5 ms·
Because otherwise if you graduate at 25, work until 65, and expect to die at 85, your retirement contribution during work years needs to be half of your retirem
by john_moscow 6y ago
Because otherwise if you graduate at 25, work until 65, and expect to die at 85, your retirement contribution during work years needs to be half of your retirement check. If you are aiming for the same income level, 1/3 of your income needs to go towards retirement.
In reality, people cannot put aside that much, so the % is much lower, relying on higher returns (private) and population growth (public).
- oblio 6y agoReturns on investment? Even public pension plans can have them.
- jopsen 6y agoActually, the point was to not have the public pension save up money. Instead, we're betting that future generations will pay through taxes. Note. Public pensions are tiny, so you'll still want a private pension that is invested in stocks. But both is fantastic, because you have diversified your pension into stocks (private pension) and humans (public pension).
- jopsen 6y agoPublic pension is only part of the puzzle.. the pensions is tiny, you can maybe live off it, well barely. But it means that your private pension doesn't have to be as big. More importantly: the point is that your private pension depends on the stock market. You public pension depends on future generations. So overall part of my pension is going to be private: the underlying assets it's invested into is private companies through stocks. Another part of my pension will be public: the underlying asset is humans that can be taxed.