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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: Mary Cluney who wrote (105609)	3/7/2009 2:35:23 PM
From: TimF	Respond to of 541933

I am no expert when it comes to these mathematic modeling stuff but this sounds to me like for anyone that started a personal retirement account within the last 20 years would now be under water Something like that. His data shows more like 17 or 18 years, but its based on November, not the lower stock levels now. So now 20 years is possible (OTOH I'm not sure its increased much as in the model older people's contribution shifts toward government bonds, and if you held government bonds the declining interest rates would make your older bonds with higher rates worth more) OTOH they would be only slightly underwater. And underwater means a negative real return, not that you haven't accumulated savings. Not a zero or negative balance. He sumes up his findings with "Individuals who began participating in a personal account at ages 48 through 64 would have lost money by doing so, but these losses would be very small: on average, total benefits would be reduced by only 0.3 percent. Moreover, even this figure may be misleading, since under most reform plan specifications individuals over age 55 would not be allowed to participate in accounts, for the very reason that they would not have enough time prior to retirement." So you really only have people who started their accounts from age 48 to 55 being just slightly under water after one of the worst periods for the stock market in a long time. And its not like Social Security doesn't leave people under water. People my age will likely be a lot more underwater than people relying on the investment model laid out in that post.