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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: combjelly who wrote (218219)	2/8/2005 9:43:44 PM
From: TimF	Read Replies (1) \| Respond to of 1572472

Does a lifecycle fund guarantee that you will have a specified amount of money indefinitely? Nothing guarantees that. Social security now is subject to the political and fiscal situation in the US, and if John is correct in his argument on how SS can't "go bust" than the law already calls for an automatic cut in benefits if the SSA runs through its assets and the payouts still exceed its income from payroll taxes. The return from the government bonds he was talking about is at least as (probably more) guaranteed than current social security payouts are. A well designed, well diversified fund that invests in both stocks and bonds, moving more of the funds to bonds (including government bonds) as retirement age draws near may not have more risk than social security. It has more explicit risk but less political risk, and the rate expected rate of return is so much greater that the risk adjusted rate of return is also greater even if you exclude the greater political risk from social security. Tim