Under Ghilarducciâs plan, all workers would receive a $600 annual inflation-adjusted subsidy from the U.S. government but would be required to invest 5 percent of their pay into a guaranteed retirement account administered by the Social Security Administration. The money in turn would be invested in special government bonds that would pay 3 percent a year, adjusted for inflation. The current system of providing tax breaks on 401(k) contributions and earnings would be eliminated. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20081007/REG/810079894 http://www.workforce.com/section/00/article/25/83/58.php
401(K) are the biggest scam ever perpetrated. "In the long run stock markets are always up" is my favorite phrase. If someone is supposed to retire NOW their stocks did not do much for a few years. Apparently average people(joe the plumbers) don't know how the Nikkei STILL has not achieved the levels it had in the 80s.
I think this could be a fine idea, depending on the details (rules for accessing the money, how is interest determined, etc.). Right now the retirement system is headed for a disaster when the stock market stays flat or negative for 10-20 years, and all those people counting on stock market gains for their retirement will be SOL. Under this plan people who don't save anything would be forced to save something, and the rest of us can compensate by keeping slightly more in our risk accounts and slightly less in riskless accounts/instruments. It's way better than SS for instance, you get out what you put in and the money isn't spirited away to the general fund...
If you're retiring now (or in the next 5-10 yrs) you shouldn't have all your money in stocks. Look at the fucking charts. The market always goes up....................over time.
No, that would be an oversimplification. Even in the 20th century (which can be safely named the American century) there were extended periods of time when dow did NOTHING(1964 to 198 something). If you take into account that 20th century was also a period of considerable, unprecedented (and unlikely to repeat) growth for US economy you will quickly realize that it would be foolish to expect the same performance in the 21st century. Nikkei is a good (recent) example that markets can do nothing for 20 years or more.
Ok, I'll keep investing in my 401k (with a 50% employer match) and you invest in Treasuries at 3% and we'll see who comes out ahead. I have no problem if you want to do that, if you distrust the stock market. But you can do that with a 401k currently by rolling it into a self directed IRA and investing in what ever you want to. My problem is the government, ONCE AGAIN, stepping in and forcing me to contribute to something that I don't want to. They have established a pretty poor track record with SS, so call me skeptical.
This is a tax by another name. Let the Social Security administration run it and invest in bonds? In other words, let us continue our reckless spending and use this new money to do it. And, I'm so sure when we get ready to retire both the Social Security system and this system will both be functioning, ha! What percentage of our money are we going to be left with soon? Guess it won't matter, we'll all get that $600 credit that will oh so make up for this new 5% tax. Why not just quit perpetuating the myth that stocks always go up and you can't oversaturate people with growth. I mean, when you have almost all consumers in debt keeping up with the Joneses and some of the most popular magazines having to do with decluttering and organizing your growing piles of crap, you think something might have become systemically broken? You think? I don't usually rant, but it felt good to get that out.
Um this is not japan. Stocks always outperform. Always. If you keep money in the bank expect 1% yearly interest at best. Although the S&P 500 may be flat since 1998 it does pay nice dividends which aren't factored into the chart.