Americans’ retirement plans have lost as much as $2 trillion in the past 15 months, Congress’ top budget analyst estimated Tuesday.
The upheaval that has engulfed the financial industry and sent the stock market plummeting is devastating workers’ savings, forcing people to hold off on major purchases and consider delaying their retirement, said Peter Orszag, the head of the Congressional Budget Office.
Read it all. The collateral damage from this fiasco is simply astounding–makes the heart sad.
This is starting to hit the Church in some places. I know at least two rectors who are getting calls from retired parishioners about cutting their pledges (and worse).
Yet another reason to pray. Hard. Ceaselessly. Please join me y’all. I’m mighty weary.
we should really now privatize social security.
It’s the perfect time to privatize Social Security…buy low.
John,
The entitlement bust is right around the corner. We can try to expand the tax base, but we aren’t having enough kids and immigrants aren’t coming here to pay taxes for us. And they get old and sick too. We can inflate, in which case that Social Security check will buy you half a week’s groceries. Or we can means test, in which case a lot of us will net zero after a lifetime of payments.
Tell me again why I should support Social Security?
#5 Exactly.
1. We have had the housing bubble (now bust).
2. We have had the CDO/Credit swap bubble (rapidly deflating)
3. We have had the stock bubble (rapidly deflating)
4. We have had the insurance/annuities bubble (will not deflate for six months to a year)
5. Currently we have the Treasury bubble (due to the above three, and the fact that the worlds biggest debtor is also the holder of the worlds reserve currency. As the above leverage is paid/defaulted down, the hordes buying dollars will reverse, and the dollar will drop, and treasuries with it. (I give it six months)
Into this mess will ride the most entitled generation in history, who will be blamed for the greed, stupidity and selfishness that created bubbles 1-5, all ready to feed on Social Security and Medicare as they did on every other good part of the US economy.
The money will not be there, and the good will will be in even shorter supply.
#6 – all thanks to the some who who never believed in social security in the first place. As Grover Norquist said, shrink government so you can drown it in a bathtub. Yep: that’s how you create ill-will.
#5 – your comment is interesting, but you might want to use numbers before spouting off ideology.
John,
The retirement age will be raised again. The payroll tax will be increased again. The numbers do not work, and Bush fired the last Treasury secretary to point that out. Next will be means testing, and at that point savings will start heading offshore.
LIFE LINE
by HARRY NILSSON
Down to the bottom,
Hello
Is there anybody else here?
It’s cold and I’m so lonely,
Hello!
Is there anybody else here?
Hello (Hello, Hello, Hello)
Won’t you throw me down a Life Line?
I’m so afraid of darkness,
And down here it’s just like night time.
Oobelie, Ooobely, Oogolie, Oogolie,
Oohs..Are all around me.
Hello!
Will you please send down a Life Line?
Down,
And there isn’t any hope for me,
Unless this dream which seems so real,
Is just a fantasy.
********************************
Psalm 43:5
Why are you downcast, O my soul?
Why so disturbed within me?
Put your hope in God,
for I will yet praise him,
my Savior and my God.
I deferred my retirement from 1992 to 1994 precisely because the recession at that time signficantly reduced the dollar amount of my 401(k). That also meant that I was “buying low” and benefitting by the recovery. It appears that I will see a substantial reduction in my Minimum Required Distribution next year because of the deteriorating markets. Fortunately, I have substantial retirement income from other sources, so the pain will primarly be the consequence of inflation which has doubled this year and will continue to rise.
However, I would say that what is happening in the markets this year is a good object lesson in why Social Security should not be privatized. If one’s retirement were tied up in even a well designed IRA and one were about to retire or retired, one would see declining returns on bonds and values in stock — with cash being eroded by inflation.
We will get through it, but it will mean that the values espoused by the boomers will change back to those of earlier generations.
1. Since we will be depending on family rather than the social security check that now barely covers the weeks groceries, let alone the months rent, family will become more important. There will be less abandonment of wife and children in order to “find” oneself.
2. Since parents will be moving in with sons and daughters (and vice versa) grandparents will return to assisting in raising their grandchildren rather than living in golf course communities in Florida while their grand kids are raised by day care attendents or by their peer groups in Pennsylvania.
3. The idea that somebody should fail to invest in society by raising children, saving and working, but should instead live with their boy/girlfriend while using recreational drugs, and should then collect a check from the rest of society when they are no longer able to care for themselves will be seen for what it is: Profound selfishness and folly, since that selfishness will no longer be rewarded by government largesse.
4. Since family will be more important, and jobs less stable, there will be less emphasis on moving accross the country to “get that great job” and people will accept lesser positions in order to maintain their wealth in social networks rather than seeking monetary wealth.
5. Since it will no longer make economical sense to “marry the government” instead of the father of ones child (due to shrinking welfare checks) marriage will return to being a “good deal”.
Yes, we will get through it. And it will be good for us. I can’t wait for the entire perverted burden of Boomer values (enshrined and blessed by TEC) dies its well deserved death.
Actualy, if one was about to retire and had a moderately well designed IRA you’d mostly be in bonds, and would have had a return which is a bit beneath the consumer price index, but still positive, enjoying an increase in the value of your bonds as rates are cut.
One of the problems is too many people in their late 50s or early 60s run their 401(k)s as aggressively as someone in their 20s. I’m 95% equities, but I just turned 30 and can ride out a crash. Even so I may be too high, but my wife’s 401(k) is bond heavy to compensate. (Her company has better fixed-income products to chose from than I do, I have better equity products) Right now everyone is 100% invested in US Gov’t securities that yield less than Treasuries. We just call them Social Security checks.
Though I do think privatizing SS isn’t viable, we’ll still need some sort of net for those who badly mismanage their portfolios, though perhaps we could gradualy phase something in paired with mandatory basic financial literacy classes? Not that I’m hopeful when one considers how we’re doing at actual literacy.