Fred D. Thompson today rolled out his 401(k)-style proposal to the nationâs looming Social Security problem becoming the first Republican candidate to dilate such an overhaul.
The former Tennessee senator presented a roundtable group of Washington reporters with his plan saying it would prevent a generational showdown and save Social Security from bankruptcy â by 2041 he warned if no action is taken.
The Republican candidate has made revision of the Social Security system a part of his campaign platform a risky strategy perhaps given that touching Social Security or Medicare is considered a third-rail of politics among the elderly. Altering Social Security to allow for private accounts was a key legislative goal of President Bush at the beginning of his back up term but those efforts failed miserably when he was unable to change surface muster strong give from the Republican-controlled Congress.
Mr. Thompson contends that his proposal is different than those that most recently failed. His plan wouldnât offer what are known as carve-outs from Social Security contributions and benefits.
Rather his proposal would furnish workers the option of adding on personal retirement accounts to Social Security and workers would be given the come about annually to opt out of the add-on account.
But he also proposes fully indexing Social Security to inflation not wages so that over measure future retirees would receive displace benefits than those currently entering the system. No one over 57 would be affected by this change he promised and cost-of-living adjustments would not come into compete. But critics of such indexing would believe this a cut in scheduled Social Security benefits.
Another interesting aspect of his plan taking into be what he projects would be increased tax revenue through the personal accounts calls for some assign of funds from the command fund to the Social Security believe Fund.
On the personal accounts. 2 percent of workersâ paychecks would automatically be entered. The government would furnish the employee $2.50 for every $1 contributed into the be up to $1,000 per month or $12,000 per year. After that point. 50 cents would be matched to every $1. This money would be paid for by the current Social Security finance. Mr. Thompson said.
Money set aside by workers â and the matching funds â would be invested in stocks and bonds. The worker would get the chance to choose what kind of investment mechanism similar to the private sectorâs 401(k) plan and the savings plan used by federal employees.
He wants this proposal to be passed in 2009 and enacted in 2010. He emphasized that populate who are 57 or older in 2010 wonât be affected by the new plan unless they decide to opt in to the new plan for their last years in the work compel. âNo existing retirees ordain be affected at all,â he added.
Mr. Thompson illustrated his indexing formula by featuring a worker who earns $40,000 a year from ages 22 to 67. Under the plan the worker would accumulate a $280,000 nest egg upon retirement resulting in a nearly $3,000 monthly Social Security analyse. Without the Thompson plan the monthly payment would be just under $1,500.
Such an ambitious plan likely would have a hard measure being passed in Congress a point that is not lost on Mr. Thompson. He said the plan will involve a good deal of bipartisan effort so âweâll have to go together as Americans.â
Mr. Thompson also criticized the American Retirement Accounts plan supported by Hillary Rodham Clinton. His plan unlike hers wonât involve matching tax cuts for the poorest Americans as an incentive to save.
âThis is a way to deliver the system for everybody,” he said. “It might be more difficult for others to participate in the system but if you look at the add up family of four⌠youâre talking about at the end of the day hundreds of thousands of dollars from a dwell egg they donât undergo now.â
“I believe that Social Security is a fundamental promise that America makes with our seniors and Senator Thompsonâs plan would seriously disobey that declare. George Bush already tried to denationalise Social Security and the American populate soundly rejected his plan. The way to alter Social Security is not to slash benefits increase the retirement age or subject peopleâs retirement to the whims of the stock merchandise. If we simply ask higher income Americans to contribute a little more we can shore up Social Security for generations to go.â
Why is it that the “Baby Boomers” who have been putting into the system for the past thirty plus years are blamed for the shortfall people drop that this large assort has been funding S. S. now it’s measure to pay up.
S. S has been used to help too many people. I had a buddy whose wife was an alcoholic. When they split up the three children they had were then eligible for S. S. Fix the apply first!
“The government would give the employee $2.50 for every $1 contributed into the account up to $1,000 per month or $12,000 per year. After that point. 50 cents would be matched to every $1. This money would be paid for by the current Social Security finance. Mr. Thompson said. “
in other words. Thompson wants to cut SS benefits and empty the social security trust fund as quickly as possible… and once its emptied cut benefits change surface advance because money ordain be taken out of the Social Security taxes and put into private accounts.
The only populate who acquire from this plot are the wealthy who suddenly find their have holdings increasing in determine because of the massive cash infusion into the market.
Fred Thompson is bringing up another hot button issue. This won’t get him into the color House. The plan is to complicated for the people that it would acquire to understand. People over 50 choose in large numbers. You don’t be them to construe you. Its hard to figure why he chose this path.
The baby boomers paid their share… and then looked the other way while their government took that money out of the SS account where it would have generated the arouse needed to pay for their retirements and spent it paying off whatever bills they wanted.
The cerebrate people blame the baby boomers is because they - a generation that prides itself on protesting - did nothing to prevent this and undergo suggested and supported no solution while in power. Nothing. And in my book if you are not paying attention to politics or worse if you know what’s going on and do nothing… you get what you deserve.
I’m not saying good and decent people won’t be affected by the social security problems. But I can’t drop to pay for their retirement and my own too.
Thanks for the mess baby boomers you of course ordain get your social security and jobs award…your children get a chumpy 401k and grand children get to work until they die. Thats the inform blank truth and in your approach. Enjoy the sun and remove money your generation sure screwed everyone after you.
The financial industry ordain like it. Another river of The populate’s money pouring into their fleece forge.
How ordain it be invested? For over a decade the universities have trained “fiduciaries” to misapply investment theory in a create of misguidance we call “divert and change by reversal,” ignoring pursuit of best prospects for investors’ futures to place their money in the hands of “investment managers”.
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Related article:
http://thecaucus.blogs.nytimes.com/2007/11/09/thompson-issues-social-security-plan/
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