Hello Ebbie

"1) Ultimately, what would be the benefit in someone taking 2/3rds of his/her money nominally earmarked for Social Security and putting it into a 'personal' retirement account? Don't we already have the 401(k) and the various kinds of IRAs?"



1. The talk of the plan is nowhere near 2/3 of what's being paid in. The talk is only setting aside anywhere between 4-10% of what's being paid in but the important part is that now they have a sense of control over their own money by looking at what the best investments are available to them. The one thing that I don't like about the plan is that the Gov't will only allow us to put the money into preselected funds. But that's really no different than what we have with our retirement funds through work. Most plans have contracts with certain companies and only let you invest in the security vehicles of which that particular company has control of. This will also allow people that work for small businesses who have no access to a 401(k) or not enough disposable income to continuously contribute to an IRA to actually see first hand how compounding interest can and will work for them.


"2) There are people out there who will/would take advantage of the voluntary nature of the Personal Account and just not put it in, giving him or herself more money in the pocket. What happens at the end of the road when this person finds itself up the creek without funds?"

2. Do not give that person this particular choice. We, right now, have no choice in how much comes out of our checks for social security. We have no choice on where the money goes or to whom it goes to. All of those decisions are made for us and all of the time without taking into account how we feel about it. So in order for us not to be saddled with the responsibility of having to care for the grasshopper that didn't prepare for the winter, that particular portion of his/her social security contribution would automatically go into a government backed money market account. They would still see a greater rate of return than that of the social security "fund". But the best part is that they would be preparing for their retirement and not having to mooch off of the rest of us who took the time to research and plan for our golden years. But if they did ever decide to take control of their own lives and practice a little personal responsibility then they would have the freedom to move those funds around into something that would give them a greater return than what the gov't currently returns on their own securities. Hope this helps!