Do You Trust This Man With Your Retirement?

Tuesday, February 08, 2005

Do You Trust This Man With Your Retirement?

Imagine that you had a meeting with your financial planner do discuss a series of changes to your investment portfolio that he had encouraging you consider. You, being a bit skeptical, ask for some explanation of the changes and your planner replies with a series of terrifying facts about how, if you don't make this change, you'll go bankrupt. He then seeks to reassure you with a bunch of vague promises about how well off you'll be after the switch and that there really is nothing to worry about - you just need to trust him (he knows what he is doing, after all).

Still, the new system seems sort of confusing and even somewhat ridiculous and, even worse, it doesn't seem to even address whatever it is that will supposedly cause your current investment portfolio to go bankrupt. So you say "I don't really understand how is it the new plan is going to fix that problem" and your planner replies
Because the -- all which is on the table begins to address the big cost drivers. For example, how benefits are calculate, for example, is on the table; whether or not benefits rise based upon wage increases or price increases. There's a series of parts of the formula that are being considered. And when you couple that, those different cost drivers, affecting those -- changing those with personal accounts, the idea is to get what has been promised more likely to be -- or closer delivered to what has been promised.

Does that make any sense to you? It's kind of muddled. Look, there's a series of things that cause the -- like, for example, benefits are calculated based upon the increase of wages, as opposed to the increase of prices. Some have suggested that we calculate -- the benefits will rise based upon inflation, as opposed to wage increases. There is a reform that would help solve the red if that were put into effect. In other words, how fast benefits grow, how fast the promised benefits grow, if those -- if that growth is affected, it will help on the red.

Okay, better? I'll keep working on it.
Would you continue to trust this man with your retirement? Not likely.

Fortunately, this man is not your financial planner. But unfortunately, he is the President of the United States.

(as usual, the post was more or less stolen from the Carpetbagger.)

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