Let me put this bluntly. If I am expected to self-censor asides deemed "too political" by some, I will stop contributing to this board.I'm sorry Charlie said something that got him censured. I'm a lot more sorry we lost our resident poet, as irritating as he could be.Are we supposed to stop making snide remarks about topics like today's news story about the Senate making "earmarks" more transparent and the potential affect on the deficit and interest rates? "Makes snide remarks" is pretty much at the top of the job description for card carrying Fools.And there are some topics, which are certainly political, that have direct relevance to the primary concern of this board: yields and values of bonds and fixed-income instruments. The federal deficit is one, and you can't meaningfully talk about the deficit without taking a political stance about whether the deficit is worrysome and what can be done about it. This board has intelligent people and, I believe, such discussions are more illuminating, here, than on some board dedicated to spouting off.Social Security is another such topic, since how much we will actually get of our currently designated "entitlement" is crucial to estimating how much we need to save for retirement and how we allocate it. I'm specifically reacting to yesterday's comments by Bernanke who, like Greenspan, seems to be doing doom and gloom about "entitlements" without differentiating the small shortfall of Social Security, which can be fixed with actuarial changes and Medicare/Medicaid which require radical surgery. (Now that he's a private citizen, Greenspan has acknowledged that a blue-ribbon panel could come up with a solution for SS in 10 minutes, and most of the time would be spent getting coffee and donuts, or something like that.)http://www.nytimes.com/2007/01/19/business/19fed.htmlWhich actuarial changes for SS are chosen is definitely political, and there will be winners and losers. When the rhetoric turns on the idea that "entitlements" are really younger generations paying older generations more than they deserve in terms of contributions made, the losers are likely to be people like me and Polymer Mom, who are on the top end of the contribution scale with solid retirement incomes, the idea being that the poor elderly may need a handout, but we don't.A couple of years ago the "solution" being pushed, and I suspect still a part of an eventual solution, was the idea that people on the upper end should have their SS payments tied to CPI-U adjustments, not the historically higher increase in wages that has been used. What this actually would mean is that our SS contributions (plus employer match) would get a return only equal to CPI-U increases. This would be like buying TIPS with a zero coupon. People on the low end would continue to get more than the equivalent of investing contributions in TIPS (with a coupon), but this would be subsidized by those at the upper end getting zero coupon TIPS. I forget the exact calculations, but it was something like someone making $90,000 for 30 years would end up getting SS payments about 30% of what they would have gotten by buying TIPS at 2.5%, then buying an inflation adjusted annuity at age 65.My financial goal is to achieve less than a 3% initial withdrawal rate without Social Security. I don't know what I will actually get from SS, and if pencilling it in as zero led me to make more risky investments I would pencil it in at something like 50% or 60% or current "entitlement" estimates. I doubt it will be 100%. I hope it won't be 30%, but I do know that's out there, and I think it is important for those of us facing that possibility to understand that it isn't that we would simply be giving up some generous benefit at the expense of our grandchildren, but that we would in fact be giving up the "real return" component from our (and our employers') SS contributions.
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