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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: bonnuss_in_austin who wrote (208552)	12/10/2001 10:19:07 PM
From: Jagfan	Read Replies (2) \| Respond to of 769670

So, in other words, the American people are too stupid to take care of their own retirement?

To: bonnuss_in_austin who wrote (208552)	12/10/2001 10:31:18 PM
From: calgal	Respond to of 769670

Where I feel that I will get good advice and feel competent enough to get handle money, and decisions about money, I realize that not everyone will feel as if they can handle their dollars. So, my answer today, is I need more info! Westi

To: bonnuss_in_austin who wrote (208552)	12/10/2001 10:35:03 PM
From: gao seng	Read Replies (1) \| Respond to of 769670

Can Payroll Taxes Be Turned Into Wealth? By William Raspberry Monday, December 10, 2001; Page A23 The open secret is that the president's Commission on Social Security Reform will shortly recommend some form of privatization -- primarily because the president avoided naming to the panel anyone who doubts the wisdom of privatization. That, and the fact that the approach is loved by political conservatives, doesn't necessarily make privatization a bad idea, of course. Still, a lot of us get suspicious when rich and conservative people try to convince us that what is good for them is also good for America -- poor folk included. Are our suspicions well-founded? I honestly don't know, but I've been talking with two people who are certain they're not. Former senator Daniel Patrick Moynihan, the commission co-chair, says he is puzzled that advocates for the poor have had so little to say about proposals for a thrift-savings component to Social Security. Federal workers contribute to a savings plan, and, as a result not only get retirement benefits but also can accumulate bequeathable wealth, he said. Social Security annuitants get only the direct benefits. "Our object," he told me, "is to provide workers with a measure of wealth at the end of their working days. The 'magic' of compound interest would provide taxi drivers and doormen at least a third of a million dollars on retirement. A two-earner couple with average earnings could have up to a million." And that isn't all, says Moynihan. Poor and minority workers have a lower life expectancy, which means they tend to have fewer years of Social Security benefits. Two-thirds of African American men fail to survive past 60. Jagadeesh Gokhale, senior economic adviser to the Federal Reserve Bank in Cleveland, gets to the same destination by a slightly different route. The very fact that the poor are disproportionately dependent on Social Security gives them (and their advocates) a special interest in the prospective reform of the system. And since the system is going to be reformed, he says, this is a propitious time to examine its impact "on wealth accumulation, the intergenerational transfer of wealth, and the inequality of wealth in America," Gokhale said in a piece he wrote for the Cato Institute. "The best way to understand it is to think of Social Security as a forced saving program," he elaborated in a telephone interview. "You contribute to Social Security, through payroll taxes, while you're working, and the system provides you with many times your contribution as a benefit. "But you don't get your benefit in a lump sum when you retire. Your benefits are annuitized, meaning that when you die there's nothing left to leave your survivors." This isn't much of a problem for the well-off, Gokhale argues, since Social Security constitutes only a minor fraction of their retirement income. The rest -- mostly generated from investments -- is heritable wealth. Gokhale makes a rather complicated -- and not particularly persuasive -- argument that the very existence of Social Security as it is now structured is a disincentive for the poor to accumulate wealth. Most of us, he said, hope to maintain our working-life standard of living into retirement. For the higher-paid among us, but not for low-wage workers, that means private savings plans of some sort. Thus, the well-off have a greater incentive than the poor to save. My guess is that it isn't lack of incentive that keeps poor folk from saving; it's the lack of discretionary income. But it's hard to disagree with Moynihan or Gokhale on one point: the pitfall of confusing income and wealth. The middle class and the wealthy tend to provide for their retirement years by building wealth. The Social Security-dependent poor do it by providing for income -- which is what annuitized Social Security payments amount to. "What this means," says Gokhale, "is that the distribution of wealth at retirement is vastly unequal. And because it is, the distribution of bequests is unequal." The result, he and Moynihan agree, is that both wealth and poverty are heritable. So why, they ask, shouldn't low-income workers be given the opportunity to use some portion of their Social Security contributions for wealth accumulation? Well, why not? washingtonpost.com