Posted on 10/08/2011 4:15:06 PM PDT by xzins
BM
For whatever reason, I don’t recognize “BM.”
Can you help me out?
This is a description of the Chilean model, and that country takes 10 to 20 percent of income.
I assume we would have to do roughly the same given the current 14.? percent we take for social security. It would fall in there someplace between 10 and 20 percent that would be required deducted.
I don’t believe there is an opt-out for the average citizen.
NP
BM is Book Mark.
So I can use the article over and over to beat socialists over their empty heads with in the future.
Thanks, PO.45
Who controls the money prior to retirement?
The government?
Or the individual?
I wrote about this in college FCOL.
This is what Herman Cain talked briefly about in the first debate (no one has any real time to elaborate in a debate).
I know the Chilean system had a meltdown a number of years ago but has since recovered. It’s certainly worth a look since our present system is unsustainable.
We would have to have a tax of some sort to cover the transition. Adults 20-40 would be crazy to continue paying into the govt system. Assuming that most of the people 50 and older stay in the govt system we would have about a 30 yr period of declining liability. In the end you our children would have greater freedom and really retirement security.
This is very similar to a 401K plan in which the employee contributes and the business contributes.
The money is being held by approved insurance companies in low risk annuities. It's in the individuals name, but they can't touch it until they retire.
Yes, I do think this model would work to the extent that it did NOT drive up the value of stocks creating a bubble due to a huge influx of money into the investment system.
The bottom line would be that each individual would be required by the government to pay 10-20 percent of their income into the system. In other words, we don’t rid ourselvs of the social security tax by switching to this system, we simply retarget that same amount of money into a new, personal system.
One idea I’ve heard of that might avoid the possibility of creating a bubble is to pool all the money in independent “retirement bank or banks” that then, like any other bank, makes money by lending, investing, etc. with the profits being distributed to the various accounts in the bank. They are untouchable by the government, and depending on the facility of the bank at making a profit, those with their money in it would always see some protected growth of their personal retirement accounts.
Either system, though, the money is required to be taken from a person’s income. While they might no longer be in social security, they are STILL having a SIMILAR amount deducted from their income.
A politician can’t claim their tax plan eliminates the need for social security taxes.
The individual controls its investment.
Instead of being forced to pay into a general retirement fund that you may not ever draw from, you would being paying into your own account. Like a forced savings. I kinda like it.
Not keen on this. What guarantee do you have if the bank makes bad investments with your money and goes under? It shouldn't be touched by anyone. jmo
You have to send your money to someone to invest.
A bank making bad investments with your money.
A fund manager making bad investments with your money.
A government agent making bad investments with your money.
An insurance company making bad investments with your money.
Someone’s going to get your money.
Why does it have to be invested? Why can’t it just sit and draw interest?
I think it’s more than 14%. I’m self-employed, so I pay the full amount, and IIRC, it’s about 16.8%.
Bambi is planning on reducing the payroll tax next year in order to win votes, which of course will put Social Security even more in the hole and will in fact mean that the difference will have to be made up by direct payments from the federal government. In other words, welfare, in the form of direct dependence on the federal government, which can be given and taken away at whim.
A state-sponsored pension fund is not necessarily a bad idea, but it’s got to be something that is really a pension fund and pays you back, just the way a private pension fund would. And it’s got to be beyond the manipulations of politicians. The Chilean model seems to do that.
I think that was part of the plan when our SS was started, but the problem is that SS extends to many more things now that it did originally. This includes SS disability payments that cover things like “working gives me migraines” to alcoholism...while at the same time, Congress has been dipping into the fund to bankroll its whims and the money has not been invested and grown.
Where do you think banks get the money to pay interest? They invest your money. Same with fund managers, insurance companies, etc.
We took a huge hit when the market fell and our IRA’s went with it, and we weren’t putting in 20%. I can’t even imagine how devastated we would have been had we been doing that.
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