re: Here's a scenario for you:
A guy who's 21 yrs old today earns $30K/yr until he's 67, at which point he retires. In other words, he's solidly poor all his life. Using SSA.gov's quick retirements calculator, he will get $1,171 per month in today's dollars when he retires.
If that guy had taken the same dollars and invested in a lifecycle fund earning 7%, with inflation at 3%/yr, he would have earned $1,431 per month.
Two points.
In the first example the return is fixed for life(W/COL adjustments), in the second, the return is variable. 7% is in no way guaranteed... in fact I think it's optimistic. And in the second example the person can outlive their savings.
Second, there are a lot of people that earn less than $30K per year. How do WalMart employees (the nations largest employer) do with their $17K per year?
re: Increase taxes to the rich (those earning $500K or more per year) by 5% to cover transition costs. Allow anyone in the system today, who is 30 years or younger to forfeit all their contributions in the current system, in order to move to the new system.
That might work if the private accounts were only for people under 30. Have to see the numbers.
John |
