Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

'Automatic' IRAs to Fill Retirement Gap
The Street.com ^ | Aug. 12, 2010 | Joe Mont

Posted on 08/12/2010 10:01:10 AM PDT by Clairity

A bill filed by U.S. senators Jeff Bingaman (D-New Mexico) and John Kerry (D-Mass.) would automatically enroll most U.S. workers in individual retirement accounts if their employers don't sponsor a retirement plan.

All automatic IRAs would offer the same three standardized investment options, each to be developed with regulations and fee guidelines issued by the Treasury and Department of Labor. The options would include a "principal preservation fund" (which would include a special Treasury Retirement Bond , the R-Bond, designed for use within an automatic IRA), a "life-cycle" option and an "alternative investment option" that can include a higher concentration of equities.

(Excerpt) Read more at thestreet.com ...


TOPICS: Business/Economy; Extended News; Government; Politics/Elections
KEYWORDS: democrats; forcedsavings; government; ira; iras; obama; regulations; retirement; rothira; savings
Navigation: use the links below to view more comments.
first previous 1-2021-4041-6061-65 next last
To: neodad
I’m sure this one will have a lock box to make sure the money is actually there when you retire /sarc

Of course it will, just like all the money confiscated for social security. Now about that bridge I have for sale.
41 posted on 08/12/2010 11:41:33 AM PDT by algernonpj (He who pays the piper . . .)
[ Post Reply | Private Reply | To 2 | View Replies]

To: Gorzaloon
One thing governments do not like to deal with is someone who has nothing to lose.

That's exactly what they will produce if they steal all of the money we've saved for retirement. The dispossessed become exactly the group that Alinsky uses so well. Have nothing. Have nothing to lose. Willing to do anything to change the situation.

42 posted on 08/12/2010 11:44:28 AM PDT by Myrddin
[ Post Reply | Private Reply | To 34 | View Replies]

To: stephenjohnbanker
As Schiff lectures, we need savings and the temporary related recession (to savings) to rebuild our economy long term, but forcing us to save when they are creating the next crash with this repeating monetary policy makes no sense except to win the next election.
43 posted on 08/12/2010 12:15:01 PM PDT by sickoflibs ("It's not the taxes, the redistribution is the federal spending=tax delayed")
[ Post Reply | Private Reply | To 39 | View Replies]

To: sickoflibs; Liz

The only thing Obama is going to win is a “Get out of jail free card “

Well....that and maybe 100 million he stole out of the “stimulus” fund.

Do I believe this? Your damned right I do.


44 posted on 08/12/2010 12:31:49 PM PDT by stephenjohnbanker (.Go troops! " Vote out RINOS. They screw you EVERY time" Jim Robinson)
[ Post Reply | Private Reply | To 43 | View Replies]

To: 101voodoo
This a preliminary move to end the SS system as we know it. It’s not a bad thing as long as workers have their own accounts and have control over where the money goes.

BS. Two Democrats don't set up a system to replace SS. This is clearly another way for the government to raise more revenue. Notice the default fund consists of T-bills.

45 posted on 08/12/2010 12:56:01 PM PDT by kabar
[ Post Reply | Private Reply | To 40 | View Replies]

To: 101voodoo
LOL!!

You must not really understand Democrats...let alone politicians.

46 posted on 08/12/2010 12:57:40 PM PDT by Osage Orange (MOLON LABE)
[ Post Reply | Private Reply | To 40 | View Replies]

To: Clairity
This is a end-around....to taking over EVERYONE'S 401k's.

They've been talking about it for a long time now....

And there's enough morons out there...that think this is a good idea. Even some FReeper's....

47 posted on 08/12/2010 1:00:07 PM PDT by Osage Orange (MOLON LABE)
[ Post Reply | Private Reply | To 1 | View Replies]

To: stephenjohnbanker; Liz
RE :”Well....that and maybe 100 million he stole out of the “stimulus” fund.

That reminds me of my FICA social security trust fund money that they (both parties) spent on food stamps, public school teachers, drugs for seniors, pork projects, more federal government employees, ACORN, the F-22, TSA employees , rebuilding Iraq......

I think there are not enough jails for congresses and the presidents that spent our money under false pretenses.

48 posted on 08/12/2010 1:04:02 PM PDT by sickoflibs ("It's not the taxes, the redistribution is the federal spending=tax delayed")
[ Post Reply | Private Reply | To 44 | View Replies]

To: sickoflibs; Liz

Tents are faster to erect and much cheaper. ask my Sheriff Joe ;-)


49 posted on 08/12/2010 1:10:03 PM PDT by stephenjohnbanker (.Go troops! " Vote out RINOS. They screw you EVERY time" Jim Robinson)
[ Post Reply | Private Reply | To 48 | View Replies]

To: sickoflibs; stephenjohnbanker
There are not enough jails for congresses and the presidents that spent our money under false pretenses.

They "said" they did it "for the children" (/snix).

50 posted on 08/12/2010 1:13:36 PM PDT by Liz
[ Post Reply | Private Reply | To 48 | View Replies]

To: kabar

My take is based on what I believe to be the indisputable (by any reasoning individual) fact regarding the guaranteed insolvency and imminent collapse of the current SS system.

With an ever increasing number of people depending on an ever decreasing number in the workforce to support them the system is the equivalent to “a dead man walking”

The only answer is to start every individual entering the workforce in a private plan and give the same option to everyone else based on their being able to allocate a % of their contributions to the private fund depending on age. Ditto Medicare, which is totally broke now, Private health plans are all which will work and the sooner we start new workers on that the sooner the problem will be fixed.

Within 10-15 years there will be no SS or medicare as we see it today. The Left are loathe to see it touched because they claim credit for it so if it is to be changed at all they believe it AMAUST be them who does the changes so they can continue to take credit.

Your claim of the funds being used to buy T-bills makes no sense since now there is NOTHING in any acct anywhere which is comprised of what we call SS funds. The money goes into the general tax fund and is immediately spent, What is left in the “SS trust fund” are IOU’s, promises to pay the money back, which is no different then T-bills except these IOU’s pay no interest.


51 posted on 08/12/2010 1:41:10 PM PDT by 101voodoo
[ Post Reply | Private Reply | To 45 | View Replies]

To: Liz

Foooooor the children , right Hillary?


52 posted on 08/12/2010 2:16:49 PM PDT by stephenjohnbanker (.Go troops! " Vote out RINOS. They screw you EVERY time" Jim Robinson)
[ Post Reply | Private Reply | To 50 | View Replies]

To: 101voodoo
Your claim of the funds being used to buy T-bills makes no sense since now there is NOTHING in any acct anywhere which is comprised of what we call SS funds. The money goes into the general tax fund and is immediately spent, What is left in the “SS trust fund” are IOU’s, promises to pay the money back, which is no different then T-bills except these IOU’s pay no interest.

It is not a claim, it is a fact. The SSTF contains non-market T-bills [redeemable only by the USG] and they are interest bearing. They represent an unfunded liability, which is why the SSTF is included in the $13.1 trillion national debt as part of "Intra-governmental Holdings."

Although I don't support kicking the can down the road, SS is relatively easy to fix. It is really just a matter of arithmetic. You can use a combination of measures including extend the retirement age for full benefits, increase the payroll tax, change the COLA forumla, raise the cap faster than currently is the case, etc. Medicare is much more difficult to fix.

53 posted on 08/12/2010 2:59:27 PM PDT by kabar
[ Post Reply | Private Reply | To 51 | View Replies]

To: 101voodoo
How the Social Security Trust Funds earn interest
54 posted on 08/12/2010 3:05:59 PM PDT by kabar
[ Post Reply | Private Reply | To 51 | View Replies]

To: Clairity

Social Security, the sequel.


55 posted on 08/12/2010 6:42:40 PM PDT by Freedom_Is_Not_Free (California Bankruptcy in 4... 3... 2...)
[ Post Reply | Private Reply | To 1 | View Replies]

To: kabar
"The SSTF contains non-market T-bills [redeemable only by the USG] and they are interest bearing."

How does one pay interest to ones self?

"Although I don't support kicking the can down the road, SS is relatively easy to fix. It is really just a matter of arithmetic. You can use a combination of measures including extend the retirement age for full benefits, increase the payroll tax, change the COLA formula, raise the cap faster than currently is the case, etc. Medicare is much more difficult to fix."

This can only be done for a limited period of time before the system collapses. Look at it this way. Say there are 100 people on SS and 1000 people employed and paying taxes into the SS system from which the retired folks are being paid. Each year a few more people retire, reducing the amount going into the SS fund while the number of folks collecting these funds has risen. You can extend the retirement age all you want but as long as you want and in the beginning that will help but as long as the pool of workers is shrinking and the number of retirees is growing the system cannot remain viable.

The average lifespan is around 80 years while the retirement age is around 67 for full benefits. How high do you want it to go? How about we raise it to 82 so people pay into up until the day they die and nothing is ever paid out in the majority of cases?

Private plans, even if the money is ONLY allowed to be put into CD's will give a wage earner with an average wage of just $40,000 throughout his life a nest egg of $555,000 at age 65 (I assumed just 3% interest compounded 1 time annually). Right now I can put this money in a guaranteed lifetime annuity which would pass to my wife should I die, and get $2312.00 per month. Also if my wife worked (likely) she would get the same from her account, which means a total of $4600 per month. based on average of $40,000 annual earnings for 2 people this is far more then SS would ever pay AND the remaining money upon death of the recipient is passed on to the spouse or whomever is the designated beneficiary. There is absolutely NO reason NOT to privatise the SS system and do so immediately. The sole reason it is not being done is purely political.

56 posted on 08/13/2010 1:55:38 AM PDT by 101voodoo
[ Post Reply | Private Reply | To 53 | View Replies]

To: 101voodoo
How does one pay interest to ones self?

The same way we borrow from ourselves.

This can only be done for a limited period of time before the system collapses. Look at it this way. Say there are 100 people on SS and 1000 people employed and paying taxes into the SS system from which the retired folks are being paid. Each year a few more people retire, reducing the amount going into the SS fund while the number of folks collecting these funds has risen. You can extend the retirement age all you want but as long as you want and in the beginning that will help but as long as the pool of workers is shrinking and the number of retirees is growing the system cannot remain viable.

In 1983 we faced a similar situation with SS. Reagan and O'Neill struck a Faustian bargain and we got the P.L. 98-21, (H.R. 1900), which was supposed to fix the system for the next 75 years. The bill raised taxes and reduced benefits, including raising the retirement age to 67 for full benefits. In 2016 we will be back in the same situation, i.e., SS permanently in the red.

The pool of workers won't be shrinking, but the ratio between workers and retirees will. It was 16 to 1 in 1950; it is 3.3 today; and by 2030 it will be two to one as the baby boomer cohort retires and our society continues to age. Your example is static and fails to include the measures I suggest that policymakers will use to kick the can down the road, i.e., raising the retirement age; increasing payroll taxes, changing the COLA and benefit formulas, increasing the cap more rapidly, etc. I don't advocate them. I favor personal accounts and privatization to get the government out of the pension business.

The average lifespan is around 80 years while the retirement age is around 67 for full benefits. How high do you want it to go? How about we raise it to 82 so people pay into up until the day they die and nothing is ever paid out in the majority of cases?

I assume that is a rhetorical question. There is no doubt in my mind that raising the retirement age for full benefits will be part of a package to make SS solvent for the next 75 years. I also think there will be some sort of means testing eventually. The Dems want to keep this system going at all costs and the Reps are scared to death to talk seriously about privatization. By 2030 one in five Americans will be 65 or older, twice what it is now. They will have a major impact on whatever solution is developed. I see another Reagan-O'Neill deal that will be bad for the country in the long term.

Private plans, even if the money is ONLY allowed to be put into CD's will give a wage earner with an average wage of just $40,000 throughout his life a nest egg of $555,000 at age 65 (I assumed just 3% interest compounded 1 time annually). Right now I can put this money in a guaranteed lifetime annuity which would pass to my wife should I die, and get $2312.00 per month. Also if my wife worked (likely) she would get the same from her account, which means a total of $4600 per month. based on average of $40,000 annual earnings for 2 people this is far more then SS would ever pay AND the remaining money upon death of the recipient is passed on to the spouse or whomever is the designated beneficiary. There is absolutely NO reason NOT to privatise the SS system and do so immediately. The sole reason it is not being done is purely political.

I agree. You are preaching to the choir. The problem is that the political will is lacking to privatize the system. It is most popular among young people, but they don't have the electoral clout. And the Dems will demagogue any attempt to eliminate the system. It creates a dependency on the governent. One third of current SS recipients depend upon SS as their sole source of income. SS constititutes more than half of the retirement income for two-thirds of the current recipients. Most Americans today are ill-prepared for retirement.

SS is a pay as you go system. For most of its existence, it has been a cash cow for the government, which uses the "surplus" as part of its revenue. When SS goes into the red, i.e., paying out more than it is taking in, then the government acts to put the system into the black so that they can again use the "surplus" revenue for other purposes.

I attended a week long seminar on SS a number of years ago sponsored by CATO. We had a star studded cast including a Nobel prize economist, five members of Congress including Paul Ryan, Jim DeMint, and Clay Shaw, David Walker of GAO, OMB, think tanks like the Concord Coalition etc., It was an interesting, informative discussion of the issues involved. I also had an opportunity to speak with Tom Saving, a long time public member of the SS and Medicare Board of Trustees. Tom mentioned that he believed that SS should be a line item in the federal budget and the SSTF abolished. This would force Congress to address the $13 trillion unfunded liability that SS represents. And it would eliminate the "surpluses" that are just another way to get tax revenue. 80% of Americans now pay more in payroll taxes than they do in income taxes.

57 posted on 08/13/2010 6:15:25 AM PDT by kabar
[ Post Reply | Private Reply | To 56 | View Replies]

To: kabar

Your last sentence highlights one of the major problems we have, That 80% of the people pay more in SS taxes then income taxes is only part of the problem. A larger one is that so many people pay NO income tax. If every citizen in America, whether they worked or were on welfare, paid SOMETHING, even if it were just 1%, they would then not sit by lamely each time taxes were raised because THEY would be effected as the rest of us are.

I’m not buying your claim we can pay ourselves interest. I have a few hundred thousand in cash I would like to invest and pay myself interest on. If I buy gov’t debt then I am being paid with my own money AND I have to pay tax on it to boot.

And I don’t believe you are correct in your assessment the SS system can be sustained. A 75 year “fix” is a waste of time and effort and merely delays the obvious end to the system as well as makes the cost to fix it more.


58 posted on 08/13/2010 7:52:17 AM PDT by 101voodoo
[ Post Reply | Private Reply | To 57 | View Replies]

To: 101voodoo
If every citizen in America, whether they worked or were on welfare, paid SOMETHING, even if it were just 1%, they would then not sit by lamely each time taxes were raised because THEY would be effected [sic] as the rest of us are.

They are paying payroll taxes, which really is an income tax. Including the employers share, that amounts to 15.3% of income. Payroll taxes pay for the benefits of those retired. SS is a pay as you go system as is Medicare. Any "surplus" is put into the General Fund. And payroll taxes are regressive.

I’m not buying your claim we can pay ourselves interest. I have a few hundred thousand in cash I would like to invest and pay myself interest on. If I buy gov’t debt then I am being paid with my own money AND I have to pay tax on it to boot.

Facts are stubborn things. Do you believe we can lend money to ourselves?

And I don’t believe you are correct in your assessment the SS system can be sustained. A 75 year “fix” is a waste of time and effort and merely delays the obvious end to the system as well as makes the cost to fix it more.

LOL. Of course it can depending on what changes you make to the system. I gave you some of them. It might involve rasing taxes, reducing benefits, changing formulas and means testing, but the system can be preserved if that is what the people want.

59 posted on 08/13/2010 8:18:06 PM PDT by kabar
[ Post Reply | Private Reply | To 58 | View Replies]

To: kabar

They are paying payroll taxes, which really is an income tax. Including the employers share, that amounts to 15.3% of income. Payroll taxes pay for the benefits of those retired. SS is a pay as you go system as is Medicare. Any “surplus” is put into the General Fund. And payroll taxes are regressive.

************************************************************

Sure but they are getting the withholding back and with the tax credits in place many people get a good part of the SS tax back as well. It needs to be paid as most working Americans pay it. They must file a return and actually SEE they are paying taxes. Currently almost 50% of the population is off the tax rolls and they need to be put back on and they have to KNOW they are back on so that when the greedy slobs in Washington go after our money these folks will know they have something to lose as well.

Currently when tax increases are mentioned those who pay none don’t care because it doesn’t effect them and when tax cuts are talked about they are AGAINST them. Why? because being someone who pays NO taxes they cannot benefit from the tax cut so are against it (if I can’t have it then neither can they). If everyone paid then everyone would have a stake in what happens and the politicians would have a much more difficult time in this area.

As for SS, certain assumptions have to be made and among them is an ever expanding gap between workers and retirees as people live longer and the birth rate continues to drop. Sure you can raise taxes through the roof, means test so many after paying in all their lives get nothing, delay retirement age to close to when people die anyway and other gimmicky “fixes” but all you have left is a sham which is still referred to as SS but which is nothing more then another way for the pols to take our money so they can hand it out elsewhere to get themselves re elected. SS as we know it is dead and privatised accounts will be the norm within 15-20 years. The reason it’s taking so long to do the obvious is the liberals haven’t yet figured out how to sell the people on doing something they have so long demonized the right on wanting to do.

It is testimony to the great ignorance of the majority of the population that there is not a huge demonstrations in the streets calling for a total reform of this kind, a reform which would allow retired folks to live far better then they do now AND pass on what’s left to their loved ones.


60 posted on 08/14/2010 2:09:54 AM PDT by 101voodoo
[ Post Reply | Private Reply | To 59 | View Replies]


Navigation: use the links below to view more comments.
first previous 1-2021-4041-6061-65 next last

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson