Why can't the Federal Government handle retirement accounts..

[Virginia Dare]

as opposed to Wall Street? What if I wanted to pay more than 6.2% into social security so I could get a bigger check from the government when I retired? Would that be a plausible avenue to look at?

[Eric J in MN]

1. If you put your money into savings accounts,

...the first $250,000 is federally insured.

http://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corporation#FDIC_insured_items

[Virginia Dare]

3. Agreed, but I'm going to need a heck of a lot more than 250,000..

to retire on. It's an inconvenience to have to worry about opening up how ever many different accounts you'd need to do this. Plus, I'd have a hard time calculating exactly how much I can withdraw every month over a certain period of time, and the government can figure all of that out for me. It would give me a bigger sense of security I think, knowing that, and I'd have a larger motiviation to put more and more money in the closer I got to retirement.

[Imperialism Inc.]

2. Hillary had a plan for a National Retirment Account. program.

People here didn't like it much because they viewed it as a possible backdoor to killing SS. It wasn't but that was the fear. She also wanted a refundable tax credit to go along with it.

I think it is a good idea. One big benefit is that the government could pay out at retirement with very low overhead. SS for instance has a very low overhead cost. By contrast people in private plans that have their money annuitized (i.e. paid out a fixed amount every year) pay a very high percentage fee for that service. It would end up saving people a ton of money in the long run.

[Virginia Dare]

12. Yes, that makes sense..

I hope the Dems pick up on this idea, and soon. I'm at the tail-end of the baby boom, I see doom and gloom ahead.

[TreasonousBastard]

4. Not really-- SS is designed as a pay-as-you-go...

program, not an investment fund. Payng more into it would just make it easier to pay current retirees.

A properly balanced retirement account shouldn't really be affected all that much by one, or even two, crashes during one's lifetime. Sure, there's a risk a market will tank just about as you're about to cash in, but what's happening now is really rare.

[Virginia Dare]

5. You think the 401(k) system is a good one?

because I feel like it's a scam. It seems counterintuitive to give the money that I count on to live out my life to a bunch of greedy Wall Streeters who are just out to make a buck off me.

As you say, major busts are pretty rare, but I guess I just don't have the peace of mind I'd like to regarding the investments that are supposed to carry me through my old age. I feel like there's got to be a better way. I'm sure Wall Street is happy to carry on the way we are though.

[slackmaster]

6. I have yet to see a 401k plan that didn't have stable value, guaranteed income, etc. options

Even money market funds. You don't have to invest in stocks at all. YMMV, but that's a fair description of every plan I have ever had.

[Virginia Dare]

7. True, you don't...

but I have a problem with the billions of dollars in fees that these companies make off our 401(k)'s, and to my way of thinking they basically do nothing for us. I just think we ought to have a choice whether we want to go that route or not.

[TreasonousBastard]

9. But they're working for you, so...

why shouldn't they get paid for it?

Sure, thieves go where the money is, but aside from the gonifs there are plenty of professional money managers, financial planners, fund managers, stockbrokers, banks, and others who do their best to help you invest your money profitably. You can opt for safety or growth, and leave the details to them.

(They read corporate filings and 10-K's so you don't have to.)

[Virginia Dare]

10. If I could have fired them last week, I would have...n/t

[slackmaster]

13. Please consider what 401k plans have taken the place of

Defined-benefit pension plans, which were managed by professional trustees who charged money to employers for taking care of the money. Somebody always makes money by charging fees on investments.

I just think we ought to have a choice whether we want to go that route or not.

I'm all for choice. Frankly most people don't have the financial knowledge to manage their own retirement plans without a lot of expert advice.

[Virginia Dare]

15. They obviously still can't do it even with all the "expert advice"..

as evidenced by how much was collectively lost in 401k plans last week.

[slackmaster]

16. The state of financial education in our country is as bad as it has ever been

I believe the paper loss in most of those 401k accounts is temporary. The only people who are bound to lose are the ones who panic and sell low.

YMMV

[Virginia Dare]

17. Sadly, that is a sizable percentage of people....n/t

[Egalitariat]

8. By T-Bills with long maturity dates***

nm

[Virginia Dare]

11. Yep, I do that, I'm diversified..

I just think we need a choice.

[A HERETIC I AM]

14. Longest maturity Treasury Bill = 52 weeks.

http://www.treasurydirect.gov/indiv/products/prod_tbills_glance.htm

[Sgent]

18. Kinda true

you can buy 20 yr T-Bonds, which are similar to T-Bills. The difference is that T-Bills don't have coupons, you buy them at a discount and redeem them for $1000. T-Bonds pay a coupon semi-annually.

[A HERETIC I AM]

19. "Kinda true" if accuracy is not important to you.

They are similar in the respect that they are tradeable and mature at par. That's it.

Egalitariat said "By T-Bills with long maturity dates***" (sic)

I merely pointed out the the longest term Treasury Bill was 1 year. That is not considered a "long" bond.

And FWIW, you can NOT buy a new issue 20 Year Treasury Bond. The United States Treasury no longer issues them.

http://www.treas.gov/offices/domestic-finance/debt-management/interest-rate/yield.shtml

20 year Treasury paper are "TIPS", which are structured differently than a traditional 10 or 30 year Treasury Bond.

http://www.treasurydirect.gov/indiv/products/prod_tips_glance.htm