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Tuesday, February 22, 2005

You're stupid - LAT 

The Los Angeles Times makes the case (unsurprising for the source) that you're too stupid to handle your own retirement. Like it or not, this is the main reason why liberals and the MSM oppose private accounts to supplement Social Security. They believe that you, your friends, your family, and your neighbors are all just too damn ignorant to take care of yourselves.

The article hammers the point home repeatedly:

Joseph Jankowski, executive director of the West Virginia Consolidated Public Retirement Board, said: "The vast majority of people don't have the inclination or comfort level to be responsible for their own retirements." ...

"Generally, people don't like risk," O'Connor said of the poor showing in Montana.
People may not like risk, but they also probably don't know that the market as a whole has experienced average annual growth of around 8% since the 1929 crash. Social Security gives you between 1-2% on the dollar, averaged. Why isn't the MSM telling us that? And why is the Democrat party opposed to people retiring with more money?

And when it comes to people's investment abilities, state retirement officials have plenty of stories about how ill-prepared most workers are to handle the financing of their own futures.

"We get individuals into our training sessions and ask them about basic investment terms — What is a stock? What is a bond? — and they rate themselves as practically unknowledgeable," said Washington state retirement director John F. Charles.
In case you haven't gotten the point yet, you're TOO STUPID to handle your own finances. More importantly, the government can't be bothered to educate you.

But you know what? The choice isn't simply between the government giving you a paltry 1-2% return or being hung out to dry on your unknowledgeable own. There's a third way.

Federal employees (myself included, as a Naval Reservist) can put a portion of their pay into the Thrift Savings Plan. The money can be allocated to any mix of 5 funds, which range from Treasury securities, bonds, common stock, small caps, and international stocks.

Here's the important thing about the TSP: The lowest 10-year compound return is 5.45%, from the International Stocks fund.

Even a complete moron using the TSP would have, at a minimum, earned an average of 2 or 3 times the return Social Security provides, compounded over 10 years. Possibly quite a bit more. The common stock and small cap funds returned nearly 12% compounded annually, as you can see from the chart linked above.

12% compounded 10 times TRIPLES your initial contribution. Try finding that with Social Security.

And try finding that out from the media or Democrats in Congress.

There's no reason why the Thrift Savings Plan or something very similar can't be extended to the general public. It provides a much greater return than Social Security, and it requires only very basic investment decisions. What's not to like about that?
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