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-   -   Invest in 401K or pass it up and keep entire pay? (http://www.insidehoops.com/forum/showthread.php?t=281638)

Hermit 11-16-2012 12:54 AM

Invest in 401K or pass it up and keep entire pay?
 
Is 401K better then Social Security after retirement?

bmulls 11-16-2012 01:00 AM

Re: Invest in 401K or pass it up and keep entire pay?
 
401k does not affect social security

nathanjizzle 11-16-2012 01:34 AM

Re: Invest in 401K or pass it up and keep entire pay?
 
based on the shit your saying, youll need both by the time you retire.

stevieming 11-16-2012 02:34 AM

Re: Invest in 401K or pass it up and keep entire pay?
 
depends on how old you are bro....

generally the older you are the more you need to save, the younger you are the more uncertainty the landscape is going to be.

Who knows if 401k is still going to be around in 30 odd years if you're 18 or so.

Meticode 11-16-2012 03:01 AM

Re: Invest in 401K or pass it up and keep entire pay?
 
Quote:

Originally Posted by nathanjizzle
based on the shit your saying, youll need both by the time you retire.

:roll:

joe 11-16-2012 03:15 AM

Re: Invest in 401K or pass it up and keep entire pay?
 
Social Security is the textbook definition of a Ponzi Scheme, except it's actually worse than a Ponzi Scheme, because at least people pay into those voluntarily.

Within 15-20 years, Social Security checks will either:

-Not be given at all
-Not pay as much as they do today
-Be the same amount of money, but due to inflation they'll actually be much smaller.

Like all Ponzi Schemes, eventually SS will fall apart. There is no money in the social security "trust fund," the government spent it all. You need to plan for your retirement separately from SS, don't rely on it.

And by the way, I'm not anything close to a financial adviser, so you best do your own research and don't strictly rely on what I say, or what any random person online says!

Geriatric 11-16-2012 09:08 AM

Re: Invest in 401K or pass it up and keep entire pay?
 
A 401k and Social Security are not mutually exclusive. And you should, if at all possible have both. You have zero choice in whether to contribute to Social Security and just about as much confidence that the program as we currently know it will even exist when you and I become old enough to begin getting back what we have put into it.

A 401k is your own money and as such is always going to be better than trusting a government program to provide for you in the future. If you have an employer who offers any kind of match, you'd be an idiot to pass up whatever the matching percentage is. That's like getting a 100% return on investment the second you make the investment. You just need to make sure you know your risk tolerance and invest accordingly. If you can't stomach seeing the short term swings where your balance jumps by large amounts day to day, I wouldn't invest too aggressively. Typical advice is to invest more aggressively when you are younger and have time to build your wealth and move gradually to less risky investments as you age so your nest egg doesn't take a substantial hit right before you need it.

But as joe said, consult a financial adviser who can explain things to you in more detail so you can make the most informed decision for your circumstances.

JohnnySic 11-16-2012 09:29 AM

Re: Invest in 401K or pass it up and keep entire pay?
 
Invest as much as you can and watch it grow.

InfiniteBaskets 11-16-2012 01:38 PM

Re: Invest in 401K or pass it up and keep entire pay?
 
Quote:

Originally Posted by joe
Social Security is the textbook definition of a Ponzi Scheme, except it's actually worse than a Ponzi Scheme, because at least people pay into those voluntarily.


Social Security is designed to provide social equity to retirees while keeping individual benefits in mind. What exactly makes you think SS is worse than a Ponzi scheme? You believe that people put money in a system where they will not get any money or benefit out of it?

Because that is incorrect, throughout the entire lifetime of social security, the system has been reformed multiple times to ensure those who contribute money in are eligible for benefit collection. Since its inception in the 1930s, it's had no trouble paying any retirees despite economical turmoil and increasing life expectancies.

Quote:

Originally Posted by joe

Within 15-20 years, Social Security checks will either:

-Not be given at all
-Not pay as much as they do today
-Be the same amount of money, but due to inflation they'll actually be much smaller.



There is almost no possibility that social security checks will be cancelled with present day contributors seeing 0 cents on the dollar. Even post-bankruptcies of the most corrupt organizations liquidate to provide partial relief on losses. It is comical to think the US government would be able to get away with providing no benefit to 99% of the US population.

IF absolutely no reform actions are taken, then in 2017 the social security trust fund is expected to decrease. In 2027, the trust fund will evaporate, and in 2040 total program outgo will be greater than cash inflow.

What most people don't know is that long-term financial balance (70 years) of the plan can be achieved by increasing social security tax from 12.40% to 14.42%. In case you didn't know, you pay 6.2% of your income to SS, and your employer pays the other half. If you are self-employed you pay the whole 12.40%.

What a terrible thought! They want to increase our tax by 2.02% !?!? That's just not American! Nevermind the fact that we are the ones who threw the plan out of balance by living longer or the fact that fluctuations in our population (baby boomers) are causing financial volatility within the plan. We were okay when you increased social security tax from 2% to 6% from the 1930s to 1960s, and we were fine with an increase from 6% - 10% from the 60s to 1980. And then when you increased it again to 12.4% in 1990 we didn't have a problem. But we're putting our foot down this time!

http://www.taxpolicycenter.org/taxfa...historical.pdf


Quote:

Originally Posted by joe
Like all Ponzi Schemes, eventually SS will fall apart.


Yes, SS, like most civilizations and planet earth will fall apart one day. As for now, if SS is a Ponzi Scheme then so is paying taxes, buying insurance, and any other form of pooling money together for the cause of social welfare.

Quote:

Originally Posted by joe
There is no money in the social security "trust fund," the government spent it all.


That is false. But if you would like to humor me, I'd invite you to find a credible source proving the trust fund is out of money.

Quote:

Originally Posted by joe
You need to plan for your retirement separately from SS, don't rely on it.


Probably the only concrete statement you've made that I agree with. But then again, I'd also recommend people have emergency funds and not just rely on unemployment checks. Overall fiscal conservatism doesn't apply specifically to retirement.

Quote:

Originally Posted by joe
And by the way, I'm not anything close to a financial adviser, so you best do your own research and don't strictly rely on what I say, or what any random person online says!


Correct.

Further reading: http://www.actuary.org/pdf/socialsecurity/reform_07.pdf

-p.tiddy- 11-16-2012 01:49 PM

Re: Invest in 401K or pass it up and keep entire pay?
 
if your company is willing to match you on your 401k you would be a fool not to do it...

invest whatever it is your company matches

if your company matches 5%, then invest 5%...

boozehound 11-16-2012 02:45 PM

Re: Invest in 401K or pass it up and keep entire pay?
 
Quote:

Originally Posted by -p.tiddy-
if your company is willing to match you on your 401k you would be a fool not to do it...

invest whatever it is your company matches

if your company matches 5%, then invest 5%...

This. Now, it seems like matching contributions are less common than they were. If you are young (below say 26 or so), it may make as much sense to take the extra salary (presuming no match) now and using it as a downpayment on a car or house or other reasonable property investment.

KevinNYC 11-16-2012 02:48 PM

Re: Invest in 401K or pass it up and keep entire pay?
 
Quote:

Originally Posted by Hermit
Is 401K better then Social Security after retirement?


You definitely want to invest in a 401K. You want that in addition to 401K.
Look up compounded interest while you are at it and you will see why it's also good to start saving early.


You can ignore Joe's nonsense about Ponzi's schemes. He's going to retire on the canned goods he's buried on his survival ranch.

Duderonomy 11-16-2012 03:26 PM

Re: Invest in 401K or pass it up and keep entire pay?
 
Invest what your company will match. Unfortunately my former employer matched very little so I invested the money myself. I say you can't go wrong with 2-3% of your paycheck. If you do invest the money yourself, stick to things you follow the market on or are interested in.

kNicKz 11-16-2012 03:28 PM

Re: Invest in 401K or pass it up and keep entire pay?
 
Quote:

Originally Posted by joe
Social Security is the textbook definition of a Ponzi Scheme, except it's actually worse than a Ponzi Scheme, because at least people pay into those voluntarily.

Within 15-20 years, Social Security checks will either:

-Not be given at all
-Not pay as much as they do today
-Be the same amount of money, but due to inflation they'll actually be much smaller.

Like all Ponzi Schemes, eventually SS will fall apart. There is no money in the social security "trust fund," the government spent it all. You need to plan for your retirement separately from SS, don't rely on it.

And by the way, I'm not anything close to a financial adviser, so you best do your own research and don't strictly rely on what I say, or what any random person online says!


social security is just a free loan to the government that they don't even have to pay back. I could take 6% out of every paycheck, put it in a separate bank account, and watch it rise/ collect interest. Don't need the government's paws in it

InfiniteBaskets 11-16-2012 03:53 PM

Re: Invest in 401K or pass it up and keep entire pay?
 
Quote:

Originally Posted by kNicKz
social security is just a free loan to the government that they don't even have to pay back. I could take 6% out of every paycheck, put it in a separate bank account, and watch it rise/ collect interest. Don't need the government's paws in it


Social security isn't supposed to make you better off if you are already on one of the higher rungs of society.

If you annually earn 100K, you obviously could take 6K and get a decent return on it. Social Security takes your 6K, earns a modest but safe return and then gives you back a present value of 5K or so when you retire.

That extra 1K plus interest goes to someone else who made 30K annually their entire life. It's a social insurance program just like unemployment.


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