In light of the earlier couple of posts on this topic, I'll share this article that I just read in my newest favorite online magazine, Reason. I particularly like this article because it doesn't make my post sound stupid (which could easily happen as I was kind of talking about of my arse).
I like the approach of the article for other reasons as well -- it actually appears to be pretty fair and touches on many different arguments and positions. It doesn't feel like I have somebody with an ulterior motive trying to convince me of one side's position while burying everything that contradicts that position.
http://www.reason.com/rauch/011505.shtml
Social security article
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SonomaCat
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BobCatFan
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Here is my idea plan.
Figure out how much of you social security tax goes to the disability part of social security. This tax would remain in place.
The rest of you tax goes to a private account of your choosing but it would be regulated by the government to make sure the investments had some kind of safety check. I would not recommend the government be in charge on investment selection, this is a private sector function. I would even go as far as requiring 10% with a 10% match from the employer. You would be required to invest in your retirement plan and you can not ever touch the money no matter how bad off you might be until you reach retirement age. 65, 62? 70?. In retirement, you have to put your funds into a very safe investment like bonds, cds, and annuities. Creditors would not be allowed to touch your retirement account.
Here is example of what long term investing can do to your account. I tell this to 18 year olds to try and get them to start an IRA account. If you invested $50 a month starting at age 18, you would be a millionaire by the time you are 70 at a compound rate of return of 10%. (This is the longer stock market return) Can you image if you had to invest 20% or you lifetime earnings, even the poorest Joe would be a millionaire.
Here is another example; average life time earnings of $25,000 so $2360/year is put away at an 8% compound return for 40 years, at retirement you would have a yearly annuity payment of $37,337/year for 35 years.( I know you should look at a lifetime annuity but I do not have access to those calculations.) $37,000/yr retirement income looks a lot better the $800 to $900/ month that this poor Joe now gets.
For all liberals out there, do the math; it does not lie like a politician.
Figure out how much of you social security tax goes to the disability part of social security. This tax would remain in place.
The rest of you tax goes to a private account of your choosing but it would be regulated by the government to make sure the investments had some kind of safety check. I would not recommend the government be in charge on investment selection, this is a private sector function. I would even go as far as requiring 10% with a 10% match from the employer. You would be required to invest in your retirement plan and you can not ever touch the money no matter how bad off you might be until you reach retirement age. 65, 62? 70?. In retirement, you have to put your funds into a very safe investment like bonds, cds, and annuities. Creditors would not be allowed to touch your retirement account.
Here is example of what long term investing can do to your account. I tell this to 18 year olds to try and get them to start an IRA account. If you invested $50 a month starting at age 18, you would be a millionaire by the time you are 70 at a compound rate of return of 10%. (This is the longer stock market return) Can you image if you had to invest 20% or you lifetime earnings, even the poorest Joe would be a millionaire.
Here is another example; average life time earnings of $25,000 so $2360/year is put away at an 8% compound return for 40 years, at retirement you would have a yearly annuity payment of $37,337/year for 35 years.( I know you should look at a lifetime annuity but I do not have access to those calculations.) $37,000/yr retirement income looks a lot better the $800 to $900/ month that this poor Joe now gets.
For all liberals out there, do the math; it does not lie like a politician.
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SonomaCat
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Actually, instead of bashing on liberals in your last sentence, you should be opening your arms to them -- your plan, although not a bad one per se, is certainly allowing the government to play big brother on everyone. Forcing people to participate and then not letting them touch their money until a certain age? Forcing employers to contribute? Not letting creditors access those funds (removing accountability for people's debts). That's certainly not a "conservative" plan, my friend. You just professed to be a liberal who happens to like the stock market. There are a lot of those out there.