Posted on 09/30/2011 1:30:25 PM PDT by SeekAndFind
Sounds reasonable to me. (Seek, here's an idea from another FReeper.)
A “do-nothing” approach will lead to negative returns on investment for younger individuals (more money put into SS that will be paid out).
Hermann Cain gets kudos for even bringing the topic up for discussion.
Yeah, the Chilean model is SOOOO much worse than ours.
Wait...what?
“How Well Has Chile’s Retirement Program Aged?”
http://knowledge.wharton.upenn.edu/article.cfm?articleid=1263
Selection from link:
“Chile enacted its national defined contribution pension system in 1981 after the prior government-run systems collapsed. The core element of the plan is that workers are required to set aside 10% of their earnings into private savings accounts. Eleven other Latin American countries have copied elements of the Chilean approach, in which bankrupt state-run pension plans are replaced by defined contribution-funded individual accounts. ‘This reform model has been exported all around the Americas and it’s been held up by many as a fine example of a well-functioning national personal accounts system,’ says the Wharton School’s Olivia Mitchell. Overall, the Chilean system has provided savers a 10% real rate of return since its inception. ‘That has made the system very popular, but it’s not clear whether this can persist in the future, or whether others can replicate it,’ she adds.”
A ten percent real rate of return over decades would make any system popular. Our Social Security system does not vest to retirees, so it’s impossible to calculate a real rate of return, as far as I can tell.
In the 3 opt-out Texas counties the contributions are pooled and top-rated financial institutions bid on the money. Those institutions guarantee an interest rate that wont go below a base level, and could go higher if the market does well.
Like I said in #20, it should not be handed over to a private monopoly chosen by the government. It should be open competition from banks, investment firms and credit unions to get peoples business. Let them offer a toaster, lower fee’s or whatever to attract business.
Otherwise its all pointless.
This is an opinion letter to the editor - did you factcheck this? There are are some pretty glaring errors there about our current system.
WTF?
I have had financial managers since the 70s and never paid more than .5 to 1 percent.
If the financial guru is returning a reasonable return to you, then you will willingly pay the fee, if not, fire him and get a different one.
I've fired more than one and had one thief put into the slammer.
It's your money, and it's up to you to protect it.
I don't know the details of the Chilean system, but the opt out system in the three counties in Texas, has been returning 2 to 3 times the amount that would have come from SS.
The writer is an out right liar as there is no way SS is funded until 2037.
In 2026 the unicorns will deliver your SS money.
I want to see TV ads “Bring your retirement account to us! We are better than XXX! Higher returns, lower fee’s!”
The true figure for annual management fees is about 1.7% of accumulated assets, the normal way of figuring these admin costs.
The author this article has instead calculated the management fees of the entire fund as a percent of annual contributions, a most misleading subterfuge.
You can give this article ZERO credibility. It is nothing but leftist propaganda.
This article was far from what I would call a ‘compehensive review’ of the Chilean system. The Chilean system has a few shortcomings, primarily caused by the inability for some of the first entrants into the system to reach a 240 month contribution threshold, this threshold would provide a gov’t funded backstop in case their private account does not last the duration of their lives.
Overall, the concept as well as the structure of the system is brilliant when compared to our draconian Social Security System. Individual accounts which allow for three different payout options, offers a backstop to maintain 100% of an average worker’s earnings through retirement, and removes the burden from government are an amazing system. $240 billion in management fees to account managers over the course of ten years is a rather paltry compared to the expense of a governmental goliath like SOcial Security - even taking into consideration the smaller scale of the Chilean economy.
8 years ago, all news sources including Newsweek, Time and others were raving about the brilliance of the system and bashing our system. Now, they proclaim the greatness of our system and the fatal flaws of the Chilean system. This alone is reason to support a move toward a similar system, plus, it just makes good business sense - something that evades most ignorant journalists and liberal pols.
I want it to be really private. Take it all out if you want to and spend it. Leave it to the kids, whatever.
They pretty much already do. It is called fees on stock trades and 401K management fees.
It looks like dogsh*t.
It smells like dogsh*t.
It tastes like dogsh*t.
Wow! Good thing we didn't step in it.
All I know is that the U.S. model SUCKS!
The Chilean model is the right idea. The execution can be improved.
Ah yes, the Spokesman Review from the People’s Republic of Washi9ngton State! A rag not fit to line a bird cage!
These plans are actually proposals and no one expects them to be adopted without a lot of number crunching, debate and refinement. What can be said is it is the best plan so far...
And, I would expect nothing less. It is reasonable to evaluate it on its merits nd see if it has the potential to fly or fail. I'm not all in favor of adopting the plan outright because I don't know the details of it nor do I know how he plans on it being implemented.
The point I'm making, though, is that he has put forth a proposal for a plan that SHOULD be considered. No one else has offered anything else and the folks coming out of the woodwork to criticize it haven't offered their own alternative. If there is no alternative, then there is just the status quo.
The journey of a thousand miles begins with a single step. But, if we never take that first step, we never reach the end of the journey. That's all I'm trying to say.
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