Battlepanda: Now we're calling them "It's mine! All mine!" accounts


Always trying to figure things out with the minimum of bullshit and the maximum of belligerence.

Saturday, April 30, 2005

Now we're calling them "It's mine! All mine!" accounts

I just love the bogus way Social Security Privatization is being sold. Just because it's your money does not mean you can eat your cake and have it. You can either guarentee payments until you die by buying an annualty when you retire OR you can leave a nest egg to your kids if you die early. You can't do both.

Now Bush is saying that you can risk your retirement in the stock market or you can keep it safe by buying treasury bonds. "Backed by the full faith and credit of the United States Government." Seriously, if I were in the press pool in his dumbass press conference a few days ago, I would have asked him what steps he would take to ensure that those precious t-bonds would not be kept in file cabinets.
But the real dirty little secret is clawback. It goes without saying that if you divert part of your SS contributions to private accounts, your benefits from the non-privatized part of your contributions should fall. But how is that decrease calculated? By taking your private contributions, compounding it annually by 3% plus the rate of inflation, and taking THAT off the top of your total SS contributions before calculating your benefits. At least, that is if I understand Brad DeLong correctly. He ran the numbers and found that if you listen to the president of the United States in the matter and diverted your SS contributions to t-bonds, you would be guarenteed to come out behind.

Follow George W. Bush's advice, divert $1,000 into your private account, invest it in TIPS, and at the 1.85% per year interest rate you will indeed by able to collect an extra amount worth $10.11 a month in today's dollars when you retire at 65...

But the clawback would reduce your normal Social Security benefit by $14.16 a month. You're $4.05 a month behind.

Why does George Bush hate risk-averse Americans?