Over the last three decades these accounts have averaged annual returns of 9.23% above inflation. By contrast, U.S. Social Security pays a 1% to 2% (theoretical) return, and even less for new workers.
In 2005, New York Times reporter John Tierney worked out his own Social Security contributions on the Chilean model and found that his privatized pension would have been $53,000 a year plus a one-time payout of $223,000. The same contributions paid into Social Security would have paid him $18,000.
JUST DAMN. This is exactly the kind of thing we need to be looking at.
This is probably the most important thread on FR today. Perhaps this entire year. And 99% of freepers are probably going to miss it.
The Chilean Model has been discussed extensively here in the past.
Comparison of returns is meaningless. The essential comparison is a sustainable (privatized system) versus an unsustainable model (US Social Security). One factor that makes Social Security unsustainable is the CPI-W COLA. Who is not for a CPI-W COLA? Everyone is for it except that it is not sustainable. Who will fund the CPI-W COLA especially when a nasty bout of inflation occurs? Obviously the Social Security model is also broken because there is no asset pool to fund benefits. Comparisons of returns assumes that both systems are sustainable. We will never win a debate on Social Security unless we can convince the public that Social Security is not sustainable. Unfortunately, phony government accounting obscures the unsustainability. Seniors (especially the greatest generation) has been a solid voting block resisting change. Of course, the greatest generation was on the front end of the scheme, protecting intergenerational theft.
Thanks. I agree with you.
amen