Aa Pension

[goingboeing]

OK, I can't let this one go without a comment....

Of course the pay cuts paled in comparison -- management opted for job cuts instead of pay cuts. TWU opted for pay cuts instead of job cuts.

Looking at some stats from May 2001 and comparing them with some from 2004, management cuts (all levels) are running at 20%, while TWU cuts are only at 14% of what 2001 staffing levels were.

If you figure that one FT management job @ $60K nets about the same savings as a 17% paycut for six TWU employees, that additional 6% cut in management headcount plus pay cuts most likely netted a higher savings per employee than what the TWU's concessions did.
As for how it affects future retirements... Reducing your 401K contribution might have actually saved you some money given how some of the funds have performed....

[post="238561"][/post]​

Reducing my 401K contributions DID NOT HELP ME because I had enough sense after Sept 11 to put my money in LOW RISK INVESTMENTS such as the Credit Union.

 

[Boomer]

FWAA or FormerModerAAtor,

Will either of you please give the required contribution amounts that AA WOULD HAVE been required to FULLY FUND the Union Pension plans HAD Sen. Kennedy, D-MA, not pushed S.2282 through?

 

[desertfox]

Reducing my 401K contributions DID NOT HELP ME because I had enough sense after Sept 11 to put my money in LOW RISK INVESTMENTS such as the Credit Union.

[post="238707"][/post]​

hmmm, your 12 month return at the credit union was 1.92%......
The 12 month return for Dodge & Cox Stock fund is 18.19%....for Advantage Large Cap Value Fund the return was 19.22%....The Small Cap Value Fund return was 22.91% and International Equity Option up 22.84% to name a few of the funds.
Had you been in the right mix of available funds, your 5 year anualized return would have been over 17%. The credit union return for that period around 4.25%.

Not sure what your timeline to retirement is, but keeping your money in only the credit union was not a way to grow the money. The credit union is certainly a valid cash preservation spot for those with retirement around the corner, but even then some solid conservative fund exposure allows for some growth.

 

[Buck]

hmmm, your 12 month return at the credit union was 1.92%......
The 12 month return for Dodge & Cox Stock fund is 18.19%....for Advantage Large Cap Value Fund the return was 19.22%....The Small Cap Value Fund return was 22.91% and International Equity Option up 22.84% to name a few of the funds.
Had you been in the right mix of available funds, your 5 year anualized return would have been over 17%. The credit union return for that period around 4.25%.

Not sure what your timeline to retirement is, but keeping your money in only the credit union was not a way to grow the money. The credit union is certainly a valid cash preservation spot for those with retirement around the corner, but even then some solid conservative fund exposure allows for some growth.

[post="239587"][/post]​

I often wonder what the annulized return of those payroll deducted taxes known as Social Security is?

 

[Oneflyer]

I often wonder what the annulized return of those payroll deducted taxes known as Social Security is?

Social Security is entirely invested in long term US government bonds, so ideally its return should be similiar to an long term US bond mutual fund. The ones I looked up had 5 year returns of 6-8%.

 

[AA80Driver]

Social Security is entirely invested in long term US government bonds, so ideally its return should be similiar to an long term US bond mutual fund. The ones I looked up had 5 year returns of 6-8%.

[post="239616"][/post]​

Of course this is all smoke and mirrors....who is really paying that 6-8% return?

 

[Bob Owens]

FWAA or FormerModerAAtor,

Will either of you please give the required contribution amounts that AA WOULD HAVE been required to FULLY FUND the Union Pension plans HAD Sen. Kennedy, D-MA, not pushed S.2282 through?

[post="239537"][/post]​

That Senator must have some pull to push through anything being that he is a minority Democrat with a Republican controlled Senate, House and Executive!

 

[mweiss]

It was done, for profit, of course...

[post="238307"][/post]​

From where I sit, it looked like it was done to reduce the losses, which was necessary to keep the business afloat.

 

[mweiss]

Never mind...Former ModerAAtor described it better than I did.

 

[mweiss]

Of course this is all smoke and mirrors....who is really paying that 6-8% return?

[post="239647"][/post]​

It depends on your perspective. Would it have seemed like less smoke and mirrors if the money had been invested in corporate paper, and someone else bought those US bonds?

We'd all still be paying the same tax price, getting roughly the same fiscal results, and it wouldn't be one arm of the government borrowing from another.

So what's really the difference?

 

[Oneflyer]

Of course this is all smoke and mirrors....who is really paying that 6-8% return?

They have earned a return of 6-8% per year over the past five years, the decline in interests rates over the past 5 years has greatly increased the value of bond portfolios. I would assume social security has 20 years worth of us bonds in its portfolio and it is very possible that it returns 6%.

 

[LaBradford22]

They have earned a return of 6-8% per year over the past five years, the decline in interests rates over the past 5 years has greatly increased the value of bond portfolios. I would assume social security has 20 years worth of us bonds in its portfolio and it is very possible that it returns 6%.

[post="239715"][/post]​

Social Security funds aren't "invested" at all. Social Security is a pay-as-you-go system. It's not like a traditional pension plan where there is a projected liability out there offset by some assets that cover that liability. Social Security is basically an IOU from the federal government. There are no plan assets, and contrary to what Al Gore will tell you, there is no "trust fund" and there is no "lock box". Social Security is a promise from the federal government that they will pay you some amount in the future, all of which will come from future payments into Social Security.

The current system will start running a deficit around 2020 or so, depending on whose projections you believe, as Baby Boomers start retiring en masse. At that point, our government will have to do one or more of the following:

1. Increase the age at which you receive benefits
2. Reduce the amount of benefits received
3. Increase the Social Security tax in some way

In my humble opinion, Social Security was a poorly designed program to begin with - basically a government ponzi scheme. However, given that it is in place, it has a considerable amount of political inertia holding it there - i.e. the majority of Americans will never want it to go away entirely. I think we can take care of it, if we do two things:

1. Index the age at which you receive benefits to changes in life expectancy, and
2. Change the rate at which benefits increase from increases in wages to general inflation

Those two changes can preserve the current system.

 

[desertfox]

Social Security funds aren't "invested" at all. Social Security is a pay-as-you-go system. It's not like a traditional pension plan where there is a projected liability out there offset by some assets that cover that liability. Social Security is basically an IOU from the federal government. There are no plan assets, and contrary to what Al Gore will tell you, there is no "trust fund" and there is no "lock box". Social Security is a promise from the federal government that they will pay you some amount in the future, all of which will come from future payments into Social Security.




All the more reason to contribute as much as possible to 401k and make wise fund choices.

 

[mweiss]

Social Security funds aren't "invested" at all. Social Security is a pay-as-you-go system.

[post="239857"][/post]​

While the second statement is true, the first is not. At issue is how the pay-as-you-go system works. The baby boomers have been contributing more than the Greatest Generation is receiving in benefits. The surplus funds have been used to purchase Treasuries at market rates. As a result, those moneys that could have earned nothing are actually earning interest at rates above inflation.

As I said before, the surplus could have theoretically been invested in other things. The law prohibits investing in any non-government-issued securities, however.

 

[TechBoy]

While the second statement is true, the first is not. At issue is how the pay-as-you-go system works. The baby boomers have been contributing more than the Greatest Generation is receiving in benefits. The surplus funds have been used to purchase Treasuries at market rates. As a result, those moneys that could have earned nothing are actually earning interest at rates above inflation.

As I said before, the surplus could have theoretically been invested in other things. The law prohibits investing in any non-government-issued securities, however.

[post="239928"][/post]​

Technically true, but what is the value of those securities? To "cash" them in, the government will need to raise taxes or borrow real money. Which is exactly what it would do if it didn't have the securities to pay the benefits.

It's just like writing yourself and IOU for $1 million and declaring that you are a millionaire.