tag:blogger.com,1999:blog-3098264341625381422.post4900528376169423553..comments2024-03-18T17:01:07.165-07:00Comments on The Provocateur: "Imagine if Your Retirement Were Tied to the Dow Jones"mike volpehttp://www.blogger.com/profile/02999118519606254362noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-3098264341625381422.post-72473553654397156402008-06-13T19:14:00.000-07:002008-06-13T19:14:00.000-07:00Charles Murray ran the numbers for the entire hist...Charles Murray ran the numbers for the entire history of the stock market a couple years ago, and came up with the worst result possible over a 45-year working life period: <BR/> <BR/>"Let's say that we have a 21-year-old man before us who, for whatever reasons, will be unable to accumulate his own retirement fund. We accumulate it for him through a yearly contribution for 45 years until he retires at age 66. We can afford to contribute $2,000 a year and invest it in an index-based stock fund. What is the least he can expect to have when he retires? We are ridiculously conservative, so we first identify the worst compound average growth rate, using constant dollars, for any 45-year period in the history of the stock market (4.3% from 1887-1932). We then assume our 21-year-old will be the unluckiest investor in American history and get just a 4.0% average return. At the end of the 45-year period, he will have about $253,000, with which he could purchase an annuity worth about $20,500 a year. <BR/><BR/>"That's with just a $2,000 annual contribution, equivalent to the Social Security taxes the government gets for a person making only $16,129 a year. The government gets more than twice that amount from someone earning the median income, and more than five times that amount from the millions of people who pay the maximum FICA tax. Giving everyone access to a comfortable retirement income is easy for a country as rich as the U.S.--if we don't insist on doing it through the structure of the welfare state." <BR/><BR/>from WSJ, <BR/>"A Plan to Replace the Welfare State"<BR/>BY CHARLES MURRAY <BR/>Sunday, March 26, 2006 <BR/>http://www.opinionjournal.com/editorial/feature.html?id=110008142Jack McHughhttps://www.blogger.com/profile/11996725074954365568noreply@blogger.com