“Down Under” financial challenges similar to our own October 18, 2011
Posted by forwardfinancialplanning1 in Pensions, Retirement Savings, Social Security.add a comment
Recently had the pleasure of spending two weeks “down under” in Australia and took some time to review several of their financial publications. Due to a Chinese driven commodities export boom, the Australian economy is far more healthy than ours in the United States. However, a study released by commercial bank, Westpac reveals that Australian women share many of the same retirement concerns as their US counterparts.
The study found that only 13% of Aussie women feel very financially secure. Almost half report that they feel it is unlikely that they will have the required level of wealth to retire comfortably. About 35% stated they have no idea of their superannuation (an Australian retirement plan similar to a combined Social Security/401k plan) fund balance. Nearly 70% don’t use a financial advisor, but 36% wish they had a better understanding of the Australian superannuation program.
Much like women in the US, Australian females end up with lower superannuation balances than men because of a 17% gender pay gap as well as “career pauses” for child bearing. Fully 64% felt that having children significantly affected their ability to work continuously and substantially impacted their working career cycle.
So, despite being below the equator, and a half a world away, women in Australia face most of the same retirement challenges found in the United States.
Is Social Security a Ponzi scheme? September 23, 2011
Posted by forwardfinancialplanning1 in Social Security.add a comment
Republican presidential candidate, Rick Perry took a lot of heat in the press recently when he described Social Security as a “ponzi scheme”. Without taking sides in the presidential nomination or election process, let’s take a look at the valididty of Perry’s claim.
According to Investopdia.com, a ponzi scheme is “a fraudulent investing scam that promises high rates of return at little risk to investors. This scam actually yields the promises to earlier investors, as long as there are more new investors.”
Here’s some relevant facts about the Social security program:
(1)According to an analysis by Dean Leimer of the Social Security Administration, the first retirees in the system–those born before 1901 earned an 18.04% annual return on their contributions. People retiring this year earned 2.5%.
(2) According to a 1996 paper by Cleveland Federal Reserve Bank economists, Jagadeesh Gokhale and Kevin Lansing, Ida May Fuller, the first Social Security benefits recipient received benefits approaching $20,000 while having only contributed $22 in payroll deductions.
(3) In 1945, the earliest program data which is available, there were almost 42 contributors supporting each beneficiary. That ratio has been falling for years and in 2010, stood at less than three contributors for each beneficiary.
The press rarely includes such factual data with their reporting—after all, it’s their job to sell newspapers—–not to provide useful information to support or refute headlines. However, adding such facts seems to support Perry’s contention.
What do you think??
Social Security Knowledge May 23, 2011
Posted by forwardfinancialplanning1 in Social Security.add a comment
Most Americans have a general awareness of the Social Security program but lack in-depth knowledge. Most would also express a desire to know more. The Center for Retirement Research at Boston College has published two good primers on the subject. The “Social Security Claiming Guide” provides a good foundation for the decisions that claimants must make. The “Social Security Fix-It Book” examines the current issues faced by this social program and lays out a variety of possible courses of action. Both are worthwhile reading and can be found on the Center for Retirement Research website.
