Tuesday, September 13, 2011

Social Security is half ponzi

Ask yourself. What if DC offered an annuity plan that bet on the median worker's lifetime productivity in America. Would a sound financial adviser recommend it as, say, 4% of your retirement portfolio?

The answer depends on how often the annuity price is adjusted for changes in employment demographics. If we got a reasonably accurate demographic adjustment every 3-5 years, then sure, 4% seems like a reasonable investment.

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