From: "Glenn Meadows" 

Another point to consider, is if employers didn't have to pay in 7.5%
matching, and for employees who opted to fund their own, that $$ amount
could go to them.  Set it up Tax Free, as long as you contribute 15% of
your income to a retirement fund.  That would be the incentive for people
to invest it, rather than spend it.  I know when I owned the studio, I
looked every year at what my TOTAL payroll expense was, NOT just the direct
to the employee payments were, when considering what i had available to pay
the employees each year.

I KNOW I'd be able to do better than what SS is doing with the money,
spreading it across several long standing Mutual Funds.

Shelley just did that with her self directed pension plan at Vanderbilt.
It's a mandatory deduction for all employees, and Vanderbilt will match up
to 5%.  The employees get to choose how the funds are distributed, based on
their needs/desires.  There are a bunch of funds to choose from, and
movement within the funds is a free transfer, all done online.  You can
balance among very aggressive (wildly fluctuating) funds, to very
conservative (lower annual returns, but steady over the long haul).  With
the balance she's got going, even in the down market, she didn't lose any
value, and has been averaging 14.2% a year since she started at Vandy.

I wish where I work had a matching 401k.  I'm setting up my own fund now.

--
Glenn M.


"Mark"  wrote in message
news:413d3300{at}w3.nls.net...
> Yes, Gary, that's why the 15% assumption to make the comparison equal to
the
> 7.5% from you and 7.5% from the employer that goes into determining your
> social security benefit.
>
> Remember also, to prove the viability of even considering the
"your own"
> account option vs. the status quo social security plan, you only have to
be
> reasonably sure that you'd do as well as they do and be broke at the end.
> (vs. having that nest egg)
>
> As far as I can see from doing my numbers, if I plug in what they would
pay
> and give myself a 2% annual increase from that initial amount (they vary
in
> their COLA adjustments from year to year, but 2% every year is a
reasonable
> assumption) if I earn 3% (vs. my, low as it turns out, 8% assumption of
> stock returns) annually my own account would run out at age 92 or so (I'll
> never make that, hell I may not make social security at all!).
>
> One can easily make 3% in CDs and Bonds over the long haul with no risk at
> all, in fact you'd have to try real hard to make that little over any
> appreciable time-frame (even right now with almost the lowest rates in 40
> years, you can go real long on a CD and get that much).
>
> I'm just not seeing the downside to the "ownership" mind-set
that Bush is
> trying to get people to embrace and get away from the
"nanny-state" that
> we've been expanding for, seemingly, ever.
>
> "Gary Britt"  wrote in message
> news:413d287c$1{at}w3.nls.net...
> > When doing this calculation to really get a real picture of the rate of
> > return on government social security you have to be sure to include NOT
> > just
> > what is withheld from the employee but ADD the matching contriubtion
made
> > by
> > the employer.  That's what's being put in (supposedly) and that total is
> > what should be used to compute the return on investment the government
is
> > providing.
> >
> > Gary
> >
> > "Mark"  wrote in message
news:413d1bc3$1{at}w3.nls.net...
> >> What Glenn said Geo. In fact once you do the intial construction the
> >> spreadsheet (what 10 minutes or so?), I'd encourage you to drop the 8%
> >> number down until you get can get that last row in column C down low
> > enough
> >> to match the amount needed to cover the equivilent social security
> > payment.
> >>
> >> Better yet, if you get ambitious, plug in the actual average returns
for
> >> each of the past years and put them into each cell in column C instead
of
> >> going with a straight percent each year. Then I'd say in the years
going
> >> forward to plug in a variety of rates including a few years of 0%
return
> > as
> >> well as a few negative 10%'s here and there, but if you do that you
need
> > to
> >> also stick in a couple of 20% + years as well to give a bigger, better
> >> overall feel for the long-term potential results.
> >>
> >> BTW, forget about social security reform, having the numbers in
> > spreadsheet
> >> gives a good view - one you can see the growth in instead of a final
> > number
> >> in calculator - that you stick in your numbers from 401(k)
contributions,
> >> IRAs or just savings. I have MS Money and Quicken is the same and you
can
> > do
> >> charts etc., but I find it more "real" to
manipulate the numbers and
see
> >> them in Excel.
> >>
> >> "Geo."  wrote in message
news:413d0f2d{at}w3.nls.net...
> >> > "Mark"  wrote in message
> > news:413cf942$1{at}w3.nls.net...
> >> >
> >> >
> >> >> Am I making any sense now?
> >> >
> >> > almost, now find some way to calculate the last 5 years of market
> > activity
> >> > into
> >> > your 1.08 multiplier.
> >> >
> >> > Geo.
> >> >
> >> >
> >>
> >>
> >
> >
>
>

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