Comments on: The Core Problem with Social Security

By: Andy

Andy — Wed, 28 Nov 2007 20:33:22 +0000

Jim, rather than take the money under my old 401k when I quit to start my business, I went to my Chase bank and opened a 401k account. I'm still waiting for the transfer to take place any day now.

You ought to check into it. There's other IRA schems, but to do the 401k, I believe you have to own a business. But so what? You should be able to go to State and establish an LLC w/o a lawyer and get er done for a couple hundred bucks. Even if you don't intend to do business, it could just sit there & who knows, one day you may decide to go into business and as far as anyone's concerned, you'd be in business for all that time. Any of the above ought to beat giving Uncle Rangle 40%

By: Jim Collins

Jim Collins — Wed, 28 Nov 2007 13:13:13 +0000

That's true Andy, but the point I was trying to make is that under the old style pension system, I would have been partially vested after five years. When companies started to dissolve their pension systems in the 70's, the attitude was "Oh! Don't worry about it they can always collect Social Security.". Social Security was originally intended to cover those people who were not covered by pension plans, not to be a replacement for pension plans.

What I find strange about my situation is that I can't carry over my balance in my 401k to my 401k at my new job, I'm going to take a 40% loss. If our Government was at all concerned about this, there should be a way for me to transfer my balance to a designated retirement account without taking this penalty.

By: Andy

Andy — Wed, 28 Nov 2007 08:01:20 +0000

Jim, that’s a bummer — older but wiser. In retrospect I guess you would have taken the money and sheltered what you could via other investment vehicles.

By: Jim Collins

Jim Collins — Tue, 27 Nov 2007 20:21:55 +0000

MarkG
If a person is relying on their savings for retirement, they are going to be severely disappointed. Investing is where it's at. Long term investing in a stable diversified mutual fund is probably your best bet. Let's face it, all a savings account does is make money for the financial institution you have your account with. They take your money, invest it and then pay you a small percentage of the money they make with your money. If the Social Security would have been allowed to keep it's money out of the General Fund and had been allowed to invest this money, we wouldn't have the problems that we face now.

By: MarkG

MarkG — Tue, 27 Nov 2007 14:36:02 +0000

There is one big fallacy in the argument that SS discourages savings. Consumer spending fuels 2/3 of the economy. If people save more they spend less. Less spending results in less investment in production by business.
Unfortunately many people do not take the time to learn a fiat money system. The true shortfall of the Social Security system is whether the economy will produce the goods and services with a smaller workforce. It's all about productivity gains. Money is not the issue.

By: Jim Collins

Jim Collins — Tue, 27 Nov 2007 13:16:46 +0000

We had the option of having our performance bonuses paid into our 401k. Because I’m single I took that option because of the losses I’d take in taxes. The deal was that the company would match 2 for 1, but you didn’t own the match until you were vested. I wasn’t vested until the first day of the month after my five years were up. That would have been September 1st. I was downsized on August 30th. This plan had been changed a few years before, but we were grandfathered in under the old plan. The ten of us who were let go were the last people in the company eligable for the old plan. I’ve already talked to a lawyer who said that there is nothing he can do for me.

By: Andy

Andy — Tue, 27 Nov 2007 07:17:31 +0000

Jim, were the only contributions in the 401k your bonuses? I'm not sure I understand how and what it was that you lost.

Don't mean to be callous but if it was something that the company totally controlled, then it wasn't really an investment rather, it was the company pretending to give you company stock & you pretending it was income. I thot that this type of dirty trick was outlawed. Or?

By: Jim Collins

Jim Collins — Mon, 26 Nov 2007 17:38:13 +0000

The main flaw in Social Security is the way that it enabled companies to dump their pension programs. A local school district just had a teacher’s strike. While negotiations were going on, one of the newscasts interviewed a man who said that the teachers didn’t need medical insurance after they retired because they had Mecicaid. As far as savings go, I was in a 401k program where my bonuses were considered my contribution. I maxed it every year for 5 years. I was let go from my job 2 days before I would have been vested. $80,000 gone just like that. Nine other people who were in the same situation, were let go on the same day.

By: David B

David B — Sun, 25 Nov 2007 16:57:07 +0000

SS is a victim of its own success: it was created so that the elderly weren’t starving on the street. Now, the elderly are the most affluent and influential social group. Obviously something’s broken – the only question is whether it should be fixed, scrapped, or what.

By: ErikTheRed

ErikTheRed — Sun, 25 Nov 2007 16:34:14 +0000

I'm currently reading the book Boomsday by Christopher Buckley, and it contains a rather innovative modest proposal for dealing with the social security problem...