Posted on 05/12/2011 1:07:54 PM PDT by rightwingintelligentsia
Readers may recall the 1950s TV show, "The Millionaire," which portrayed stories of individuals who were given a "no strings attached" gift of money by an anonymous benefactor. Each week in one of the show's opening scenes, a man representing the wealthy benefactor, John Beresford Tipton Jr., knocked on an unsuspecting recipient's door and announced: "My name is Michael Anthony and I have a cashier's check for you for one million dollars."
That TV program is scheduled to return next year as a reality show, and the new recipients will be the typical husband and wife who reach age 66 and qualify for Social Security. Starting next year, this typical couple, receiving the average benefit, will begin collecting a combination of cash and health-care entitlement benefits that will total $1 million over their remaining expected lifetime.
According to my calculations based on government data, such married couples will begin receiving monthly Social Security checks that will, on average, total about $550,000 after inflation. They will receive health-care services paid for by Medicare that, on average, will total another $450,000 after inflation. The benefactors will be a generation of younger workers who are trying to support themselves and their families while paying taxes to finance the rest of government spending.
We cannot even remotely afford to make good on these promised benefits. Although our system of personal liberty, free enterprise and limited government has made us an affluent and upwardly mobile people, we are not yet a nation of John Beresford Tiptons.
(Excerpt) Read more at online.wsj.com ...
“Ever hear of the rule of 72?”
It breaks down in a zero interest rate environment.
“Actually, if every dollar I ever gave to social security was put in a modest bond fund, I’d have MUCH more than $1,000,000.”
And if you had a pony, well.......you’d have a pony.
One of the worst shows on TV is the “Home Makeover” or whatever they call it, when they give some hard-case family a new home.
They tear down the old home, in most cases, and slap up a monster home with useless bullshit in its place. This is supposed to “help” the family, but probably only leaves them with a huge tax burden. For the money, they could’ve helped a dozen needy families, but they have to spend $50K on flat-screen TVs, game rooms and jacuzzis just to make a big deal.
One sad-sack family immediately went out and mortgaged the home, then defaulted on it.
Shows like this actually destroy my faith in humanity, because people seem to think a plasma TV will cure their ills.
self employed people that have been reasonably successful over the course of 35 to 40 years will probably not get value for what they paid into the system.
can’t redistribute wealth, that way......
The real p1sser is that even if John Beresford Tipton came to call nowadays - and always assuming that the government somehow let you keep the money - a million bucks would be just about enough to keep yourself in Alpo.
A dollar isn’t what it used to be - and neither is a million bucks.
Get ready for a big shock!
Do your own calculations. Add up all the FICA and SS taxes taken out of your paycheck, or paid by you if you are self employed. Invested in a no risk investment @ 3-5 per cent over the average working life of 40 years, at age 66 you would have a whole lot more than $1 million.
SS is a Ponzi scheme, not in a “lock box” not invested. People pay in on the bottom to pay people on the top. Inevitably it collapses.
Exactly right! See my post below.
Please explain Rule of 72 to all FReepers. Important information to have!
How much was withheld from their salaries, over the course of their lives for social security and other ‘benefit’ taxes?
How much was withheld? Why doesn’t the government just give that amount back to them as a lump sum?
Oh I know. Congress can’t raid the ‘lock box’ for illegal alien benefits if they do.
Is that why you oppose them getting the ‘benefit’ of their taxes?
If you divide 72 by your interest rate, that is the number of years it will take to double your money.
So if you earn 7 percent on your investment then your investment will double in a little over 10 years.
A 10 percent return will double your investment in 7.2 years.
This assumes that you reinvest your returns.
That's what me and my wife did, although my wife dresses very nice. I would patch my jeans until there was no space for more; she hated that. But we're retired living the good life while many acquaintances who threw money around are deep in debt. Her brother just hit us up for a $100G loan to avoid bankruptcy, which she refused him because he only wanted to buy the best of things (on credit) like 1st-class plane seats. I always tell young people, live below your means and you will be just fine later on.
“It breaks down in a zero interest rate environment.”
Go for dividends instead. At least you get a respectable and rising return.
What is really sad is how many people truly believe that they have made “contributions” to a “fund” that is obligated to pay them a pension benefit at a certain age. In fact they have paid taxes to the government which create absolutely no property right for future pension benefit. No matter how much one has paid in FICA taxes one has no certain right to receive anything in return. And whatever one does receive in Social Security benefits is paid out of the fruit of another’s labor. Congress has the authority to terminate Social Security and never make another payment again. That’s not my opinion: that’s from the text of the Supreme Court’s ruling in Flemming vs Nestor. It’s also the language of the 1935 FICA: “Section 1104 ‘RESERVATION OF POWER’: The right to alter, amend, or repeal any provision of this Act is hereby reserved to the Congress.” Unfortunately, it’s impossible to reason with somebody who has been convinced that he’s going to get something for free or, in this case, in return for taxes paid. Like it or not, Social Security is a very popular welfare program.
I suppose the author would rather have 19 illegals living next door in a one bedroom house with a ‘man cave’ dug underneath to hold all the cash only renters.
But wait a minute..... this is the WALL STREET journal. WALL STREET, the beneficiaries of the TARP and other ‘economic recovery’ programs, paid for by taxes on wage earning citizens, much of which goes to Social Security and Medicare!
So for WALL STREET to keep raiding that ‘lock box’, citizens who’ve had that money withheld from the wages they EARNED, well we can’t have retirees taking using any of that money, can we now!
Now you know why the WALL STREET journal is pushing garbage like this.
So I guess it’s no problem that the government is handing out thousands (in some cases up to about $80K) per year in benefits (free healthcare, education, food, $$) to welfare folks who didn’t earn them? Why don’t they ever tally that up and throw it in their faces? No, they would rather pick on retirees who are at the end of their lives with limited options for employment and WHO HAVE PAID tens, sometimes hundreds of thousands into the system.
“So I guess it’s no problem that the government is handing out thousands (in some cases up to about $80K) per year in benefits (free healthcare, education, food, $$) to welfare folks who didn’t earn them?”
And then the government pays even more on top of that to fund the agencies and army of bureaucrts and contractors who dole out the money. America is being royally screwed by the government.
Should it happen, you won't go down the same path as so many lottery winners and maybe, just maybe, developing such a detailed plan would serve to spur you on to making it happen without first having the big 'pay day'.
“Go for dividends instead. At least you get a respectable and rising return”
We were having an accounting rules-of-thumb discussion and you ruined it with helpful advice.
Look into the recent lists of dividend champions, achievers and challengers. 4-5 percent is do-able with a reasonable degree of safety, but do your due diligence. Higher payers are not always safe bets and they can cut their payouts which will result in a hit on the stock price.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.