Strengthening Constitutional Self-Government

No Left Turns

A statistical question

Over the last five, ten, fifteen and twenty years, what’s the relative rate of return for the average 401k and for Social Security? I suspect that above ten years out, the rate of return for 401ks is significantly better, despite the recent market swoon. Naturally, many people are angry that they have lost a good bit of retirement money in the past two years, and any of them blame it on the whole 401k system. But in the long term they may very well still be better off.

P.S. If most people followed the old rule of thumb that the percentage of one’s portfolio in cash and bonds should be equal to one’s age (ie: at 30 years old, one should have 30% cash and bonds, and at 60 one should have 60% cash and bonds), those nearing retirement ought not to have lost quite so much of late. Of course, it is probably unreasonable not to expect people to be, as a rule, greedy about such things, and therefore to take imprudent risks. But don’t we want to encourage responsibility? If so, why not let the prudent be rewarded and the greedy take a bigger hit?

Discussions - 5 Comments

I am retired. If I could have put money into social security as President Bush proposed when I started working, I would be traveling the world today instead of posting this comment. The only reason I can do what I do now is because I took advantage of the 401k process when it became available and I put in the maximum I could afford. Yes I have lost a ton in the last year, but I am better off then if I had not participated.

I am pretty sure social security is required as a matter of law to only invest in Treasury bonds. So the rate of return should always be lower than any private investment. This is done so that government will not interfere as an investor (think pursuing govt pet projects) in the private market.

I know state teacher funds invest in private projects. I wonder how political they get. Does anyone know?

I compared my 401k balance to my Social Security projection at the end of November. 401k features 9% of income invested in wide range instruments. Social Security features. . .well, Social Security. 401k features 11 years of investment. Social Security features 28 years of investment. 401k outperformed by threefold.

I don't think you should be using the data from the last ten years as we are now finding out that so much of it was hogwash. Cooked books, bubbles, ponzi schemes. The idea of being able to make money by investing has become some sort of right that people think they are owed. Mabye things work themselves out, or mabye the markets have peaked and are now basicly where they should have been all along without all the ponzi schemeing and hedge fund chicanery. I don't know why people have the assumption that they are simply going to make money through investing and that is that. Mabye you should simply save... you won't travel the world but at this point at least you could keep your shirt.

Following my own investigation, billions of people all over the world get the personal loans at various banks. Thus, there's good chances to find a commercial loan in all countries.

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