Issues: June 2005 Archives

Posted by JCoke at Daily Pundit



He makes some incorrect assumptions. In point of fact, my calculator says that a person contributing 12.4% of a $20,000 yearly salary makes monthly contributions of $206.67 and if this earned interest at 5% over 45 years the value would be expected to come in at $418,797. There should be no tax consequences for rolling this into an annuity, where it continues to earn interest tax deferred. Assuming 5% Rate of return, something you can find fixed annuities at, a payment of $2248 monthly would be a 30 year fixed payout (not a "life with 30 years guaranteed"). If this is then taxed at 15%, this would be a net of $1910 per month, $22920 per year net to the person. This still loses to long-term inflation by a tad, but not nearly so much as Social Security.



Now if you computed it based upon 8%, far more realistic for a market investment, you get a nest egg of $1,090,089, which gives you $7998 per month, which even taxed at 28% gives you a net of $5759 per month, approximately $69,100 per year, which does substantially better than long-term inflation.



Note 1: It's the 45 year period which is the real enabler here.



Note 2: historical long term returns in the stock market have been closer to 10%, in which case, even taxed at 40%, the monthly net is $11982.



Note 3: Every insurance company has it's own mortality tables which have been revised upwards in recent years. I'm unable to locate a web based one which doesn't require your personal information. Looks like I've got to check some old connections.

From John Hudock over at Common Sense and Wonder



My public school education is twenty-five years behind me, but most teachers back then were interested in teaching the subject matter. Probably the majority of them still are, but when they cannot reliably teach the essentials of the most necessary of all school subjects, to waste time (or want to waste time) conducting political indoctrination is salt in the wound.



I strongly suspect that it's union officials, rather than working teachers, who are primarily responsible for this. Looks like it may be time for a new set of union officials, if that is so.