perfidy

I always recommend low-fee index funds, for precisely that reason. It's conservative, but if you have other things to do than manage a portfolio it's the way to go (it says here).

Dingdingdingding! Ken, you are correct, sir! Low-fee index funds, highly diversified, are your best hedge against catastrophe. Moreover, though they are innately conservative, they don't have to be the only instrument you use. Still, over a sufficiently long time horizon, low-fee indexes are are as close to foolproof as you can get in an open market. Sure, you give up a bunch of potential upside, but you also give up a boatload of potential downside that could seriously ruin your waning years.Since it's my retirement I'm personally concerned with and not hitting the lottery, and since I'm not an investment expert, I'll take a heavily hedged position I can sit on over a risky position that requires active management any day.

And, kids, let's not forget that there's a whole world out there! Foreign index funds are worthy instruments too!

NONE OF THE FOREGOING SHOULD BE CONSTRUED IN ANY WAY AS INVESTMENT ADVICE. INVEST AT YOUR OWN DAMN RISK OR I WILL ROCHAMBEAU YOU.

Johno - That's not exactly fair since Vanguard has a few specialized funds that are industry specific. What the article didn't say is if the average return for Vanguard investors was for their market basket index funds, or if that included their industry specific funds. Every 401K plan manager can choose different funds to offer their employees, so you aren't always getting the safest market-basket pegged funds. I recall seeing emerging market funds in my own 401K plan with another plan manager, and that's a fund I personally would never touch.

If you really want to know more about the long term performance of the stock market, please read Jeremy Siegel's book, Stocks for the Long Run. He's a Wharton prof I encountered while interning there. It's an academic monograph, but the gist of it is that take ANY 20 year time period, even those including the Crashes of 29 and '87(?), calculate the average annual return of the market against any other financial instrument and you will see that stocks are the best long term investment ever, hands down.

ERISA Disclaimer: DO NOT TAKE ANY OF THIS AS SERIOUS INVESTMENT ADVICE. IT'S JUST A MENTAL EXERCISE DONE ONLINE. I AM NOT AN INVESTMENT PROFESSIONAL.

the siegel book is a classic! I really should read it.

We should talk offline... drop me an email (if you would be so kind).

For me, the point of privatising SS is not the return - although bettering 2% or less is not going to be terribly difficult.

The point, the big, pointy sharp point:

You get to keep your damn money.

Even if you only got a return equal to what SS currently pays, it would be better. You would have, in an account, all that money you had deducted from your paycheck. That money could be passed on to children or spouse. That money could be used for buying a home in addition to retirement. You'd get a quarterly statement showing how much money you have.

This is vastly superior to paying taxes to a government that pretends that this is a fiscally sound retirement plan.

Wait... I'd get to keep my money?!?

Can I do that?!?

/snark off

Actually, I agree with you. At the very least, we should be given the choice to privately invest some or all of our SS funds.

I agree with the concept of me or my heirs keeping my money, too. Love it. Love it. Love it!

Still ... what happens when we have a nation FULL of independently wealthy retirees? Increased immigration by low-wage, low-skilled workers? [Not to keep social security afloat but to wipe the old fogies butts, change their diapers, and put their veggies in the blender.] Whiny yuppies in every single age group? [We'll need a neutron bomb to clear out the self-entitled deadwood.] Weird tax and ownership issues as vast portions of our economy [read, property and other assets] become the property trusts and tax shelters?

I am asking because I really don't know and haven't seen this addressed anyway. Has someone smarter than me weighed in on the prognostics of these demographics?

GP - between the 4 kids you have, I should think that one of them would be willing to take some care of you for a greater portion of whatever you have left that isn't eaten up by medical costs. Your kids are nice kids. I don't think they'd just abandon you to low-wage senior care and the abuses prone to that atmosphere.

I personally abhor nursing homes and hated having to sing in them as an elementary school child. Nursing homes creep me out. [note the present tense] But then I worked as a field installer for a large chain of them. I found it to be less unpleasant than I initially thought. Yes, it's weird and creepy to be in an Alzheimer's specialty ward, but a lot of times, long term care facilities can and do give better care than can be provided at home.

No, I really would not want to send my parents to one, but when my auntie was doing a poor job of caring for my grandmother, I really wanted my grandmother to say yes.

I'm still waiting for some rich Korean in LA to start a specialty Korean one for when my parents get old. I can't imagine anything better. If someone wants to hand me a couple million, I'll do it!

Thanks for the sweet reply, Mapgirl!

I was actually thinking of the issue writ larger. For example, Europe is aging. They have nowhere near enough births to offset (or to pay taxes for the care of) this aging population. Ever increasing immigration fills the dearth of workers. A majority of the immigrants aren't "like" the host country's inhabitants.

An example of what I'm asking is what will France be like when it becomes a majority muslim nation? Muslims from North Africa fill the jobs the French cannot fill with nonexistant Frenchmen. Half of Italy's union members are retired. This isn't a future issue in terms of demographics, but it is in terms of politics and no elected politician will touch the subject.

When our aging demographics and fiscal irresponsibility cause Social Security to tank we will have to face the same issue.

GP,
you would not BELIEVE what the projections are on the number of retirees versus workers in some nations. Let me see if I can find something for you concrete.

... Ah, I'm back. By 2015, for every five Germans of working age, there will 1.5 people age 65+ who will be nominally state-dependent. In Japan, the ratio will be 2:5. In the USA, the ratio is just north of 1:5.

Yeesh. Whatever happened to retiring at 65 and keeling over in the flowebed six months later?

GP - a better example than France is Italy. Italians have had a declining birth rate for years. I have no recent numbers, but the first I heard of declining first world birth rates was about Italy, hm 5-7 years ago?

The question is, how are they bringing immigrants? As refugees or full blown sponsored workers? As asylum seekers or HB-1 visa types?

Johno - hey... don't say that... My dad turned 65 two months ago... BTW, your Social Security benefits should kick in a few months after your 65th birthday... It's apparently 3 month delay.

MG, no offense intended, and certainly I wasn't thinking of anyone's parents in particular, but of the proverbial General Motors gold-watcher.

Here's wishing your father another 65 years.

"The question is, how are they bringing immigrants? As refugees or full blown sponsored workers? As asylum seekers or HB-1 visa types?"

Does this really matter? Virtually all immigrants become legal somehow whether by the usual legal route (visa > green card > naturalized citizen) or illegal (break immigration law and have an amnesty law erase the transgression.) Then there's the womb bomb. Demographics IS everything ... an no one has yet posted detailed answers to my questions (e.g. What will France be like when it is muslim?) This is all unavoidable given the current course of immigration and low birth rates.