Financial planning

[Stone]

As most of you know I am going in the field of Finance. It just baffels me of how many people don't take the time to plan out there finances. Did you know that 72% of people that retire end up blowing at least 1/2 of there 401K's and pensions within the 1st 3 years of retirement? Most buying sports cars, Rv's and other unneeded things.

I think finincial planning and insurance should be tought in high school, everybody will buy an insurance policy several times in there lives, weather it's car, health, home, life, ect. most adults don't even understand the policy termonilogy.

[Merika]

I totally agree with you SH.

I think every high school senior should take a class which includes a mock checkbook, income and bills. In the midst of that, they should learn how to make their dollars work, how to invest, how the credit system works, how to plan for retirement and what it takes to purchase a home.

Maybe they have something similar....but they probably teach it in such a boring way....few get anything out of it. It SHOULD be the most important class a kid takes. Nothing they accomplish will matter financially if they don't have the foundational skills to make their money work for them.

[Sparklenfade]

At my high school in michigan we couldn't graduate without taking economics... not much in depth stuff but it taught us about bank accounts and retirement funds and stocks and that sort of thing... i guess since i went to a lil hick hs i just took it for granted that not everyone had to take some sort of class similar

[Duke]

I wish we were taught financial planning in school.

[darkangelism]

im really good at finincial planning, i had the full payment for my new cell for the whole contract ready when i bought it. People do blow through their retirement fast, which is why there needs to be privtized social security.

[dogula]

Everything about privatization seems fishy to me. part of this concern is that retirees money would be subject to market forces. Also the fact that I'm a bit more willing to trust a civil servant rather than a banker. Anyway, every country that has pushed privatization seems to have failed at it. Read this:

http://www.socsec.org/publications.asp?pubid=503

[dogula]

I realize the current system is flawed but I don't trust a pro-business president who is pushing for a pro-business SS reform. I think in the end the only winners would be financial institutions.

[darkangelism]

Bush's plan isnt perfect but it is better then what SS is going to be if nothing changes. Here is what i think should happen...my ideas still need a bit of work but...


The current way that Social Security(SS) is set up it does not work properly. In short the method that is used is a Ponzi scheme. When SS was first created the average person never received it. The average life expectancy was 60 years old and the age at which a person received social security was 65. This allowed for the system to work because the number of people that got money was low so that the number of people supporting each person was large. An average of 32 people paid the support of each person in the system.

The average life expectancy now is nearly 80 years old. That means that each person receives 15 years of support on average. The number of people required to support each person has changed also, now instead of 32 people supporting every one person it is around six people for every one. That means that the current recipients are getting more money then they paid in. The average worker is paying six percent of their annual salary for the support of an unknown person who is getting a free ride out of society, because they didn't pay as much when they were working.

SS needs to be removed from the government, it costs the average person too much money. The problem with the immediate removal of the system is that the older population, both current recipients and people that will soon become eligible are planning on the money for their retirement, so the plan that I think will work uses a step down plan.

The first thing that needs to be done is the creation of a type of retirement account that is tax free and allows for a person to put up to 25% of their income into the account. The account will be part of the private banking system, and will allow for a variety of investment types. There will be a 5% minimum cash investment into the account that will be automatically taken out of the person's paycheck. This money will earn interest because the bank will be able to use the money as if it was a normal bank account. An additional 20% of each person's income can be voluntarily added to the account tax free and can be in the form of cash, bonds or stock. This allows for the people that want to have a better retirement save more money, and they are the recipients of the money that they earned not a random person that they don't know or care about. The minimum investment forces everybody to save something so that there are not people that don't save any money. The average person will end up with more money per year to live on then what social security would provide them with.

The next thing that would need to be done is the creation of a step down plan. The people that are currently receiving social security still get it, then if you are one year out of getting it you get one year of putting money into the private account, then you get normal SS. Then after that the starting year of SS is increased by one every year for the year below, so the starting age climbs to 66 for the current 63 year olds, 67 for he 62 year olds and that continues for the next 25 years. By then the younger workers are paying very little to social security and have been paying into their private accounts for years so that they can retire without the need for SS.

[Merika]

We've got so many people and so many problems....I don't think they can salvage the plan regardless of what they do. Perhaps they should just quit charging everyone who is 25 years outside of collecting it and advise them to go make their own plan.

[Stone]

Unfortunatly people will be negligant in obtaining retirement plans, or they will do what 60% of retired americans do and blow it.

I sell most of my clients EIA's ( equity indexed annuities) witch is indexed against the stock market but the principal is never lost in other words you can't lose your money. It also pays out monthly after withdrawn at age 65 1/2, so it's hard to blow the money.

Maby the awanser is that employeers will HAVE to offer retirement plans

[darkangelism]

Originally Posted by Stoneheather

Maby the awanser is that employeers will HAVE to offer retirement plans

Yeah i agree with that, if they are forced to do something they will.

[Sparklenfade]

My dad who is now in his early to mid fifties goes online everyday and checks and records how is 401k plan is doing... I found this hilarious at first but you have to know my dad to understand it... He's one of them good ol' country boys in thinking, he passed HS just because the teachers wanted him to play basketball or even may be back then there was no eliliblity.

Something needs to be done for those people whose employer doesnt offer nice 401k packages an easier way to find more about them... I was offered one once signed on for it... but then the company decided not to go thru with them b/c they were strapped for money.... Working for a dotcom has its up and downs... Anyhoo now that i'm nearing 30 and have nothing to my name i wonder what happened to all that money i was making back when i was working I should have definately saved for my future...

[Merika]

I figure the worst that can happen is that I'll become a bag lady and make friends with some whino people who have shopping carts. It'll be another adventure before I croak.

[Stone]

ALOT of americans get a tax refund check at they end of the year, THAT money COULd go in to an IRA, EIA, ect. but instead people buy TV's and go to Disney world

[Duke]

I've never been to Disneyland.