Justus For All

If you favor personal accounts, what do you think should happen if someone happens to retire during a bear market and they have no money?

One can theoretically have personnal accounts without having them in the stock market. You could require that personal accouns be entirely government bonds for instance.

I am enough of a libertaritian to be a little queezy about the idea of government mandated savings accounts at all, but since I am also unwilling to see old people starve I can see a sociatal interest in such things.

My basic outline for a program would be investments with a small range for choices for workers from pure government bonds to a mixed portfolio of bonds and market index funds (like standard and poors for example) to the most extreme investment choices of a pure index fund portfolio. Even that isn’t exactly what is considered high risk, so no one would be able to invest all (or even any) of their money in Global Crossing for example. Remember also we are talking about younger workers so even if the market was flat for their entire time of investment they would still not have ‘no money’ they just wouldn’t have seen an increase in their savings.

While this would represent a problem, I would challenge you to find any solution that will be acceptable if we have a flat economy for the next 30 or so years. I recall explicity from you posts on the subject claims that the crisis is overrated because growth projections are too low in the studies. I expect that if we assume no growth at all 2042 is a lot later that the SS fund will be able to pay it’s liabilities.

There would also have to be some rules as to how fast you can draw down your account upon retirement.

In addition to this program, I would have a safety net for those who are poor and unable to work. This would provide for those who never worked, who were never able to work, or who retired with insufficient funds to cover their remaining years (perhaps because they lived an extraordinarily long time.) The main point here is a means tested program for those who don’t have money and cannot work regardless of reason. Rather than fund this program by the current regressive payroll tax, I would fund it from the general budget (mostly income tax).

I think that this program would be far better for the poor than our current system and a lot fairer. I acknowledge though that their will be a transition cost.

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