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Politics : Politics for Pros- moderated
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To: KLP who wrote (98936)2/6/2005 2:38:42 PM
From: Lane3  Read Replies (1) of 793717
 
do you have a SS option you think would work?

My primary objectives would be to shift minimize the nanny state mentality and have people take responsibility for their own retirement while not pulling the rug out from under anyone in the process.

The first problem is the ponzi scenario for individuals committed to the current system, which is the cause of the insolvency. Given demographic and immigration issues, it's hard to generate more future workers to pay for retired workers so we should rely primarily on reducing costs (retirement benefits). To do this, I like the proposal to shift the formula for the initial benefit from wage indexing to price indexing. We could also also raise the retirement age if that didn't produce adequate cost cuts. Ideally we would reduce costs enough that we could reduce the tax rate over time and the benefit would become more like a welfare payment than a pension.

Cutting benefits by itself would serve as an impetus for more saving and better planning by individuals--out of necessity. Ideally that would be enough, maybe with some beefing up of the IRA. But human nature being what human nature is, I think that the diversion of some SS tax to private accounts along the lines of the TSP to force people to focus on planning and to force some savings would be acceptable. I'd jawbone for investment companies and employers making annuities and mutual funds more accessible to small investors. And jawbone saving, in general.

Since I don't have access to the models, I don't know how the numbers on this would work. Some adjustment might be needed. Likewise, I might find a better idea tomorrow.

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