville so any thing washington does concerning social security, medicare or elder care I follow like a stalker) don't think ss will go away, like I said it's funded by workers so unless every one just simply stops working some thing will be in the pool BUT you are right due to various reasons it will be underfunded if some thing doesn't change.
Remember social security is a bill, a law so even if you make a gazillion dollars, the formulation (as it stands today) will generate you a check. Warren Buffett is eligible and would receive a check and he's rich as all get out. I have heard he has not applied. Bill Gates will be eligible, Oprah, Beyounce will all get a check.

I think though in order to change the formulation, let's say make it need base we would need a congressional act. I'm not 100% sure on how they make changes, I gotta research that. I'm a little more optimistic about it not happening simply because look how hard it was for them to even move the eligibility age.
and late word is even with a debt ceiling meltdown, rumor has it that social security will not undergo a cut.

I think though we (country) are emphasing the wrong goal. Like I said SS was never meant to fund anyones retirement especially now that we are living so long. I think we should really kick up how to get more people to save, how to get more young workers to learn about compounding interest.
When I was a kid you got reward for saving (monetarily). you got toasters, green stamps, prizes for saving. How do we increase the rate of 401K contributions (I think only some thing like 30% participate).


Truthfully I think they should have a reality show, sort of like scared straight. Show people how seniors living solely on ss really live. If that didn't scare some one into savings nothing would. It ain't pretty.
Just my ramblings.
I'd watch that show.
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Old 01-16-2013, 10:38 AM   #318
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When they've talked about means testing SS, they have talked about making a trade. One that gets talked about is not taxing your 401k/IRA disbursements up to the Social Security amount. It will screw Roth users, some provision will have to be made there, and its just moving money from pocket to pocket (forgoing income tax to avoid paying out social security)

Remember, savers, our government doesn't like to screw over the wealthy. Saving will work to your benefit given the bias of our Congress.
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Old 01-16-2013, 10:44 AM   #319
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Originally Posted by preschoolmom View Post
I believe that Social Security will change, and those of us that have built a healthy retirement in 401Ks and IRAs will not qualify for Social Security. That's what I mean by means tested.

I hope you're right. I hope that it is still there (my husband and I have been paying in all our working lives) - but I'm not counting on it.
I do believe SS will be there, but the dollar amount will be a joke. I am not counting on it either. It'll be my "fun" money when I retire. LoL
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Old 01-16-2013, 10:49 AM   #320
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I don't understand why you say that it means it isn't working
It's not working because people are living much longer, so many people are receiving benefits for 30 years past retirement, thus receiving more in benefits than they ever paid in. How can a system like that work in the long run?
Also, there are many people receiving benefits who have never worked at all. I have a friend who was in a car accident at age 18 and has received benefits for 40 years and has never worked. Similar thing for an aunt who is very overweight and hasn't worked since age 40 and has been receiving benefits for 30 years and will receive for her entire life.
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Old 01-16-2013, 12:06 PM   #321
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Quote:
Originally Posted by eliza61 View Post

I think though we (country) are emphasing the wrong goal. Like I said SS was never meant to fund anyones retirement especially now that we are living so long. I think we should really kick up how to get more people to save, how to get more young workers to learn about compounding interest.
When I was a kid you got reward for saving (monetarily). you got toasters, green stamps, prizes for saving. How do we increase the rate of 401K contributions (I think only some thing like 30% participate).
eliza if you figure out how to increase 401k participation I would love to know. I am a HR Mgr and we have a dismally low participation rate. We have a good plan and even have a consultant who can give limited advice on what option to pick but I haven't had a new enrollee in several quarters.

Even more distressing is when people leave and opt to take a payout (with penalty) over rolling the funds into a difference account.
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Old 01-16-2013, 12:27 PM   #322
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Originally Posted by leahjade View Post
It's not working because people are living much longer, so many people are receiving benefits for 30 years past retirement, thus receiving more in benefits than they ever paid in. How can a system like that work in the long run?
Also, there are many people receiving benefits who have never worked at all. I have a friend who was in a car accident at age 18 and has received benefits for 40 years and has never worked. Similar thing for an aunt who is very overweight and hasn't worked since age 40 and has been receiving benefits for 30 years and will receive for her entire life.
The friends are probably getting SSI benefits. which is funded via other revenue (taxes). In order to receive disability benefits from ss, your parent or spouse must be contributing to the system. Now your aunt would be eligible because she has been paying into via the time she did work. If I became disabled I would get both ssi and ss disability benefits because of my work history and yes you are correct if I began getting them today I would continue to get them until I die, which for the average female would be another 25-30 years.
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Old 01-16-2013, 12:33 PM   #323
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eliza if you figure out how to increase 401k participation I would love to know. I am a HR Mgr and we have a dismally low participation rate. We have a good plan and even have a consultant who can give limited advice on what option to pick but I haven't had a new enrollee in several quarters.

Even more distressing is when people leave and opt to take a payout (with penalty) over rolling the funds into a difference account.
One idea some companies are trying is automatic opt in. The reasoning behind that seems to be is that a lot of new employees will budget down to their check. Sort of the "you can't miss it, if you never have it". A few places found that when they automatically opt their employees in very few take the time to do the paper work to leave the plan.

Another thing some companies are trying is biweekly statements when you get your paycheck. It seems people are more likely to continue to save when they see the amount actually grow. Along the same line as folks on a diet. when you diet and see that inital 10 pounds drop off you get really psyched to keep going so you tend to continue.

You're right about the payouts. Washington post just had an article yesterday about people spending their 401K's

http://www.washingtonpost.com/busine...5c8_story.html
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Old 01-16-2013, 12:48 PM   #324
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Quote:
Originally Posted by eliza61 View Post
One idea some companies are trying is automatic opt in. The reasoning behind that seems to be is that a lot of new employees will budget down to their check. Sort of the "you can't miss it, if you never have it". A few places found that when they automatically opt their employees in very few take the time to do the paper work to leave the plan.

Another thing some companies are trying is biweekly statements when you get your paycheck. It seems people are more likely to continue to save when they see the amount actually grow. Along the same line as folks on a diet. when you diet and see that inital 10 pounds drop off you get really psyched to keep going so you tend to continue.

You're right about the payouts. Washington post just had an article yesterday about people spending their 401K's

http://www.washingtonpost.com/busine...5c8_story.html
The CFO and I have discussed automatic enrollments but I really think it would cause problems for my company. Employees just don't review their paystubs and I can see the blowups occurring when they realize what happened. While it would be legal I think it would leave a bad feeling with the employees.

My DD17 had a job with the town and has $25 in their retirement plan. I was explaining how she needs to move it to another instrument and let it keep accumulating interest. Once she gets a full time job, she can add more to it.

I wish my parents explained it to me when I was younger but dad had a state pension and mom was a stay at home mother so I don't think it crossed their minds.
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Old 01-16-2013, 12:55 PM   #325
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eliza if you figure out how to increase 401k participation I would love to know. I am a HR Mgr and we have a dismally low participation rate. We have a good plan and even have a consultant who can give limited advice on what option to pick but I haven't had a new enrollee in several quarters.
This article appeared in our local paper this week and I thought it was an interesting take on increasing participation. It's keeping up with the Joneses in saving, not spending. There are a lot of flaws with the idea, as the article notes, but interesting nonetheless.
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Old 01-16-2013, 01:59 PM   #326
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The CFO and I have discussed automatic enrollments but I really think it would cause problems for my company. Employees just don't review their paystubs and I can see the blowups occurring when they realize what happened. While it would be legal I think it would leave a bad feeling with the employees.

.
LOL. YOu know Arielle, I think this is the core of the problem. We (country we) as so financial illiterate. I too have big time scientist who have said flat out they don't even look at their paystubs. My company no longer gives paper checks, you must have direct deposit, since we switched to that no one even bothers to look up their electronic paystub.
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Old 01-16-2013, 02:35 PM   #327
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This article appeared in our local paper this week and I thought it was an interesting take on increasing participation. It's keeping up with the Joneses in saving, not spending. There are a lot of flaws with the idea, as the article notes, but interesting nonetheless.
Not directly on point to the expiration of the SS tax holiday, but in case anyone is getting motivated to save more for retirement, I wanted to make the case for fully funding an HSA (to the extent it's available to you) before funding a 401k due to the triple tax advantage. After that, I'd fund the 401k up to the company match, and then into a Roth or regular IRA, depending on personal financial circumstances and goals.
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Old 01-16-2013, 02:59 PM   #328
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Employees just don't review their paystubs
So true! I wish everyone had to write a check each week to the government to pay their taxes - I think it would shock a lot of citizens and make them think twice about how much of their money they are giving up to sometimes wasteful spending. Maybe people would give a second thought to tax increases that people now just seem to take in stride without protest and become more involved with trying to change the system.
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Old 01-16-2013, 03:19 PM   #329
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My company did the automatic 401k enrollments last year. They sent out letters saying that if you weren't already contributing to your 401k, they were going to enroll you in 3% unless you called to opt out. After that, they'd increase by 1% each year until you hit 6%. I couldn't believe there were that many people not contributing that they'd do that, but I guess there are... It especially shocks me since they match 50% of the first 6% you put in, so you're throwing away an extra 3% of your salary.
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Old 01-16-2013, 03:26 PM   #330
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Even more distressing is when people leave and opt to take a payout (with penalty) over rolling the funds into a difference account.
Arielle, I am going to put my .02 in on this. When I left my first job, I was in my early 20's (over 20 years ago) I opted for the payout. I never new any different. My parents never did any investing other than savings bonds, cd's, etc. No one at my job tried to explain to me what I was doing by taking my funds. (I know it was not in the job description.) I wish someone in the HR who knew more than I would have offered to explain this to me or put me in the right direction to learn. Maybe some of these people do not understand a roll over account.
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