What I find most amazing about all of this is that while these changes are being made, no one seems concerned about the regulatory side of the equation. You would think that if governments are pushing potentially millions of people into the market, there would be some concern about the recent multiple financial crashes brought on by the perfidy of our Galtian overlords in the market. It’s really quite a good scheme if you are one of the Wall Street grifters- someone is sending you marks, and promising to look the other way. You don’t exactly have to be Nostra-fucking-damus to realize that in about a decade, a couple million Americans of retirement age are going to be wiped out by the same class of greedy pricks that just vaporized the economy a few years ago.

Labels: Big Blue Smurf Blogging, crooks, retirement savings

This proposal addresses the shortcomings of the current system and strengthens the retirement safety net by providing workers with the voluntary option of investing a portion of their FICA payroll taxes into personal savings accounts. Due to the higher rate of return received by investments in secure funds consisting of equities and bonds, these accounts would allow workers to build a significant nest egg for retirement that far exceeds what the current program can provide. Each account will be the property of the individual, and fully inheritable, which will allow workers to pass on any remaining balances in their accounts to their descendants.

Labels: economic death watch, House Republicans, retirement savings, Social Security, We Are So Screwed

It's increasingly obvious that Congress and the president (regardless of which party is in power) will deal with the political stink bomb of an aging society only if forced. And the most plausible means of compulsion would be for Social Security and Medicare to go bankrupt: trust funds run dry; promised benefits exceed dedicated payroll taxes. The sooner this happens, the better.

That the programs will ultimately go bankrupt is clear from the trustees' reports. On pages 201 and 202 of the Medicare report, you will find the conclusive arithmetic: over the next 75 years, Social Security and Medicare will cost an estimated $103.2 trillion, while dedicated taxes and premiums will total only $57.4 trillion. The gap is $45.8 trillion. (All figures are expressed in "present value," a fancy term for "today's dollars.")

The Medicare actuaries then dryly note what would happen once the trust funds for Social Security and Medicare's hospital insurance program are depleted: "No provision exists under current law to address the projected [Medicare] and [Social Security] financial imbalances. Once assets are exhausted, expenditures cannot be made except to the extent covered by ongoing tax receipts." Translation: benefits would fall. Social Security checks would shrink; some Medicare bills wouldn't be paid in full—and the shortfalls would progressively worsen. Retirees would scream. Hospitals might shut. No president or Congress would abide the outcry; even the threat of imminent bankruptcy would rouse them to action. But restoring the programs' solvency would confront Congress and the White House with fundamental questions.

In 1940, life expectancy at birth in the U.S. was 61.4 years for men, 65.7 for women; by 2008, the comparable figures were 75.4 and 80. So, as health and longevity improve, when should people stop working and be entitled (from which comes the noun "entitlement") to receive government retirement subsidies? Stripped of popular euphemisms ("social insurance," "entitlements"), that's what Social Security and Medicare mainly are. If that's so, how much should wealthier retirees be subsidized?

Or: how much should obligations to the old displace other national needs—for, say, defense, education, research, housing, transportation or adequate family incomes? In 1990, Medicare and Social Security represented 28 percent of federal spending; in 2019, their share will be almost 40 percent, projects the Obama administration. As this spending grows, pressures to raise taxes, increase budget deficits or cut other programs intensify. What's the right balance between the past and the future?

Labels: baby boomers, generational conflict, rant, retirement savings, snark, Social Security

U.S. workers are increasingly cautious about investing in corporate retirement funds, having shifted money out of stocks, reduced how much they contribute and, in some cases, stopped contributions altogether or withdrawn money, according to a study released Monday.

The study by Hewitt Associates, which administers 401(k) plans for corporations, found the average U.S. 401(k) plan balance was down 14 percent through October to $68,000 from $79,000 in 2007.

If you have nothing but Social Security and your 401(k) accounts, if you want to retire at 65 [with 80 percent of your pre-retirement income] and you're male, [you have to have] about 6.3 [times your pre-retirement annual income]; if you're a female, about 6.7. The reason, of course, is you have a longer life expectancy if you're female than male. If you want to retire early -- say, at age 60 -- those numbers are going to increase up to about 6.9 [times pay] if you're male, and about 7.2 [times pay] if you're female.

Labels: retirement savings

Bankrupt Melville-based American Home Mortgage is attempting to seize as much as $27 million that employees had set aside from their paychecks as retirement savings, and if it is successful, the workers may never see the money again.

In a flurry of objections filed in federal bankruptcy court here, employees around the country who contributed to AHM's deferred-compensation plan said its move to release the cash from a trust would put it in the hands of large creditors like banks and jeopardize their financial futures.

And the attorney for a group of former employees alleged AHM or its trustee for the retirement plan "may have acted inappropriately with regard to withholding distributions or encouraging contributions."

[snip]

The deferred-compensation plan enabled employees making more than about $200,000 per year to save money tax-free until they retired.

AHM has more than 1,000 creditors, some of which already have priority claims on the firm's assets and many of which are not expected to recoup any money.

Jeffrey Lewis, an employment benefits expert and partner with the Oakland, Calif., law firm Lewis, Feinberg, Lee, Renaker & Jackson, said it is not unusual for plans available only to select employees to end up in the hands of general creditors when companies go bankrupt.

"It's an unfortunate fact," he said. "They just don't meet the requirements for a regular, qualifying pension plan, and therefore the money is subject to the recapture of creditors."

Lewis said this would not be the first time American Home Mortgage has misled employees about retirement benefits. In 2003, he represented a group of loan officers hired when AHM acquired the retail branches of Principal Residential Mortgage Inc. He said AHM wooed employees by making promises about how it would contribute to and administer the new employees' 401(k) plans. The lender ultimately settled for about $2 million.

Labels: corporatism, employment, retirement savings