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Politics : Sharks in the Septic Tank -- Ignore unavailable to you. Want to Upgrade?

To: Lane3 who wrote (21228)	8/9/2001 5:47:49 PM
From: TimF	Read Replies (4) \| Respond to of 82486

I don't know about that. You might still have an obligation to pay yourself back if those were the terms you set for yourself. If you want to consider the loan to yourself and asset then you also have to consider it a debt. The asset exactly equals the debt netting out at zero. Thus there is no asset to draw on. When I borrowed money from my 401K the 401K showed the loan as one of the "investments" in other words an asset, but I still had the cash, another asset. Of course in reality I was no richer then before, and I am not becoming poorer as I pay back the loan. Ya know, it doesn't really matter as a practical matter, only as a political one. Uncle Sam can rationalize it either way. Its a practical one in that the government will have to come up with new funds, or spend less when the SS tax no longer supports SS expenses. The actual date that the so called Social Security tax fund supposedly runs out of money is rather unimportant except perhaps as a matter of politics (which can make it important). The really important factor in terms of economics and finance is that the government has a huge obligation that Social Security taxes will no longer cover long before that date. I think the current estimate is 2017. I will be 49. Will I face a big regular federal tax increase to pay back the "trust fund"? Maybe I will get a big social security tax increase instead. Either way I am not looking forward to it. Tim

To: Lane3 who wrote (21228)	8/9/2001 6:24:23 PM
From: The Philosopher	Read Replies (1) \| Respond to of 82486

Assume you get a salary of $50,000 per year. Your basic living expenses are $45,000, and you put $5,000 into the bank for retirement funds. Next year, your basic living expensses go up to $46,000. You still put the $5,000 into your retirement fund, but you have to borrow back $1,000 from your retirement fund. So your retirement fund is worth $10,000, of which $9,000 is in a bank account and $1,000 you owe yourself. The next year, you still don't get a raise and living expenses go up to $48,000. You still put the $5,000 into retirement funds, but this year you have to borrow $3,000 to pay your living expenses. So your retirement fund now has $15,000, of which $11,000 is in the bank and $4,000 you owe yourself. Oops, the roof goes out. You don't have any money left over to pay for it, so you borrow the $10,000 from your retirement fund, giving it an IOU. You now have a retirement fund of $15,000, of which $1,000 is in the bank and $14,000 is notes from you to you. The next year is the year you planned to retire on your $15,000. It's all there in the fund. Just pay back the $14,000, and retire. Yeah. Right.