<p>That’s an interesting concept, @colorado_mom. I’m sure there are plenty of people out there who really want benefits, which could be tough to get for a contractor. I would think it would be hard for a nonprofit to get skilled programmers to work for them, unless they are able to offer a competitive salary. But if you have people out there who are wanting to work for enjoyment, or to keep their skills up…I wonder if there are sites for volunteers, also. We found sites offering unpaid programmer internships, but paying to live in NYC while working for free just wasn’t going to work.</p>
<p>Hi Thumper, I actually think we are in agreement. I am just saying that my MIL took advantage of a Windfall loophole that is no longer available. And I am saying that I work in a state where most teachers do not contribute to SS and therefore are subject to the Windfall provision. I however, worked for a school district in Texas that does contribute to SS, and I continue to work for an organization that contributes to SS. I will not be affected by the Windfall Offset provision.</p>
<p>@WTessie:
Loved Emm1’s summary. For money held in non-tax sheltered accounts, see the section titled “ETF Tax Efficiency” for an additional difference:</p>
<p><a href=“What's The Difference? Mutual Funds And Exchange Traded Funds Explained”>http://www.forbes.com/sites/feeonlyplanner/2013/07/18/whats-the-difference-mutual-funds-and-exchange-traded-funds-explained/</a></p>
<p>When someone else sells a mutual fund, it triggers stocks held by the fund to be sold, possibly triggering capital gains. When someone sells an ETF, the underlying stocks aren’t sold and there are no such gains that are reported.</p>
<p>Also, if you make a series of small monthly contributions, it’s possible that the company may not have a service charge, but you may be hit by a charge for the ETF trades.</p>
<p>
It depends on your income level. Even though the headlines always scream how unfair it is to poor people since “the rich don’t pay their fair share”, the formula is actually quite progressive and a low income person gets a much higher percentage of his salary replaced, and it’s easier to come out ahead. (May be a Ponzi, but a progressive Ponzi…)</p>
<p>Notrichenough, I would deduct some of that paid in ss because your employer gets to write some ss payments off. </p>
<p>Doesnt a non working spouse get half what a working spouse gets in SS also?</p>
<p>And if the working spouse dies,
The non working spouse gets the full pop? </p>
<p>
On the other hand, I <em>don’t</em> get to write off SS payments, and am therefore paying tax on the tax. And I’ll pay tax on it again when I get it back.</p>
<p>
People with non-working spouses are SS winners. I don’t have a non-working spouse… People who retired in the past are are winners. People who retired long ago are huge winners.</p>
<p>My kids have pretty much zero chance of being SS winners. The maximum amount you pay in has gone up almost 4x since I started working, which is close to twice the rate of inflation over this time. And it’s only going to get worse… either they will have to pay even more in taxes or they will get less in benefits.</p>
<p>Ok… So there are winners…</p>
<p>The returns arent zero for everybody…
One spouse makes tons… The other doesnt… SS can be pretty good…</p>
<p>And if inflation ever kicks in… If it kicks in decades from now …Even young people can be winners. </p>
<p>I think those cost of living increases can be very important. </p>
<p>If my wife and I live long enough, I can see us receiving over 100,000 a year in SS. </p>
<p>
</p>
<p>Please don’t get upset: I know that I have shamelessly cherry-picked the dates of these valuations, but what happened to gold-fund managers who recommended gold at a price of 1908 in February of 1980 and now it is around 1250, some 34 years later. That’s not fraud (directly anyway, although there’s some lurking there somewhere, I just know it 
).</p>
<p>Fwiw, not only does gold not pay dividends, you have to pay to store it and protect it.</p>
<p>Anyway, my point was simply that bad results do not necessarily constitute fraud.</p>
<p>
</p>
<p>It is somewhat progressive on the payments to lower income people, which somewhat offsets its shameful regressive nature as it is funded. But, that aside, it is a million miles from being an investment, and while I think politicians have found it useful to portray it as an investment to gullible voters/taxpayers, it is a social safety net intended to help those who really need it, and in the process, it has provided some income to people who don’t need it as much. </p>
<p>I will never get even a small percentage back of what I’ve paid in taxes (SS, Federal, State, etc.) over the years, and it seems churlish to focus on that when so many are so much less well off. I am convinced that most of them (the widowed, the disabled, the elderly poor) would gladly trade places with me.</p>
<p>I just played…</p>
<p>If my wife and I live to 95…and inflation is 3 percent a year, inflation the last 30 years is 3.25 percent, I make 3 percent after tax, and SS increases are 2.75% a year, SS is worth $890,000 to me in today’s dollars. (Present value). If we live to 90, SS is worth $720,000.
If we live to 85, SS is worth around $550,000.</p>
<p>Thank you, EMM1 and Dad<em>of</em>3. The light begins to dawn… ;)</p>
<p>
Ok, if a pension fund manager invested the entire wad in gold or gold funds for 30+ years, I think you’d have a pretty good case for negligence.</p>
<p>Has there ever been a 30+ year period where a reasonable, responsible assortment of investments has returned 0%?</p>
<p>
We aren’t talking about other taxes, which fund the day-to-day operations of the government.</p>
<p>Gold wasnt 1908 in 1980. That is a misprint. </p>
<p>You can get negative returns with annuities. Pensions. </p>
<p>
Ok, now calculate how much you would have needed to invest each year over 45 years to get a pile of money that big using those same assumptions, and sum it up. </p>
<p>Life expectancy at age 67 is 16 years for men, 18.5 years for women. So your present values are all too large for the average case.</p>
<p>
Sure, in the short term. Over 3 or 4 decades? That has happened? Again, a reasonable pile of investments.</p>
<p>If we die when we’re supposed to, we’ll collect zero. </p>
<p>Really crappy investment for us.</p>
<p>Yes…that has happened…negative returns. If you dont live long enough…you can be screwed owning annuities. Your pension doesnt pay enough. You can die…</p>
<p>SS is a win if I live long enough. I have other investments if I dont. </p>
<p>These are my numbers, right? ;)</p>
<p>I am not paying into SS for 45 years. 35 is closer. </p>
<p><a href=“Contribution and Benefit Base”>Contribution and Benefit Base;
<p><a href=“FICA & SECA Tax Rates”>http://www.ssa.gov/oact/progdata/taxRates.html</a></p>
<p>And I am using my age…58</p>
<p>I’m paying for 45 years. Maybe a few less if I retire early. And I will have paid the max for almost 30 years. But it doesn’t bother me, I don’t want to see old people on the street. It’s just another tax. At least one that has some value.</p>
<p>ETF is where you can invest in a group of companies in the same market sector, and it has a stock trade name (so you can purchase just like a single stock on the market). How to learn about them - I may have first learned about them via Money, Smart Money, or Kipplinger’s. I have held in the past in TD Ameritrade accounts. Using them for DD’s Roth IRA money.</p>
<p>I am sorry to see ‘doom and gloom’ energies here. I think we all have had to overcome some issues in life. If you look at the glass half empty VS the glass half full now and in the future. One can change their outlook, but it takes effort!</p>
<p>Maybe some believe that they will not have saved enough for comfortable retirement, or they see health issues suck up money. My advice is to live in an area where you are not the poorest around if you are a very negative thinker, because you will continue to feel bad!</p>
<p>I just returned from our financial advisor’s ‘half time report’ - focused on answering the following questions “what could happen to bond prices in the near future? How could uneven economic growth around the world affect your portfolio? What do analysts predict for the second half of 2014?” Well prepared presentations. Some talk about ‘black swan’ in equities - which are difficult to predict (the tech bubble - dot com, or mortgage meltdown, as examples) - having a strategy (to avoid taking large losses). Some fear the bond market for a number of reasons.</p>
<p>We do hold some bonds (most notably in PIMCO, which is the largest bond fund - this is in our company 401 k so it is a fund choice within our list of choices) - in part because it will help soften any drop with equity funds. Last year PIMCO lost 2% (where other bond funds lost a lot more).</p>
<p>During the dips in the market in the past 15 years, I saw a couple of times where our 401k lost as much as 36% of value - so it took a while to build back up again. Now our 401 k is almost 40% above that ‘top’ value - and I sure don’t want to knock down again.</p>
<p>We are all continually watching what is happening in the total picture - on interest rates, 85% of analysts and economists predict interest rate rise in 2015 - most say in first, second or third quarter (analyst survey via online.wsj.com and 50 economists surveyed , from Forecast Edition June 2014). If interest rates go up, how will it affect the other markets? Stated the Federal Reserve will plan a gradual rise on interest rates. </p>
<p>Regarding return on SS “investment”, which would be more appropriate; consider it investing in bonds or stocks? Since the payment is presumably guaranteed, comparing it to bonds seems to be the way to go. Not fair to compare it to stocks when minimal risk is taken generally speaking.</p>
<p>If you think the ROI looks bad now, just wait till they remove the FICA wage ceiling AND means-test the benefits </p>