tag:blogger.com,1999:blog-7334408760351487944.post7593201179705817030..comments2023-11-12T06:43:00.060-05:00Comments on Notes on Social Security Reform: New paper: Can 401(k) Plans Provide Adequate Retirement Resources?Andrew G. Biggshttp://www.blogger.com/profile/16617460431856611873noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-7334408760351487944.post-86996552991317178992014-12-17T08:09:15.605-05:002014-12-17T08:09:15.605-05:00This is something really interesting……. Thanks for...This is something really <a href="http://www.bidnessetc.com/calculator/401k-calculator/" rel="nofollow">interesting</a>……. Thanks for sharing..Anonymoushttps://www.blogger.com/profile/12887336402150640913noreply@blogger.comtag:blogger.com,1999:blog-7334408760351487944.post-16616774884040367052008-12-27T22:48:00.000-05:002008-12-27T22:48:00.000-05:00"Can 401(k) Plans Provide Adequate Retirement Reso...<B><I>"Can 401(k) Plans Provide Adequate Retirement Resources?" which simulates the benefits and replacement rates individuals could expect to receive through a combination of Social Security benefits and participation in a 401(k) investment account.</I></B><BR/><BR/>I see no reason why this cannot be the case. The only problem I have is you cannot continue with SS-OASI while workers are attempting to save through a 401(k). The reason is very simple, what additional resources do you use to contribute to a 401(k)? <BR/><BR/>Do people decrease spending by 15%? This would hurt the economy.<BR/><BR/>Do people stop contributing to other retirement avenues such as IRA, savings and stocks? If they do, is this not just a shift from one retirement form to another with no net new savings?<BR/><BR/>Do you cut SS-OASI taxes enough so that people can continue to spend as they have for the past 50 years? If you do what do you do with current retirees?<BR/><BR/>The only way 401(k) can be a true alternative to SS is that new money must flow into them. Not money that was destined for IRA’s, savings or other investments.<BR/><BR/>Many think today’s workers or young spend too much on frivolous stuff. If we were to go back 100 years, what would they think about the spending of the 1930’s? Would they think cars were a frivolous, how about heating, electricity, trains, radio, theaters and more? The entire standard of living structure is based on doing things better, cheaper and faster thereby freeing up human capital to do something else. What that something else has been is nothing more than “frivolous” stuff that has put millions to work, making lives more enjoyable. In the past it may have taken 85% of our resources to meet the basic necessities of a log cabin, food and animal clothes. Today by freeing up 90% of population to do something besides farming, hunting, and building log cabins, we have some building roads, computers, providing power, radios and all the other products today. If we expect workers to cut back in order to save, then the standard of living must drop to accommodate those displaced workers until such time that productivity has improved enough to utilize them.<BR/><BR/>A society that save 15% of their income yearly can produce retirement benefits for all of 92% of pre tax take home pay for life adjusted for inflation. It is a push-me-pull-me economy. The problem with SS is that is artificially stimulated the economy beyond the natural capacity to sustain it. The 15% that once was saved by individuals for individuals was shifted to the SS and Medicare with the “promise” that it would pay benefits in the future. Instead of being set aside to build the infrastructure of the future, they were consumed allowing many to compete for products they would not have purchased otherwise. Now we have benefits that cannot be paid without extolling excessive taxes on our children.WilliamLarsenhttps://www.blogger.com/profile/00226403551284640494noreply@blogger.com