RE: Do you not remember that George W. Bush and Republicans floated this almost exactly? And what was the Democrat’s response, with the high-pitched squeal of the corrupt MSM?
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Yes, and I heartily approved of it then. Too bad, Dubya got distracted by the Iraq and Afghanistan war and finally by the mortgage crisis that weakened his bully pulpit. He had a good proposal but was not able to do anything.
This was his proposal _-— The accounts would be modeled on the Thrift Savings Plan — a 401-k type program that is already available to government employees — and centrally administered by the government.
Workers would have a choice of five broadly diversified index funds and a lifecycle fund, in which the portfolio grows more conservative as the investor nears retirement.
“We will make sure there are good options to protect your investments from sudden market swings on the eve of your retirement,” the president said in his SOTU speech.
Specifically, when a worker turns 47 the account will automatically be invested in the lifecycle fund unless the worker and his or her spouse sign a waiver opting out.
In terms of fees, the Social Security Administration estimates the administrative cost per account will be 0.3 percentage points.
Money in the accounts could not be taken out or borrowed before retirement. At retirement, it’s likely workers would have to annuitize a portion and only take out a lump sum if doing so would not result in the worker moving below the poverty line. Any unused portion of the account could be left to heirs.
I don’t see how the plan would not work now. After all, if it is good for Federal government workers, why not for everyone else?
“I don’t see how the plan would not work now. After all, if it is good for Federal government workers, why not for everyone else?”
The problem is finding enough assets of good quality at a good price in every year.
Ten million people can retire well by investing in the stock market, 300 million people can’t, there’s just not enough quality assets available at a reasonable price.
Social Security has two problems:
1. a low asset return rate
2. a redistribution scheme than shortchanges better paid workers
I can tell you problem 2 will be hard to fix in modern America.
As for problem 1, it has quite a bit to do with the desire to lower interest rates when a government is $21 trillion in debt. And I’m sure the Treasury doesn’t see low interest rates as a problem.
Your retirement income will suffer, but you benefited as a younger taxpayer by the federal government getting to borrow your future retirement money really cheap.