Quote:
Originally posted by CamB
Oops, I meant $4k pa.
I stand by my assertion on mutual fund returns - inflation over that period probably whacks that 13.91% down to about 7% real. Plug $20,000 into this calculator for an idea of the impact of inflation from 1982-present.
See this link for evidence of 7% real as the average for the market, then ask if you think the average mutual fund can outperform the market average by more than the amount of its fees and costs, and the potential impact of taxation (I suspect there is none for retirement savings, so a moot point).
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Ok, I'd definitely have to concede on the mutual fund returns. 12% is at the upper end for long-term returns. It does make for big numbers, though.
However, the calculations I ran are adjusted for 3% inflation. The $437k is the inflation-adjusted amount over 30 years. Without adjustment for inflation, the $437k is actually $1M.
I do think there would need to be some safety net for those "unfortunate" souls, but for the majority of participants, you can easily do better. I do not feel a mandatory government social security program should replace an honest effort to save for the future. In the absence of physical money, you can substitute time. Ya know what Ben Franklin said about compounding interest, eh?
If the average payout is virtually pennies, are we really helping the poor? Wouldn't this money be better spent educating and preparing individuals to bridge this gap? If I paid into the system for 40 years and got $900/month stipend, I'd be pissed. On top of that, this year's cost of living adjustment is a joke--$20. Why bother?