Saturday, April 09, 2005

More on Hagel

I have been doing some more reading on the personal accounts portion of Senator Hagel's social security proposal. If it passes, those workers age 44 and younger would have two choices. The first would be to take 4% of their payroll tax and put it into one of the investment choices currently in the Federal Thrift Plan. i am not sure if the worker can use more than one and when or if he can switch out of his choice into another, but they have that worked out for federal employees. The other choice is to simply elect the current social security system. A wrinkle I just learned of should answer some of the critics of the personal accounts. At retirement, the worker would be required to convert a portion of the retirement account into an annuity which when combined with the traditional Social Security benefit would pay the worker an amount which is at least 135% of the poverty level. The remainder of the account could be used to help with health care costs, pay college tuition for grandchildren, help children with a home purchase or simply retained for heirs. All of this seems reasonable to me, so it probably is doomed to be ignored.

Personal Unsecured Loan