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Post by pjohns1873 on Oct 29, 2013 16:23:42 GMT
I would disagree with the (apparent) implication that racism and ethnocentisim are rampant in twenty-first-century America. Yes, there will always be a few Americans with Ku Kluxer-like mindsets--just as there will always be a few who cling tenaciously to flat-Earth theory--but not very many, I suppect, in either case. Moreover, it is probably worth noting that it is the US Constitution--not the Declaration of Independence--that is our country's governing document; and even it is best understood, free of expansive (and often fatuous) interpretations of vague language... |
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Post by ShivaTD on Oct 30, 2013 8:19:21 GMT
I would disagree with the (apparent) implication that racism and ethnocentisim are rampant in twenty-first-century America. Yes, there will always be a few Americans with Ku Kluxer-like mindsets--just as there will always be a few who cling tenaciously to flat-Earth theory--but not very many, I suppect, in either case. Moreover, it is probably worth noting that it is the US Constitution--not the Declaration of Independence--that is our country's governing document; and even it is best understood, free of expansive (and often fatuous) interpretations of vague language...
I do not disagree with the opinion that overt racism is relatively rare but prejudice influences decisions and that is not overt racism. Prejudice typically produces unintentional discrimination but the discrimination still occurs. The person just isn't aware of the fact that their decisions are affected by their prejudice.
To use an analogy a teacher may have prejudice when it comes to typed text over hand-written text that would influence their decisions as to which has the best content when the actual content of both is the same. That teacher may give a lower score to the student if they turn in a paper that is hand-written, when either hand-written or typed text is acceptable, as opposed to the same assignment was turned in typed. The teacher didn't intend to discriminate in grading based upon whether the assignment was typed or hand-written, and would typically deny they discriminated because it certainly wasn't intentional, but that discrimination still occurred.
What I address is discrimination, whether intentional or not, that adversely affects the person.
Both the DOI and Constitution are legal documents from the Congress of the States. The DOI, excluding the list of grievances against England, established in a lawful resolution approved by the Congress and the States the political ideals of the People of America. Many believe the DOI has no legal standing but they are incorrect. A Congressional Resolution like the DOI is a "law" expressing a principle.
The US Constitution was the resultant social contract between the States attempting to pragmatically achieve the ideals expressed in the DOI to the maximum extent possible in a non-utopian society. Both are very closely linked as the Constitution is a pragmatic attempt to reach towards ideals established by the DOI.
Fun discussion that is actually worthy of it's own thread.
Back to this thread. Is there anything specific to my proposal that you disagree with. As noted I was "nit-picked" once on double taxation if corporate profits were taxed once at the corporate level and then again when a stockholder received them as dividends. This wouldn't happen in a sole-proprietorship (i.e. on Schedule C and then again on the 1040 form) so it made sense to include "dividends" as a cost of production for the Corporation and then tax that income paid in dividend to the stockholder that is the "owner" of the enterprise.
I do have a problem dealing with "inheritance" that I touched on. Basically I tried to treat is as "windfall" income up to a point and then as income above that point and I also covered very rare instances of "high income" from large lotteries or other sources. A single opportunity for a person to "write-off" a once in a lifetime "income" from a single source.
As far as I'm concerned it could even be used in the case of a single stock sale. For example a person buys a "penny-stock" and over time that stock becomes many thousands of time more valuable on the market. A few thousand dollar investment could grow to a very large amount. Think of what a small investment in Microsoft on day one is worth today. There should, IMO, be a reasonably "cap" on the exclusion from taxation and I'd set that pretty high like around $25 million. Basically I took the $50,000 annual exemption from taxation and applied it to once in a lifetime windfall income from any source and just increased the amount of the exemption.
It is something that needs to be defined properly if the principles behind it are sound.
So what do you think about the principle and proposal I've made to address this issue of taxation?
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Post by pjohns1873 on Nov 1, 2013 1:53:32 GMT
I would disagree with the (apparent) implication that racism and ethnocentisim are rampant in twenty-first-century America. Yes, there will always be a few Americans with Ku Kluxer-like mindsets--just as there will always be a few who cling tenaciously to flat-Earth theory--but not very many, I suppect, in either case. Moreover, it is probably worth noting that it is the US Constitution--not the Declaration of Independence--that is our country's governing document; and even it is best understood, free of expansive (and often fatuous) interpretations of vague language...
I do not disagree with the opinion that overt racism is relatively rare but prejudice influences decisions and that is not overt racism. Prejudice typically produces unintentional discrimination but the discrimination still occurs. The person just isn't aware of the fact that their decisions are affected by their prejudice.
To use an analogy a teacher may have prejudice when it comes to typed text over hand-written text that would influence their decisions as to which has the best content when the actual content of both is the same. That teacher may give a lower score to the student if they turn in a paper that is hand-written, when either hand-written or typed text is acceptable, as opposed to the same assignment was turned in typed. The teacher didn't intend to discriminate in grading based upon whether the assignment was typed or hand-written, and would typically deny they discriminated because it certainly wasn't intentional, but that discrimination still occurred.
What I address is discrimination, whether intentional or not, that adversely affects the person.
Both the DOI and Constitution are legal documents from the Congress of the States. The DOI, excluding the list of grievances against England, established in a lawful resolution approved by the Congress and the States the political ideals of the People of America. Many believe the DOI has no legal standing but they are incorrect. A Congressional Resolution like the DOI is a "law" expressing a principle.
The US Constitution was the resultant social contract between the States attempting to pragmatically achieve the ideals expressed in the DOI to the maximum extent possible in a non-utopian society. Both are very closely linked as the Constitution is a pragmatic attempt to reach towards ideals established by the DOI.
Fun discussion that is actually worthy of it's own thread.
Back to this thread. Is there anything specific to my proposal that you disagree with. As noted I was "nit-picked" once on double taxation if corporate profits were taxed once at the corporate level and then again when a stockholder received them as dividends. This wouldn't happen in a sole-proprietorship (i.e. on Schedule C and then again on the 1040 form) so it made sense to include "dividends" as a cost of production for the Corporation and then tax that income paid in dividend to the stockholder that is the "owner" of the enterprise.
I do have a problem dealing with "inheritance" that I touched on. Basically I tried to treat is as "windfall" income up to a point and then as income above that point and I also covered very rare instances of "high income" from large lotteries or other sources. A single opportunity for a person to "write-off" a once in a lifetime "income" from a single source.
As far as I'm concerned it could even be used in the case of a single stock sale. For example a person buys a "penny-stock" and over time that stock becomes many thousands of time more valuable on the market. A few thousand dollar investment could grow to a very large amount. Think of what a small investment in Microsoft on day one is worth today. There should, IMO, be a reasonably "cap" on the exclusion from taxation and I'd set that pretty high like around $25 million. Basically I took the $50,000 annual exemption from taxation and applied it to once in a lifetime windfall income from any source and just increased the amount of the exemption.
It is something that needs to be defined properly if the principles behind it are sound.
So what do you think about the principle and proposal I've made to address this issue of taxation?
I suspect that we are not ever going to agree upon either the matter of racism (i.e . the extent to which it exists in 2013 America--even subliminally) or the question of whether the Declaration of Independence may be treated as some sort of "legal document" that was merely codified by the US Constitution. And I am not sure that it is a useful exercise to merely try to score debating points; so I will not pursue this matter any further. As to the overall proposal you have advanced, I believe that it is generally a good idea; and that it should not be dismissed, cavalierly. |
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Post by ShivaTD on Nov 1, 2013 3:36:55 GMT
I appreciate your comments. I've worked hard spending several years developing this tax proposal and while I try to keep it simply it still addresses a lot. I also had to keep in mind what I found to be legitimate concerns of social conservatives, progressive liberals, and libertarians. Not an easy task and it did require some compromise.
It's like the force private investments for privatization of Social Security. I don't like the government taking money nor do libertarians but at least it's the individuals money and the government doesn't get it's grubby hands on it. The fact that about 1/2 of the people, left to their own devices, won't invest for their future forced me to make it mandatory and it was a pragmatic decision.
What I seek is legitimate concerns about the proposal that need to be addressed.
What did you think of my "inheritance tax" that is treated as wind-fall income and applies to any large amount of income from any single source. I thought the idea of having an "exemption" level (e.g. $25 million) just like my annual income tax exemption ($50,000) was a good idea. Limiting it to a "once-in-a-lifetime" exemption also made sense to me.
I do think it's pretty good and it is the only fiscally responsible proposal I've ever read because it fully funds government the first year and I believe it is very fair to all Americans in accomplishing the feat.
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Post by pjohns1873 on Nov 1, 2013 17:20:38 GMT
What did you think of my "inheritance tax" that is treated as wind-fall income and applies to any large amount of income from any single source. I thought the idea of having an "exemption" level (e.g. $25 million) just like my annual income tax exemption ($50,000) was a good idea. Limiting it to a "once-in-a-lifetime" exemption also made sense to me. Certainly, an exemption level (for the inheritance tax) of $25 million would mean that very few Americans would actually feel the bite of this tax; and those affected could probably afford it. I also rather like the idea of a once-in-a-lifetime exemption: One would have the choice of using it at will; but one should be rather careful about applying it. |
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Post by ShivaTD on Nov 2, 2013 11:20:38 GMT
What did you think of my "inheritance tax" that is treated as wind-fall income and applies to any large amount of income from any single source. I thought the idea of having an "exemption" level (e.g. $25 million) just like my annual income tax exemption ($50,000) was a good idea. Limiting it to a "once-in-a-lifetime" exemption also made sense to me. Certainly, an exemption level (for the inheritance tax) of $25 million would mean that very few Americans would actually feel the bite of this tax; and those affected could probably afford it. I also rather like the idea of a once-in-a-lifetime exemption: One would have the choice of using it at will; but one should be rather careful about applying it.
Perhaps my biggest question is whether the $25 million is logical. It was a arbitrary number I pulled out of thin air and I'm not one to rely on arbitrary numbers where the only argument is "I thought it sounded good." So I've addressed this from another angle.
If the annual $50,000 exemption was "invested" at about 6% interest every year for the working career of the person (45 years) it would grow to about $10 million. Not nearly as much as the number I pulled from thin air but it is a logical number based upon the entire median income being invested annually for a lifetime at close to a guaranteed return on investment.
If we "bumped" the interest rate up to 8% which is about lowest return on investment rate a person investing long term in a diversified and age-adjusted portfolio would expect historically then the total would be about $20 million.
Basically I believe the once-in-a-lifetime "windfall" income concept is good but I'm having a hard time with what it should be. It should be an amount based upon a logical deduction as opposed to nothing but an arbitrary number that simply "sounds good" based upon opinion.
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Post by ShivaTD on Nov 10, 2013 15:21:42 GMT
Perhaps the most important aspect of my tax proposal is that it addresses the issues and concerns of both "liberals" and "conservatives" equally when it comes to federal taxation in America. Perhaps a short list of why each should support it is in order.
Conservatives should support it because:
1. It eliminates progressive tax rates completely and establishes the same tax rate for all Americans (above the exemption level).
2. The "exemption" removes all personal tax deductions and, more importantly for the "conservatives, eliminates tax credits where a person can actually receive a tax refund greater than the amount of income taxes they paid. Additionally it doesn't really change the economic demographics of who's paying federal taxes today (i.e. it would go from about 47% to 50% but with no tax credits this basically a "wash" tax-wise).
3. It establishes the identical tax rules for the small business owner and the large corporations which is highly beneficial to the small business owners that today pay a much higher tax rate today than a corporation. Small business provides the vast majority of jobs and conservatives claim to be supporters of small businesses.
4. The tax code would be only a small fraction of today's tax codes because of it's simplification making it far easier to comply with and that would result in a dramatic reduction in the number of IRS employees to deal with it because non-compliance would be basically limited to just blatant tax fraud and opposed to simple mistakes on tax return filings.
5. It collects very little information from the individual (only their gross income) limiting how much the "government" knows about us as Americans.
6. It is very apparent when the government raises or lowers spending because spending establishes the tax rate required to pay for the spending.
7. It balances the US budget immediately upon implementation and could, with only a small additional rate increase, actually be used to pay down the national debt.
8. The "Social Security/Medicare" provisions to privatize these programs build personal wealth based upon hard work by the individuals and eventually leads to Social Security all but disappearing leaving only a small safety net in place and completely eliminates Medicare cutting the size of the US government by about 1/3rd at the end of the transitional period.
9. My "privatization" plan changes Social Security/Medicare from "rob Peter to pay Paul" to "Paul works and invests his own income for his own future retirement needs" and conservatives should be all for that.
9. The privatization of Social Security provides a huge amount of capital for financial investments that grows yearly.
10. Because of the exemption level it would leave more disposable income for those that currently receive welfare assistance and that would reduce spending on federal welfare programs.
11. The tax plan doesn't target "rich or poor" because the provisions apply to all Americans equally with out regard for the personal income of the person. A person with $100 million in gross income is treated identically to someone with $10 of income under the tax code.
Liberals should support it because:
1. It eliminates any "unfair" taxation in America because all individuals and enterprises are treated the same under the tax code.
2. While it eliminates progressive tax rates the exemption that applies to everyone made the tax progressive.
3. The exemption increases the disposable income and that reduces poverty in America.
4. The privatization of Social Security/Medicare will result in personal wealth accumulation that reduces poverty while providing over 4-times the income (or more) for Americans and the "safety net" will also provide four times the income when compared to Social Security today. Even with the elimination of Medicare that would be replaced by private insurance (with subsidies if required) anyone that only has the minimum guaranteed income of $30,000/yr would still receive "free" health insurance under Medicaid.
5. The privatization of Social Security would literally result on minimum wage Americans becoming millionaire but the time they retire and would also leave a valuable estate for their heirs dramatically reducing poverty in America over time.
6. It balances the US budget based upon "fair taxation" where every American, regardless of income, is treated identically under the tax codes.
7. It does not reduce the standard of living for any Americans regardless of whether they're rich or poor but it does improve the standard of living for the poor.
8. It re-establishes the "American Dream" where working Americans will realize "upward financial mobility" once again that has been lost over about the last 10 years.
I'm sure that I could think of many other reasons why both Conservatives and Liberals should support the proposal because I took recommendations from both in creating the proposal. No legitimate objections were overlooked in the creation of the proposal.
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Post by ShivaTD on Jun 19, 2014 10:40:10 GMT
Re-addressing this for clarification on the "investment" accounts.
The current 15.3% FICA/Payroll/Self-Employment tax would not be imposed up to median income but the money would still be collected and directly invested in a 401K type plan that is a diversified and age adjusted portfolio. The government doesn't touch any of this investment money!! It is a mandatory private investment program but the employee and/or employer or self-employed individual could contribute more than 15.3% voluntarily to the investment plan. The person is 100% vested in this account but cannot withdraw any of the mandatory investment or assets prior to retirement (they could withdraw voluntary contributions like a 401K today but not on the mandatory investment).
If a worker earned federal minimum wage of $7.25/hr for a year (2080 hrs) they would earn $15,080 and they would have $1,153.62 withheld plus their employer would match that for a total annual investment of $2,307.24. After 45 years at 9% ROI (a very conservative lifetime return on investment) they would have roughly $1,366,000 in assets. They could collect 5% ROI on assets (not touching the $1,366,000) that would provide $68,300/year FOREVER. If they died at age 65 or anytime thereafter they would leave that $1,366,000 estate to their heirs. If they never lived to retirement age and died early the accumulated assets would go to their heirs. For example that minimum wage worker would leave about $550,000 to their heirs if they died at age 55.
They would never have paid any FICA/Payroll/Self-Employment tax prior to retirement as that tax is only imposed above $30,000/yr in income (the median gross individual income in the United States). They actually would have the 15.3% withheld on their retirement income, or $10,450 on $68,300/yr in retirement income, with $4,590 (i.e. 15.3% of $30,000) going into their mandatory retirement account and the balance being taxation under the current tax rate but that is partially incorrect.
At the end of 45 years the "tax rate" wouldn't be 15.3% above $30K/yr in income so this really over-estimates what they would have to pay as a tax. They would, after retirement, make the $4,590 contribution to their mandatory investment account (i.e. 15.3% of $30,000/yr in income) and it would continue to grow. This minimum wage worker would be far better off in retirement than they ever were during their working career because they would literally be a "millioniare" with over $1 million in assets. Obviously they wouldn't require even one dime of "welfare" assistance.
AND THAT'S FOR A LIFETIME MINIMUM WAGE WORKER!!!! |
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Post by ShivaTD on Jun 19, 2014 11:01:10 GMT
Clarification on ending Medicare.
Because of the high retirement incomes under privatization (e.g. over $60,000/yr for a lifetime minimum wage worker) there would be no need for Medicare. Based upon today's current cost per Medicare member the estimated cost of private health insurance above age 65 is about $15,000/yr. A person with $60,000/yr can afford to pay for that private health insurance.
We have to make provisions for the very few that might not have that level of income and there is a transitional income area that I've addressed. A person that falls into the privatized Social Security "safety net" would only have $30,000/yr in income and they couldn't afford any "health insurance" expenditures so we expand Medicaid and they would be covered by that health insurance program. Above $30,000/yr in income and up to $50,000/yr in income they would receive a "subsidy" to help fund private insurance much like the "Individual Mandate" under Obamacare today. It would be "pro-rated" based upon income based upon the principle that above $30,000/yr they could afford to pay something and at $50,000/yr they could afford to pay it all (they would still have $35,000/yr in retirement income after paying for health insurance).
As noted though, because even a minimum wage worker would typically have over $60,000/yr in retirement income, this "safety net" would not be required very often and so the costs would be very low. This would require phased implementation that I haven't calculated but the ultimate goal after 45 years is to not have Medicare at all and it can logically be ended sooner than that completely based upon "average" incomes from privatization that would make Medicare unnecessary for about 1/2 of all retirees after roughly 30 years.
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Post by pjohns1873 on Jun 19, 2014 17:42:56 GMT
Re-addressing this for clarification on the "investment" accounts.
The current 15.3% FICA/Payroll/Self-Employment tax would not be imposed up to median income but the money would still be collected and directly invested in a 401K type plan that is a diversified and age adjusted portfolio. The government doesn't touch any of this investment money!! It is a mandatory private investment program but the employee and/or employer or self-employed individual could contribute more than 15.3% voluntarily to the investment plan. The person is 100% vested in this account but cannot withdraw any of the mandatory investment or assets prior to retirement (they could withdraw voluntary contributions like a 401K today but not on the mandatory investment).
If a worker earned federal minimum wage of $7.25/hr for a year (2080 hrs) they would earn $15,080 and they would have $1,153.62 withheld plus their employer would match that for a total annual investment of $2,307.24. After 45 years at 9% ROI (a very conservative lifetime return on investment) they would have roughly $1,366,000 in assets. They could collect 5% ROI on assets (not touching the $1,366,000) that would provide $68,300/year FOREVER. If they died at age 65 or anytime thereafter they would leave that $1,366,000 estate to their heirs. If they never lived to retirement age and died early the accumulated assets would go to their heirs. For example that minimum wage worker would leave about $550,000 to their heirs if they died at age 55.
They would never have paid any FICA/Payroll/Self-Employment tax prior to retirement as that tax is only imposed above $30,000/yr in income (the median gross individual income in the United States). They actually would have the 15.3% withheld on their retirement income, or $10,450 on $68,300/yr in retirement income, with $4,590 (i.e. 15.3% of $30,000) going into their mandatory retirement account and the balance being taxation under the current tax rate but that is partially incorrect.
At the end of 45 years the "tax rate" wouldn't be 15.3% above $30K/yr in income so this really over-estimates what they would have to pay as a tax. They would, after retirement, make the $4,590 contribution to their mandatory investment account (i.e. 15.3% of $30,000/yr in income) and it would continue to grow. This minimum wage worker would be far better off in retirement than they ever were during their working career because they would literally be a "millioniare" with over $1 million in assets. Obviously they wouldn't require even one dime of "welfare" assistance.
AND THAT'S FOR A LIFETIME MINIMUM WAGE WORKER!!!! Athough $1,366,000 in the distant future will surely not be anywhere near what it is today, because of the ravages of inflation, I think your plan is essentially pretty good. Not quite perfect, perhaps; but I cannot come up with a better alternative--including the current system. And, as I noted in another post (in another thread), one could easily convert the resulting (finite) pool of money into an (infinite) stream of money, by purchasing a SPIA (or other lifetime financial instrument) with it, thereby making it impossible to outlive one's money; which is a common worry in retirement. |
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Post by pjohns1873 on Jun 19, 2014 17:48:30 GMT
Clarification on ending Medicare.
Because of the high retirement incomes under privatization (e.g. over $60,000/yr for a lifetime minimum wage worker) there would be no need for Medicare. Based upon today's current cost per Medicare member the estimated cost of private health insurance above age 65 is about $15,000/yr. A person with $60,000/yr can afford to pay for that private health insurance.
We have to make provisions for the very few that might not have that level of income and there is a transitional income area that I've addressed. A person that falls into the privatized Social Security "safety net" would only have $30,000/yr in income and they couldn't afford any "health insurance" expenditures so we expand Medicaid and they would be covered by that health insurance program. Above $30,000/yr in income and up to $50,000/yr in income they would receive a "subsidy" to help fund private insurance much like the "Individual Mandate" under Obamacare today. It would be "pro-rated" based upon income based upon the principle that above $30,000/yr they could afford to pay something and at $50,000/yr they could afford to pay it all (they would still have $35,000/yr in retirement income after paying for health insurance).
As noted though, because even a minimum wage worker would typically have over $60,000/yr in retirement income, this "safety net" would not be required very often and so the costs would be very low. This would require phased implementation that I haven't calculated but the ultimate goal after 45 years is to not have Medicare at all and it can logically be ended sooner than that completely based upon "average" incomes from privatization that would make Medicare unnecessary for about 1/2 of all retirees after roughly 30 years.
Although I am probably not the most objective person who might possibly comment upon this, since I have oly Part A of Medicare (and it seems downright superfluous, given my other healthcare insurance), you plan seems reasonable enough to me. Let me ask you this--and I mean this sincerely, not as merely some catty remark--have you ever contacted one of your US senators or your congressperson about your plan? I realize, of course, that these people often do not take the time to read their constituents' mail; but it might be worth a try, anyway. |
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Post by ShivaTD on Jun 20, 2014 1:04:05 GMT
Let me ask you this--and I mean this sincerely, not as merely some catty remark--have you ever contacted one of your US senators or your congressperson about your plan? I realize, of course, that these people often do not take the time to read their constituents' mail; but it might be worth a try, anyway.
One of my senators is "untouchable" for the most part but I have contacted the other but received no reply. My House member is a Democrat and the Democrats have been completely shut-down by the House GOP that controls everything and won't even discuss tax reform with a Democrat.
I'm still working out minor details, which is why questions help me, and then I'm going to self-publish a booklet on the issue and send it to them as well as to other members of Congress. That's probably a year or so away from happening but perhaps just one of them will actually read it and spread it around. That's the hope anyway.
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Post by ShivaTD on Jun 20, 2014 1:17:56 GMT
Athough $1,366,000 in the distant future will surely not be anywhere near what it is today, because of the ravages of inflation, I think your plan is essentially pretty good. Not quite perfect, perhaps; but I cannot come up with a better alternative--including the current system. And, as I noted in another post (in another thread), one could easily convert the resulting (finite) pool of money into an (infinite) stream of money, by purchasing a SPIA (or other lifetime financial instrument) with it, thereby making it impossible to outlive one's money; which is a common worry in retirement.
In the past investment experts recommended at least 10% be invested but because of the inflationary policies of government (that benefits the government and wealthy at the expense of everyone else) I believe that 15.3% is really necessary which is why I stick to it even after the transition period. Of course I would also recommend that individuals, especially low income individuals even though they have the least disposable income, contribute more than the mandatory amount as well.
I provided the income for a minimum wage earner but for 50% of all worker they would have about 2.7 million at age 65 and that would provide them an income of about $135,000/yr FOREVER without touching the "principle" (compared to the average $15,000/yr for Social Security today).
As you mentioned there are annuities that pay better and do pay for life for the person and their spouse but they consume the principle. There could be disbursment options that I'm not addressing. One nice feature is that with just a little more in voluntary contributions a person could easily retire at 55 with over $100,000/yr in income. All they need to do is add a little more when they're in their 20's. It's like the opposite of pre-paying principle on a mortgage that we discussed recently. A little more really adds up over time.
I'm also being very conservative with a 9% ROI lifetime because early "age-adjusted" investments when a person is young typically have a much higher ROI generally in the 14%-18% range based upon the mutual funds I've looked at. The often invest in foreign stocks in developing countries that have very high ROI's often in the 20% range (but they don't have a large percentage in those stocks).
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Post by pjohns1873 on Jun 20, 2014 16:05:28 GMT
Let me ask you this--and I mean this sincerely, not as merely some catty remark--have you ever contacted one of your US senators or your congressperson about your plan? I realize, of course, that these people often do not take the time to read their constituents' mail; but it might be worth a try, anyway.
One of my senators is "untouchable" for the most part but I have contacted the other but received no reply. My House member is a Democrat and the Democrats have been completely shut-down by the House GOP that controls everything and won't even discuss tax reform with a Democrat.
I'm still working out minor details, which is why questions help me, and then I'm going to self-publish a booklet on the issue and send it to them as well as to other members of Congress. That's probably a year or so away from happening but perhaps just one of them will actually read it and spread it around. That's the hope anyway.
I think that is a very good idea, to publish a booklet on the subject. (Perhaps some senator or congresscritter will read it, and act upon it--even of he or she decdes to pretend that it was his or her own idea.) It is probably not a good idea, however, to take a cheap shot at the Republican-controlled House, since Harry Reid and the Democrat-controlled Senate will not take up for a vote any GOP-sponsored legislation, either--especially if it would force Democrtic senators to take a tough vote in an election year (for some of those senators, anyway). |
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Post by pjohns1873 on Jun 20, 2014 16:20:03 GMT
Athough $1,366,000 in the distant future will surely not be anywhere near what it is today, because of the ravages of inflation, I think your plan is essentially pretty good. Not quite perfect, perhaps; but I cannot come up with a better alternative--including the current system. And, as I noted in another post (in another thread), one could easily convert the resulting (finite) pool of money into an (infinite) stream of money, by purchasing a SPIA (or other lifetime financial instrument) with it, thereby making it impossible to outlive one's money; which is a common worry in retirement.
In the past investment experts recommended at least 10% be invested but because of the inflationary policies of government (that benefits the government and wealthy at the expense of everyone else) I believe that 15.3% is really necessary which is why I stick to it even after the transition period. Of course I would also recommend that individuals, especially low income individuals even though they have the least disposable income, contribute more than the mandatory amount as well.
I provided the income for a minimum wage earner but for 50% of all worker they would have about 2.7 million at age 65 and that would provide them an income of about $135,000/yr FOREVER without touching the "principle" (compared to the average $15,000/yr for Social Security today).
As you mentioned there are annuities that pay better and do pay for life for the person and their spouse but they consume the principle. There could be disbursment options that I'm not addressing. One nice feature is that with just a little more in voluntary contributions a person could easily retire at 55 with over $100,000/yr in income. All they need to do is add a little more when they're in their 20's. It's like the opposite of pre-paying principle on a mortgage that we discussed recently. A little more really adds up over time.
I'm also being very conservative with a 9% ROI lifetime because early "age-adjusted" investments when a person is young typically have a much higher ROI generally in the 14%-18% range based upon the mutual funds I've looked at. The often invest in foreign stocks in developing countries that have very high ROI's often in the 20% range (but they don't have a large percentage in those stocks).
Yes, you are certainly correct: Lifetime annuities (SPIAs) do consume the principal; which is to say, once that money has been invested, one may never again access it as a lump sum. That is why it is good to have both pools of money (lump sums) and streams of money (never-ending payouts) in retirement. (Although I have many different streams of income, including both SPIAs and other financial instruments--all of which, together, amount to a rather modest sum of money--I do save my entire Social Security check into my Rainy Day Fund, which is, by definition, a pool of money. So whenever an emergency rolls around--and it really is a matter of when, not if--I can simply draw from it. as necessary; and I can also use it to purchase a new vehicle, when that time comes about, without having to acquire a new monthly bill, and also having to pay interest on the purchase.) |
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