Neocon, the numbers you cite are quite differnt from the $1 Trillion over ten years going to $3 trillions. As for the current 2%, that return must be over all funds collected, a good portion of which is paid out at once to current retirees. The marginal returns (funds in the trust fund) surely must earn treasury rates which in the last few years ranged from 4.5 % to 6%. . If you take out 1/6 of current contributions, these are going to decrese the monthly payments (relative to current payment schedule) by 1/6, and the question is really, how many of those "young workers" will indeed match the treasury's rate in their self directed account, what do you do with the 90% (my guess), which will shift from securities to boinds and vice versa at the wreong time.
Mind you, sincwe these are going to be accounts which for most of their lives will be well under $150,000, the brokerage houses are going to exact a management fee, and that itself might be as high as 1% of assets per year. Impacting quite negatively on the rate of return.
We have an old say in the technical world, if it ain't broke, don't fix it. (g).
Good luck out there.
Zeev |
