Monday, August 22, 2016

Let Us Know How That Worked Out In About 40 Years

In my dealings with people who were paid lots of money (and not) to think deep thoughts about retirement issues, there were 3 basic things I came across:

1) Expanding Social Security is unpossible and/or undesirable. As for the former, things in politics are unpossible until they aren't. And as for undesirable, the reasons were quite clear: ????? .

2) Even for people who weren't trying to (or in the wake of Bush's failure, didn't want to be seen as trying to) privatize Social Security, there was an obsession with people have a savings account that required some sort of personal responsibility. As in, you needed an account with your name on it and you needed to choose to put some money in it. Well, ok, that wasn't working, so we'll give you the option to opt out but you still have to choose not to opt out.

3) Since 401Ks had failed to provide for retirement, privatization wasn't (this week) going to happen, and Social Security expansion was unpossible and/or undesirable because ?????? what would be great is yet another exciting new program run by the states. One more account! One more thing to keep track of! One more pile of paperwork! But it will have your name on it! And you will choose to save! Or not save! Very Important! And it will be an account! With your name on it!

What's left largely unsaid is that the current system has failed, and the exciting plan to "fix" the failed system is run the same experiment, with minor tweaks, over for another 40 years and see how that works. Of course if you just grab your trusty envelope back and do The Math, the pittance people will save in these exciting new plans will be just that, a pittance.

Another benefit of the state-sponsored plans will be to allow more workers to benefit from the Saver’s Credit, a federal tax credit that goes to low- and moderate-income Americans who contribute to a retirement account. Under this credit, savers are eligible to receive up to $1,000 in what’s essentially a savings match. The National Institute on Retirement Security and the Aspen Institute estimates that nearly five million people living in the Secure Choice states could become eligible for the credit as a result of being enrolled in their state’s new plan. And if Congress ever decides to make the Saver’s Credit refundable, a move many policy experts and advocates endorse, the credit’s reach – and boost to savings – would be even larger.


The success of these efforts carries a potential dual prize: the ability of millions of hard-working Americans to save in their own retirement accounts for the very first time, and a potentially valuable model for how government can help solve the retirement crisis.

Their very own retirement accounts! A ONE THOUSAND DOLLAR MATCH requiring yet another line on the damn tax form, another bunch of paperwork to keep track of. Invest in GM stock now, in about 40 years those Cadillacs are going to be zooming out of the showroom, especially the self-driving ones. 20somethings will retire rich!

As for people near retirement now. Well, they fucked up. They trusted us!