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Read how Australia is handling their pension and SS issues.
First, I fail to see what qualifies the plan as brilliant. Is it the "have folks work until they are 70" or some other part? Sorry but working some jobs until you are 70 will basically kill you but maybe that's the intent.
Second, how many businesses do you think will be lining up in agreement to increase their payments into 401k plans to that 9-12% level? Don't feel bad, I can't think of any either.
If we're worried about SS system failure I think we'd be better off looking for solutions in the areas of 1) making "ALL" wages subject to SS taxation and 2) restricting or limiting SS payments to those who have 'x' amount of assets at their time of retirement. Neither perfect or clean I admit. Don't you just wonder what Charlie Munger, Warren Buffett and those Walton kids do with their monthly checks? I know what folks who actually need and depend on them do.
What a novel idea that employers are required to contribute a bigger percentage of their overall comp into retirement account. If I had any confidence that eventually congress wouldn't try to spend such an account like they've done with SS, I would be all for increasing the contribution rate significantly.
And I say that as an employer. It's in everyone's best interest to have some additional "forced savings". They key is keeping the money in an account that is "owned" by the employee however.
Mark, #1 is only about 15 states have government employees that don't pay into SS #2 is accomplished with the pay-in cap and the pay-out bend points; both could be adjusted and/or the former eliminated. Erosion of middle class support with means testing would kill SS and turn it into a welfare system for old formerly hard working laborers.
I put this article up to see if it would spur some discussion and it did. I don't agree with a lot of it. @Mark, the businesses are already putting in the 9%. From what I understand, prices are expensive in Oz. High labor is a big part of that. People make good wages and they spend it on high prices at the stores. Restaurants are very expensive.
I do like the idea of a portable 401k type of plan that a employee could take with them. Each employer along the way would plug into it and add to it per their policy. That's wishful thinking though.
The Aussies I have met like their system. They tell me their taxes are not bad. Now whether that is true or that they haven't been anywhere else to compare, I don't know. Funding for this has to come from somewhere and that includes the healthcare they enjoy.
Mark, that is the "cap" I spoke of. Many want it raised substantially; others want it eliminated; still others want it to remain to preserve the "workers" flavor. I think it is the 6th item in the chart but only because this solution was tooted to be a 90% solution.
@JohnChisum: I've had to move to three cups of coffee, bran, with a dose of MiraLAX myself. But on topic, Social Security in my opinion has always been ill-conceived and doomed to failure. However, it has been a big piggy bank for the Politicians to raid whenever they wish. It's also been useful for scaring the uniformed. Their final solution will be means testing to screw those who have been responsible and to save those who have not. The Australian plan may not be perfect, but if I haven't missed something, I believe it belongs to the participants and it is using the Market for sustainable growth.
@BrianW, You are correct. Experts should have seen the effects of the boomer generation a long time ago and planned back then. What happened however was LBJ who opened up SS and used it to pay for his "guns and butter" agenda. The lid hasn't been closed since. Means testing keeps coming up but that is not fair to those who paid into the system and then are closed out when the time comes to benefit. I am not sure if the SS accounts in Australia belong to the individual but the Super Annuation accounts do and those are currently available to tap when one hits 55. So no one is actually forced to work until age 70 unless they have nothing in their SA accounts. Additionally, Australians have their private retirement accounts they can open similar to our IRA/401k etc. So its a three pronged effort.
I've taken MiraLax myself. I would say that its much easier to swallow that most of the other products out there. I also take a spoonful of extra virgin olive oil in the morning with breakfast and my vitamins. A lot of vitamins need fat to help absorption. EVOO has practically the same benefit profile as fish oil and is cheaper too.
Comments
Second, how many businesses do you think will be lining up in agreement to increase their payments into 401k plans to that 9-12% level? Don't feel bad, I can't think of any either.
If we're worried about SS system failure I think we'd be better off looking for solutions in the areas of 1) making "ALL" wages subject to SS taxation and 2) restricting or limiting SS payments to those who have 'x' amount of assets at their time of retirement. Neither perfect or clean I admit. Don't you just wonder what Charlie Munger, Warren Buffett and those Walton kids do with their monthly checks? I know what folks who actually need and depend on them do.
And I say that as an employer. It's in everyone's best interest to have some additional "forced savings". They key is keeping the money in an account that is "owned" by the employee however.
#2 is accomplished with the pay-in cap and the pay-out bend points; both could be adjusted and/or the former eliminated. Erosion of middle class support with means testing would kill SS and turn it into a welfare system for old formerly hard working laborers.
Play the SS game at the American Academy of Actuaries
http://www.actuary.org/content/try-your-hand-social-security-reform
Read the long standing CATO libertarian plan for making entitlement program increasingly unpopular:
http://object.cato.org/sites/cato.org/files/serials/files/cato-journal/1983/11/cj3n2-11.pdf
The 2010 CBO study of policy options and supplemental materials:
http://www.cbo.gov/publication/21547
Summary chart:
1989 2046
1990 2043
1991 2041
1992 2036
1993 2036
1994 2029
1995 2030
1996 2029
1997 2029
1998 2029
1999 2034
2000 2037
2001 2038
2002 2041
2003 2042
2004 2042
2005 2041
2006 2040
2007 2041
2008 2041
2009 2037
2010 2037
2011 2036
2012 2033
2013 2033
2014 2033
I do like the idea of a portable 401k type of plan that a employee could take with them. Each employer along the way would plug into it and add to it per their policy. That's wishful thinking though.
The Aussies I have met like their system. They tell me their taxes are not bad. Now whether that is true or that they haven't been anywhere else to compare, I don't know. Funding for this has to come from somewhere and that includes the healthcare they enjoy.
I've taken MiraLax myself. I would say that its much easier to swallow that most of the other products out there. I also take a spoonful of extra virgin olive oil in the morning with breakfast and my vitamins. A lot of vitamins need fat to help absorption. EVOO has practically the same benefit profile as fish oil and is cheaper too.
Good to hear from you.