Why Democrats Will Target the Investor Class in 2009

A LOT OF MISINFORMED PEOPLE

For one, the 3% rate of return discussed is indexed for inflation -- therefore, it would average out over 6% annually with the ability to raise it if returns are better. The long-term inflation rate, since 1914, has been 3.43%; while the average 35-year-period stock return has been 6.4% or 9.83% after inflation. Unfortunately, there are still fees involved which drop your returns by 0.2% to 2.5%, not to mention front end loads. Plus we have the poor investment habits of the typical investor -- jumping in and out of the market -- which can make the lose another 2-5 percentage points. This makes that 3% inflation adjusted return not that bad of a guarantee.

As far as Social Security goes, it was never designed to let you live at your same standard of living with it ONLY! It is for fullfilling minimum needs. And even if nothing is done to shore it up, you will still get roughly 74% of your expected benefit. It is a good program and only needs a few tweeks to make it whole again.

Moving on to the economy and politics. The economy, like everything else, moves in cycles. Sometimes the bad falls on the Democrates, sometimes the Republicans take the heat. Remember stagflation and Jimmy Carter? Reagan got us out of that one. Part of Bush's economic woes were actually started during the Clinton administration -- the opening up of home credit lines to people that would have not been previously approved. It is how we anticipate and react to these cycles that really counts. Bush's administration reacted slowly to the credit crisis, but I believe they did a great job after the 9/11 crisis.

Defined benefit plans are great, but they are a thing of the past. The average worker is more portable now and not able to stay at the same job until they retire. That is why IRA's and other defined contribution plans such as the 401(k) are rapidly replacing them. I myself enjoy the tax breaks of retirement plans. Unfortunately, we are a consumer society -- concerned with immediate needs instead of the future. If you are eligible to contribute to a Roth IRA, have a job, and are not putting the maximum money in it, then you may be an idiot -- you are passing up tax-free money in the future. The 401(k) situation can be fixed if the government makes it mandatory to contribute 5% of your earnings to your retirement plan (such as in Ghilarducci's plan) -- a separate government plan is not needed.

Jeff Scott of VA @ Apr 14, 2009 14:40:38 PM

Hypocrite!

"I DO NOT want the government taking my money and helping who they deem necessary to help."

Unless it's YOU - buying a HUD home as you say in your silly rant...

This is typical for the American right-wing - they hate government handouts - unless it's THEIR hand getting stroked.

Fred of NY @ Mar 05, 2009 12:03:49 PM

The Bottom Line

Give the people the choice, if we want to leave the Social Security System and invest on our own with our OWN money...so be it.

The option should have been there to decide when I was 18, now as it is when I turn of age for Social Security there wont be a dime left.

I would rather the Government pay me back my Social Security I have already invested then wonder if it is going to be there.

Mike of HI @ Feb 24, 2009 00:19:28 AM

Pension Management or Mismanagement

"The Democrats might like to eliminate private retirement accounts and return to defined benefit pensions. But after pensions drove most of the legacy airlines into bankruptcy, I would think that's going to be a hard sell."

Let's see. The airlines had all of this pension money to invest and they lost it...right?

If they had been good members of the "investor class", the pensions would have been worth tons of money...right? The moral of the story is "do not let anyone manage your money that you cannot change at will".

CrustyOldGoat of IN @ Dec 19, 2008 08:44:08 AM

Why should someone who sells a house not be taxed on the gain from the difference in price of the old house and the new? Homeowners are perfect dupes for socialism. They are ignorant of economics and cling to the entitlement mentality.

Devlin of IL @ Dec 02, 2008 13:24:20 PM

Republicans should not write articles about investing

I think the whole world has seen what can happen when the world runs according to republicans. If they had gotten their way several years ago and citizens been allowed to invest their social security in the stock market we would have about a 50 percent homeless rate among retirees. Of course Repubs will never admit this since they are never wrong (in their own minds). Just ask one how great was Ronnie Raygun. It took Bill Clinton's economic policy just 8 years to fix that mess and GW only 4 to destroy our way of life. Way to go repubs for handing the Dems control once again.

Clintonite of IL @ Nov 21, 2008 10:51:37 AM

Think again. My husband will retire early to avoid taxes.

My husband never went to college, but instead went to work as a welder when he was 17 years old. He was and is an extremely hard worker and has slowly moved up the work ladder and now is in management for a large company.

I worked full time when we got married then part time while I raised our two children while also going back to school. I finally obtained my degree as a nurse practitioner. I currently work in an underserved area where 90% of my patients are medicaid, so I am all about helping people.

When my husband and I first got married we lived in a mobile home then years later bought a HUD home. We drove used cars, and I bought baby clothes and other items such as strollers, play pens, etc. at garage sales. We never lived beyond our means and paid off our house at ages 33/35. We have no car note etc. It was because we managed our money well and didn't go out to eat often,vacation, etc.

Now we make over $200,000 a year. We are putting one child thru college with another to join him in 2 1/2 years. We are helping our elderly parents. We still do not live beyond our means. I do not "look" at our money in the stock market that we have been saving in a 401k or 403b since we were in our twenties, but I am still proud that we were responsible enough to have saved it for that long.

I help a lot of people (from my own pocket) including some of my patients. I choose to help these people. I DO NOT want the government taking my money and helping who they deem necessary to help. I want to help who I WANT to help with the money we earn. My husband and I have already decided that if taxes go up too much he will retire early (he is 47), since we will have universal health care. So don't think people want do it. I have worked too hard for my degree, but if the government is going to take a large portion of our income, you better believe my husband will early retire, and I am sure we are not the only ones who feel this way. Again, I love to help those who are helping themselves, but I am tired of helping those who don't want to work and are able and there are many people like that.

Laura of LA @ Nov 11, 2008 23:10:58 PM

The 3% guarantee

Just think, a nation with the 3% guarantee. The government will have us where they want us, totally dependent. Who said it ?

"Give me liberty or give me death!" I for one prefer liberty and I will fight to the death for it !

30yr vet

maharba of VA @ Nov 11, 2008 21:27:15 PM