Lockbox Deceit

Was watching the tube this evening and heard for the 18 billion^th time how the problem with Social Security is that we're all living too damn long and it was never meant to pay we old dotards, etc.  So why don't we all just die before getting it like the plan originally intended?

Well, sorry, but that's just Bullshit.

That's just a bunch of crap to make you feel lucky.  I'm sick of this lie they keep telling us.  The reality is that if the government didn't mismanage the ole lockbox, you would probably get a much larger Social Security monthly check.  I know I would.

How do I figure this? 

Well I spent some time on research and number crunching. 

Based on the United Nations life expectancy tables & World Health Organization life expectancy tables, I'm going to kick when I am 76.  A little unsettling, but I guess that's that.

If I start collecting Social Security at the full retirement age I'll have 10 years of checks at a monthly rate of $2,395.  Or a total payout of $287,400.

So far it looks like they are right.  After all, if I add up the amounts deducted from my paychecks over the years, it's only $113,841.55.

But wait a minute.  My employer (in some years that's me, myself, and I) contributes to the fund.  There have been some variations, but it is roughly the same amount.  So let's double that to $227,683.10.

Hmmm.  A lot closer to the payout, but it still looks like I'm getting a great deal at the expense of future taxpayers.

But as Ron Popeil says, "but wait there's more!"

No one in their right mind (which probably excludes the government) would stash away money for 35 to 40 years and not expect a return.  Actually the government even expects it.  Try paying your taxes late and see if they want some interest.  So no.  We still don't have numbers to compare.

What can we use?  Well I decided to work the numbers based on three different rates of return.

The first uses the inflation or CPI rate.  That provides a flat "no return" number.  It merely accounts for inflation.  So how does that compare?  My contributions using CPI rates totals $192,975.96.  Still far short of my payout.  But my contributions plus my employer's totals $385,951.91.  WOW!  Just accounting for inflation shows that the government has shortchanged me by almost a $100,000!  $385,951.91 - $287,400.00 = $98,551.91.

Then I took a look at what I would get if I actually got some return on my investment.  So I used a really conservative 5% annual return.  The combined contributions would be worth $588,104.96.  Now I see the government will cheat me out of $300,704.96.

But is 5% the right return?  After thinking about it awhile longer, I decided to rework the numbers one last time.  This time I used the S&P returns for each year I contributed.  Simple enough for you to do if you had that money.  Use it to buy an S&P index ETF.   What would I have then instead of the government 'securing my future' all these years?  Hold on to your seats kiddies.  The combined contribution would have been worth $1,683,343.17!  

So enough of this crap that I'm going to suck more money out than I put in.  YOU are cheating me out of $1,395,943.17.  I should be getting $11,632.86 per month instead of that measly $2,395 per month.

Lastly, I purposely ignored any cost of listing adjustments I might get in my Social Security payout.  For one thing, I didn't know how to figure that out.  And secondly I thought it was safe to assume that I should be able to cover that with the returns on my declining investment.  After all, if I just make 2% on my 1.6 million, I'd cover my my $2,395 per month payment and actually increase the principal, not slowly whittle it away.

References:

• Social Security payout from http://www.socialsecurity.gov/begin-est/
• CPI from http://data.bls.gov/cgi-bin/srgate using series CUUR0000SA0
• S&P data from http://financeandinvestments.blogspot.com/2012/06/historical-annual-returns-for-s-500.html

This Time You've Gone Too Far

I'm not sure how far off the coast we are.  Someone with more resources than I have right now can probably make a decent guess from the TV map below.

I zoomed the camera phone at its highest.  If you look carefully on the right side of ocean image, you can see a small sailboat.  You wouldn't catch me this far out in that thing.

Wondering about that zigzag in our course?  We had a medical helicopter emergency rescue last night around 8:30.

Off to Bermuda

We made it to the cruise terminal in about an hour.  I can see the car from our room.  So yea, parking was easy.  I'm a little buzzed already.  Mr sub got this drink in the hallway and the guy poured in some extra shots.  So of course I had to go back there & and get one too.  I got a couple extra shots too.  But Mr peaches was there so I bought him one and the Guy poured a couple more in mine.  Then peachy came up and I bought her one.  And the guy hit me again.  Well the boat's pulling away so I gsuess time to post before I lose 3G.

Peaches Makes a Basket

After quitting her job during the recession and going back to school, Yale gives Peaches her diploma.

Congratulations to Peaches with her newly minted Master's of Architecture.

Paperwork Reduction

Happy Tax Day Everyone!

Hope everyone is done and relaxed for the rest of the year now.

I was looking at some of the forms and was struck by the prevalence of the paperwork reduction act notices.  Yes, they've been there for years, but I guess I have too much time on my hands now.

But I was curious so I counted the pieces of paper that are my 2012 returns. 
A whopping 26 pages.

That is both federal and state and to be fair, that 1 page return was when NJ didn't have an income tax. 

How much paper to produce those 26 pages?  88 pieces of paper.  W-2, 1099, charitable donation receipts, etc. etc. 

Whew.  Glad we've reduced all that paper.

Back in the 60s my tax return was a single piece of paper.  True I have investments I didn't have back then and I didn't own a house etc.  This is my 1967 tax return.

That's it.  Eleven pieces of information.  Address is item 1 and my refund is line 11.  Now that's paperwork reduction.

All Fools Day at the White House

Came early this year when the President declared April as National Financial Capability Month on March 29.

I call upon all Americans to observe this month with programs and activities to improve their understanding of financial principles and practices

Obama is lecturing me on financial responsibility?  Perhaps he'll teach me how to make and adhere to a budget?

So what's next?

Is John Boehner going to teach me how to use sun block?

Is Debbie Wasserman Schultz going to teach me how to comb my hair?

This is the second year of National Financial Capability Month.  We also had  National Financial Literacy Month in 2010 & 2011.

If you do not have a life, you can read all four:

April 2, 2010	-	2010 National Financial Literacy Month
March 31, 2011	-	2011 National Financial Literacy Month
April 2, 2012	-	2012 National Financial Capability Month
March 29, 2013	-	2013 National Financial Capability Month

So here is what I learned:

The debt at the end of March when each of these proclamations were made:

Year	Total Debt
2010	12,773,123,000,000
2011	14,270,115,000,000
2012	15,582,079,000,000
2013	16,687,289,000,000

So given we had a debt of 11,126,941 000,000 on  March 31 2009, the president called on us to become financially literate while the federal government was racking this sort of debt each year:

Year	Debt Increase	Debt Incr per Person *
2010	1,646,182,000,000	5487.27
2011	1,496,992,000,000	4989.97
2012	1,311,964,000,000	4373.21
2013	1,105,210,000,000	3684.03

* using a rough number of 300,000,000 people

So the federal government has increased the debt for each person in the U.S. by 18534.49.  Yep.  That's almost $20,000 even for your child sleeping in her cradle.

Here it is only 2-April.  I think my financial acumen has really grown.

Just the Gas Ma'am

I was listening to the news on a local radio station this morning

I pricked up my ears when they started talking about gas prices.  Their report stated that gas prices had risen again.  The average was up 11 cents this week.  That made me a little curious as I had bought gas late yesterday and noticed that the price was the same as I had previously paid.

I've recorded every gas purchase I've made for my personal vehicles since the early seventies.  In recent years I've kept a spreadsheet.  Anyway, segue aside, I took a look and found that the current price is at its lowest since over 7 months ago.  As you can see below, I typically buy gas 1 to 2 times a month.

So are the prices so volatile that they are hopping up and down frequently and I'm just not seeing this because I'm not buying every other day?  Or is something else going on?

Just wondering

Here's what I've paid over the last 8 months.  You can see that you have to go back to last May to find cheaper gas.  All fill-ups were at the same gas station except for Nov 5 and July 28 (this one the same brand but different place).

Jan 31, 2013	3.39
Jan 14, 2013	3.39
Jan 08, 2013	3.39
Dec 24, 2012	3.39
Nov 24, 2012	3.59
Nov 05, 2012	3.63
Oct 10, 2012	3.79
Aug 31, 2012	3.67
Aug 08, 2012	3.55
Jul 28, 2012	3.69
Jul 20, 2012	3.45
Jun 20, 2012	3.35
May 12, 2012	3.75