Social Insecurity? (April 7, 2008)
[Scene – Three guys sitting around the den on a Tuesday night.]
“Your parents have a ‘defined benefit plan’ which is paying certain amounts at regular times. You have something called a ‘defined contribution plan.’ You must make the contributions yourself.”
. . .
“At least you won’t lose anything.”
. . .
“Exactly. You are on your own.”
. . .
“How will privatizing the social security scheme help? If you don’t contribute anything now with a beta version of the plan in place, why would you suddenly feel some great urge to contribute if the program were expanded?”
. . .
“I get my statement from the Social Security folks every April. It is sort of a taunt. I reflect on what I have paid and what I could have done with the money. But here’s the dilemma. If they completely privatize social security, I will make money, you guys won’t.”
[Nervous laughter. Panicked eyes. Shifting in seats.]
“That still leaves me trying to figure out how to take care of you guys.”
. . .
“What if the tax were imposed on all income and the funds were invested and each person were provided a property interest in a defined sum? Everyone receives a small subsistence payment upon retirement. Those who are industrious, talented, tenacious or lucky are free to acquire more and to retire with more.”
. . .
“The nagging problem is that there is no way to guarantee that the government will pay or even be able to pay benefits.”
Bumper stickers of the week:
What’s said in the den stays in the den.
Be careful what you wish for.
This entry was posted on April 7, 2008 at 9:06 am and is filed under Social Security. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
Leave a Reply