State of the Union Address: My 2 Cents


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State of the Union Address: My 2 Cents
02.02.05 (9:13 pm)   [edit]

Regarding the Environment:


The president talked about new energy sources, fuel cells, and other initiatives helpful environment. He said next to nothing about what he proposes to actually do to to further any of these things. My favorite: Nuclear power. Just my opinion, but I don't think "Safe and Clean" nuclear power exists. I have worked for our Hydro Company here in Ontario as a sysadmin providing nuclear support. I live spitting distance from a nuke plant. This is just my two cents from an insider perspective. 


While I'm on the environment,  I am just wondering how many of those "non-producing programs" Bush’s plan to reduce deficit/debt have something to do with the environment by what yard stick they judge what produces and what doesn't. The administration has slashed funding to the EPA This administration has had a horrible environmental record. Kyoto? Who needs it? Bad for business!


Regarding Social Security: 


I can tell you what I support what we did here in Canada. It became quite obvious some years ago that our old age pension (we don’t call it Social Security here, we call it the Canadian Pension Plan) was unsustainable. We did two things to fix it:


1. As is the Canadian way we increased taxes on it about three-fold. This was done to save the program against the rising tide of soon to be retired Baby Boomers.   


2. We have an alternative as well: What’s called RSP's or retirement savings plans. There is very little government control on this here and it provides remarkable leeway in how you can invest it and what you can do with it. You can invest in stocks, bonds, trusts, securities you name it. In fact, you can self-direct the entire thing. You can borrow against it for many reasons with very lenient payback options, mortgage down payments, education, just about anything and it is still totally tax sheltered. This is one of my personal primary focuses of retirement planning. 


What I heard from Bush was: 


I don't want to increase taxes at all and in order to "save" Social Security I will slash these benefits (post spin on the democrat side says up to 40%), which makes sense that He is going to slash, otherwise why placate the 55+ crowds that their benefits will not touched? Not once did I hear that he would cut any benefits. All I heard from the president was the usual fear tactic, spiraling costs, etc. Well, no matter what He slashes and burns Social Security in America to the cost of it is still going to go up, as everything does. His analysis is quite obviously based on never increasing the amount taxed.  


I will then institute a form of RSP with all kinds of controls on it. Can't take much out, must be doled out over time, somehow he plans to control “Wall street” fees. Just curious as to how he plans to do that? For a President that is ostensibly so against “big government controls” and so pro free market enterprise there seems to be an odd irony here. On a personal note, I find it even more interesting that I live in such an oft defamed “Socialist” nation as compared to the much vaunted “Capitalist” U.S. Still, this one step in itself is better than nothing, which is what most American’s had before.


Bush seems to be looking for a cure all to the issue. As per usual He wants to slash and burn while offering the appearance to the populace that he is protecting Social Security without actually spending any more money or increasing taxes. While I do not have the actual minutes he spent substantially more time espousing the grand tradition of Social Security then what the cuts that would mean less money for people, excepting the above mentioned placating statement that he would not change benefits to those 55+. In fact, He made it sound like Social Security was totally out of control and he was going to rescue it. Never did Bush even implicitly state that these benefits would affect the bottom line of the old folks collecting. 


As an aside, the language on this issue was fascinating: Not once did I hear the word “cuts” the entire time. As compared to when he talks about tax cuts when it’s every third word. IMHO, it seems to me that the perception of the content is far more valued to this president than the actual content of the message. Of course, this is pretty much true of all those involved in the political game in my experience. Doublespeak is in prime action right here. If average Joe didn’t know better listening to this I am willing to bet he would think that his benefits were not going to be affected at all after paying into this all his life on minimum wage at a Wall mart type job. I guess intellectual dishonesty is just par for the course. 


Regarding further warfare: 


The President specifically mentioned Syria and Iran to stop harboring terrorists. He put some very forceful language on Iran to stop “all enrichment of plutonium”. Nothing particularly surprising here excepting that I am never quite sure who is next on the hit list. Sometimes it seems to be North Korea (mentioned only in passing tonight), sometimes its Iran, sometimes and it’s Syria. For a President that markets himself with statements like “people always know where I stand” well, I don’t. 


What I do know is that while Bush made mention of a withdrawal of troops from Iraq I highly doubt anyone’s going home soon. One of these places is bound to be invaded or usurped next.  

 


posted by: ScubaDiva (reply)
post date: 02.02.05 (11:06 pm)

(laughing) I fell asleep listening to it. So, relying on your 'recap':

Of course Bush isn't going to use words like cut or slash. It is spin. Granted, the Democrats just want to stick their head in the sand and claim there is no problem, blah blah blah. (If you recall, the Dems were actually screaming about SS reform last year - now that the GOP is picking it up, they suddenly change course)

Question for you: say you pay into your system - when do you start collecting? are there restrictions on when you can start taking it? what if you die before you reach retirement age - does your family get to collect what you paid in? What sort of rate of return do you get?

Not sure if you've heard of this but in 1982 (might be off by a year or two) but the city of Galveston, Texas opted out of SS due to a loophole and created their own private retirement fund for employees. The average amount of monthly checks for retirees is over 10k - where it would be approx $700/mo had they invested in SS. And we are talking about city gov't employees making 40k a year prior to retirement. If they croak before retirement, their family gets the account.

Would you rather retire on 10k/month or $700/month?



posted by: marysmith (reply)
post date: 02.03.05 (5:18 am)

A registered retirement saving plan (RRSP) is a savings plan for indivuals which allows them to defer tax on money to be used for retirement. Contribution limits for RRSP's plans are based on income and are tax deductible at the time of the deposit. The tax is paid when investment and interest is withdrawn. The contribution amount for taxiation year 2004 is 18% of income or a maximum of $15,500.00 .
You can withdraw from these accounts at any time however there is a 10% withholding amount for income tax at the time of the withdrawl. This is also considered as income in the taxiation year in which the withdrawl is made.
You can contribute to your RRSP until December 31st of the year you turn 69. At that time, you must consider the following options:

You can cash in your RRSP outright and pay tax on the lump-sum amount.
You can transfer the investments in your RRSP to a Registered Retirement Income Fund (RRIF) from which you must begin drawing retirement income. You will then be taxed annually on your annual income amount.
You can purchase a Registered Annuity that will offer you a guaranteed income for a specified amount of time.
When you die, the value of the funds in your RRSP will be included in your income and will be taxed when your final tax return is filed. However, if you have a surviving spouse, the RRSP may be rolled over tax-free to the survivor, who then becomes the annuitant, or holder, of the RRSP. This provision can also apply to a common-law partner. A tax-free rollover may also be made to a dependent child or grandchild, who may use the funds to purchase an annuity with a term not exceeding 18 years, minus the age of the child.

I am a big advocate of purchasing RRSP's.




posted by: marysmith (reply)
post date: 02.03.05 (6:48 am)

The rate of return on the RRSP depends on the particular fund that was purchased. There are various types of RRSP funds that can be purchased. There are money market/treasury bill funds, fixed income funds, equity funds, balanced funds, special equity funds, and global and international funds. The rate of return depends on the specific fund that was purchased. In order to optimize the interest accrued in your RRSP you should have a diversified portfolio.




posted by: deviant1 (reply)
post date: 02.03.05 (7:13 am)

Reply to: ScubaDiva

uh, what she said :) I suggest that anyone wanting answers about RRSP's direct there questions towards MarySmith



posted by: marysmith (reply)
post date: 02.03.05 (7:24 am)

LOL!
I try to keep myself well informed when it comes to RRSP's and the financial future.




posted by: ScubaDiva (reply)
post date: 02.03.05 (8:08 am)

Reply to: deviant1
Taking the easy way out, eh? LOL Sounds a lot like our 401k's although if we put 'after-tax' money in, it won't be taxed when we take it out. The limits on the amount of contribution are more generous plus we can also set up Roth IRA's on top of that and contribute up to $2k a year that is tax-deductible as well..

Regardless, a lot of people fail to realize that there are NO guaranteed benefits for SS. The Democrats love to throw that word around, but in reality, there is NOTHING in the US code that states we are guaranteed ANY sort of return...



posted by: deviant1 (reply)
post date: 02.03.05 (8:25 am)

Reply to: ScubaDiva

is a 401K an employer match type thing or can anyone do it?

Are there limits on the kinds of investments that you can make?

Marysmith? Can you weigh in on this? I am claerly out of my element. Thank God for IT!



posted by: ScubaDiva (reply)
post date: 02.03.05 (8:31 am)

Some employers will match - it varies from employer to employer. Most of mine will match 3-7% of your salary dollar for dollar or some wil match 50-75%... It can really vary.



posted by: deviant1 (reply)
post date: 02.03.05 (8:40 am)

Reply to: ScubaDiva
Reply to: April

Is there a limit on what kind of investments you can make with a 401K?

Also, they deduct canada pension as well here april.

As far as Social Security/Canada Pension plan goes. I wouldn't be staking my comfort in old age on either of these things! Guaranteed or not!



posted by: ScubaDiva (reply)
post date: 02.03.05 (8:59 am)

With a 401k, you are limited by the types of plans your employer selects to participate in. They may have an agreement with say, Fidelity, and Fidelity would manage it. Their offerings would include company stock, conservative, mid and aggressive plans... I've always worked for very large employers - so I've had about 15+ different funds to divy up my contributions into.



posted by: marysmith (reply)
post date: 02.03.05 (9:25 am)

Not being an Americian I am not familiar with your 401K plan or your tax laws.
I can say that in Canada the money used to purchase a RRSP is after tax money (if my understanding of your statement " after tax money" is correct and it is your net pay, what you actually take home after all deductions have been made).
The amount that a person uses to purchase a RRSP is a tax deduction in the tax year in which it is purchased (18% of gross income or $15,500.00 for tax year 2004). Therefore the amount of tax that I pay in 2004 can be reduced by $15,500.00. In effect I am deferring the payment of income tax on $15,500.00 until when I withdraw the money or the dividend income. Most people turn their RRSP to a Registered Retirement Income Fund (RRIF) from which you begin drawing retirement income. You are then to be taxed on your annual income amount.
You can also purchase a Registered Annuity that will offer you a guaranteed income for a specified amount of time.

By reducing the amount of my taxable income I have benefited in two ways. First, is the RRSP(the amount in the fund) and the interest that I will make from it. Secondly, the tax savings of $15,500.00. (I have saved paying income tax on $15,500.00). So it is a win win situation.
In Canada our SS is called Canada Pension Plan (CPP). The monies used to purchase an RRSP have no effect on the amount of CPP that I would be entitled to. The RRSP is considered as a private investment.
I would have to check out the laws in Canada to determine if there is a law that guarantees the citizens of the payment of CPP. I am sure there is legislation in place that guarantees the payment of CPP.
The CPP contributions in Canada are very high. In 2004 I paid the maximium amount which was $1,831.50. I am not sure of the amount of premiums that you pay on SS.




posted by: marysmith (reply)
post date: 02.03.05 (10:32 am)

Does "The Social Security Act" not guarantee you that you will be paid social security benefits?
On August 14, 1935, laws were past providing for a system of old-age insurance for workers at age sixty-five and survivor benefits for children or spouses of insured workers who die before age sixty-five. Money for the pensions is collected from a Social Security tax taken out of workers' and employers' earnings. The act also provided that money be returned to the states so they could set up systems of unemployment insurance.
There are laws in place NOW that guarantee the payment of SS. These laws would have to be changed before the government could take away ss. Do you really believe the will of the American public is to do away with ss?

BTW in Canada not only do we have to pay into CPP we also have to pay employment insurance premiums. These premiums cost us Canadians another $772.20 (maximum) a year (these premiums just went down).



posted by: jennirae269 (reply)
post date: 02.03.05 (9:47 pm)

Um, you actually watched this and listened instead of just making fun of him, and looking for that guy with the "APPLAUSE" sign cuing the audience?

I've already decided that by the time I can retire, around 90, there will be no social security, and I will have to fend for myself, just like I do now.



posted by: angiekruger (reply)
post date: 02.05.05 (4:11 pm)

social security will not be bankrupt for about another 100 years. the real crisis is in medicare, but he wants to do nothing about that

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