What would Social Security coverage look like if the press covered it more like personal finance reporters cover IRAs and 401(k)s?
The Wall Street Journal’s Ellen Schultz shows us with a great piece on Social Security that cuts through the propaganda that’s falsely convinced so many people that they won’t ever draw benefits:
Despite widespread gloom over the health of the system, it will be still be able to pay at least 70% of benefits in coming decades, even if no action is taken.
That means you need to take the benefits into account when estimating your retirement income, how much you’ll need to save and how to allocate your investments to achieve your goals.
A 50-year-old man, for example, might have accrued a Social Security benefit worth $1,750 a month at full retirement age. Assuming annual cost-of-living adjustments of 2% a year and a life expectancy of 90, the present value of his Social Security benefits would be $588,551 if he starts taking them at age 62, and $802,039 if he begins at 70, says William Meyer, founder of Social Security Solutions, a Leawood, Kan., financial-planning firm.
To generate the same amount of income they would be receiving from Social Security taken at age 70, the individual would have to pay $436,517 today into an immediate annuity, says Mr. Meyer.
If those look like high numbers, it’s because they are.
The median 401(k) for people 55 to 64 is less than $60,000.
And that’s among people who have private retirement accounts. Most people nearing retirement don’t, which means the median retirement-account savings is zero.
Even among the best-earning quarter of 55 to 64 year olds, the median retirement account balance is just $52,000.
More like this, please.
— Columbia’s Bill Grueskin at 10:55 last night on Twitter:
It’s almost time for @cnbc to blast out its online reader poll that has no significance whatsoever
— BGrueskin (@BGrueskin) October 23, 2012
And 51 minutes later:
Just like clockwork …“@cnbc: CNBC.com Survey Results: Who do you think won the debate? Obama: 67%, Romney: 30%, Neither: 3%”
— BGrueskin (@BGrueskin) October 23, 2012
For the back story, read my post from two weeks ago on how CNBC’s misleading tweet spread through the media.
The Financial Times appears to be the only major outlet to fall for CNBC’s bogus poll this time.
— Gawker’s Hamilton Nolan has the best take yet on the Goldman Sachs/savvy biz journalist pushback against Greg Smith, writing “In Defense of Being Outraged by Things that Everyone Already Knows”:
So before that backlash is fully formed, allow us to offer a defense of Greg Smith, and others like him, who assert their moral outrage over bad situations that are ostensibly “well known” even before they raise their voices in protest.
The backlash, of course, is already well under way. The NYT’s Andrew Ross Sorkin said he thought Smith “might have conned” the media into paying attention to him, because his book “doesn’t say anything particularly revelatory.” Nathan Vardi at Forbes dismisses Smith’s complaints, saying that clients distrusting their own banks is “precisely what should be happening in financial markets.” The NY Daily News complains that Smith’s book “failed to make his readers care” about the issues he raises. As Bloomberg View put it in its original snide dismissal of Smith’s op-ed, “If you want to dedicate your life to serving humanity, do not go to work for Goldman Sachs.”
What bothers most Wall Street-savvy critics about Greg Smith is this: he got a lot of attention for complaining about a situation that all of these Wall Street-savvy people already know exists.
Ellen's great. Love the line:
"If you want to be pessimistic, you might as well leave your other investments out of your projections. After all, stocks can tank and insurance companies, which sell annuities, can fail. And the earth could be hit by an asteroid, further eroding the value of your real-estate investments."
:)
And in other book news:
http://neweconomicperspectives.org/2012/10/the-payoff-why-wall-street-always-wins-jeff-connaughton.html
"Reading Connaughton’s account evoked in me the comments of Dr. Rieux in Albert Camus’ The Plague.
All I say is that on this earth there are pestilences and there are victims — and as far as possible one must refuse to be on the side of the pestilence.
[W]hen you see the suffering and pain that it brings, you have to be mad, blind or a coward to resign yourself to the plague.
Connaughton shows us that the leaders of both parties were – and are – mad, blind, and cowards. They have sided with those that caused the pestilence and resigned our nation to a series of financial and moral plagues."
Looks interesting enough.
And it looks like former Columbia J & B school grad and GE capital man, William Cohan is of like mind:
http://news.firedoglake.com/2012/10/22/on-the-need-to-continue-pointing-out-that-nobody-has-gone-to-jail-for-the-financial-crisis/
"No one -- no one -- on Wall Street has paid a serious price. The one criminal prosecution -- of the Bear Stearns hedge-fund managers Ralph Cioffi and Matthew Tannin -- failed miserably. Every bank has received its slap on the wrist, has had its insurance carrier or its shareholders cough up a few hundred million dollars -- the cost of doing business, don’t you know -- and moved on.
And governments, most recently New York State, have decided to milk the banks for badly needed cash rather than charge the miscreants themselves.
Once upon a time, prosecutors were vigilant about prosecuting bad financial behavior on Wall Street. According to the Financial Times, during the savings-and-loan crisis of the mid 1980s, some 3,500 bankers were jailed for their transgressions. I still haven’t heard a good reason why the number of successful prosecutions in the wake of our most recent financial crisis remains at zero."
If this article were to segway into a movie scene, it'd be the Dr. Evil lecturing his son bit.
"You just don't get it, do you William. Lemme tell you a little story about a man named Shh! "
#1 Posted by Thimbles, CJR on Tue 23 Oct 2012 at 02:21 PM
Pretty nifty followup to the Smith story:
http://www.nakedcapitalism.com/2012/10/what-ex-goldmanite-greg-smith-didnt-say-and-some-guesses-as-to-why.html
"[W]hile the negative commentary will likely succeed in killing book sales, that may not matter much, since Smith reached more people than were ever likely to read his work via his 60 Minutes appearance, in which he comes off well... By contrast, as Pam Martens describes Goldman’s brass knuckles reaction in making extensive disclosures from Smith’s personnel files is unheard of outside litigation.
But let’s get to the more interesting question: why is Smith’s book thin on the sort of salacious detail that the many of his critics clearly wanted him to serve up? There may have been legal concerns. Note that fellow Goldman alum Tetsuya Ishikawa wrote a thinly disguised autobiography in the form of a novel; it’s not hard to tell which of the several firms his main character worked for is meant to be Goldman, and his book is full of the liberal use of drugs, hookers, and very expensive wine as inducements in the sale of drecky CDOs, combined with pretty good primers on the products themselves). But we’ll put that aside and offer some possibilities.
Smith was simply too junior...
The more I read, however, the more I’m struck by how little top-level insider material there is. Maybe I should make that “how little honest top-level insider material.” There’s a reason for this: Wall Streeters may be exorbitantly well paid for what they do, but ex-Wall Streeters, especially those with first-hand knowledge of the location of the bodies, and super-especially the big hitters who called the shots, who made things happen and denominated their triumphs in nine digits or more, seldom speak for the record – which is how and why they get to keep the money...
Wall Street is the mother of career reinvention, the working motto of the place is “This time is different” (which old-timers say it never is), so why screw up the possibility of a second or third go-round with a mea culpa or a mea whatever?
The problem is, most Wall Street books written by so-called “insiders” turn out to be by low-level functionaries. The definitive book in this genre, Michael Lewis’ Liar’s Poker, is an account written by a guy who I’m told was perhaps a couple of rungs up from clerk at Salomon Brothers. What we never got was Salomon CEO John Gutfreund’s side of the story. When he got the boot, he kept his mouth shut, took his money and left the firm.
Smith was in an area where the opportunity for ripping off clients was circumscribed, so he wasn’t likely to have real dirt. If you listened to the 60 Minutes video, what Smith says, in essence, is that the best profit opportunity lies in selling a really complex product to a naive client...
Complex product design is fundamentally related to IT systems capacity. Far too much of the blogosphere focuses on greed. People are just a greedy now as ever, but financial products have gone from something that a person of reasonable intelligence and a college education could understand to something that requires at least a specialist degree in financial design from Wharton or perhaps an advanced physics degree. So financial products have become very sophisticated embodiments of Intellectual Property. In the pharmaceutical industry we have elaborate FDA safeguards to ensure the products produced are fit for consumption. The financial market has yet to adjust is regulatory principles to the current set of technologically sophisticated products."
#2 Posted by Thimbles, CJR on Wed 24 Oct 2012 at 02:50 PM