Media in Trouble: All the news thats UNfit to print!: Save US Shaw!

"The information of the people at large can alone make them safe, as they are the sole depositary of our political and religious freedom." --Thomas Jefferson 1810

Friday, February 11, 2005

Save US Shaw!

Congressman Clay Shaw (R) Fl. says he's got a plan here are the details:
A former chairman of the Social Security subcommittee, Shaw said his legislation would make every worker eligible for a personal Social Security account, funded by the government at up to $1,000 a year. Individuals would make their own investment decisions from options of varying risk.

At retirement, a worker would automatically receive 5 percent of the funds in the account. The retiree could then choose either a monthly benefit based on the amount remaining in the private account or the traditional Social Security benefit promised under current law.

Let's stop it there. You automatically get 5% of the funds in your personal account. GREAT!

Now you get to choose either the remainder of your Private account or what you get with SS. No change in SS.

So that means since you have already lost 5% of your private account, in order for you to have gained some ground here you need to make over 5
% plus hope that those $1000 gets a move on and grows faster than you regular SS.

Let's do the math, if you make the top of the cieling ($90,000) for contributing to Social Security and multiply that by the 12% you and your employer are collectively putting in thats $10,800 a year.

Shaw's plan gives you $1,000 a year which is only 10% of what you put into SS.

Say you started working at 20 years old and work until your 67 thats $47,000 total contribution per citizen's lifetime by the gment. The Heritage Foundation Calculator assumes only 4.87% /year (thats half in stocks half in annuity).

Let us just see how much it will cost (because the problem with any plan for Social Security has to stand up to the "does it solve the "problem" test)

hmm 47k times say 200 million people who are elligible that's: hmmm
My calculator says $9.4 TRILLION

Well its fuzzy math but waith there's more:

Retirees who choose the traditional benefit would lose the money remaining in their private account. Those funds would revert to the government's Social Security trust fund.

Shaw said his plan would cost the Treasury $3.4 trillion over 30 years, but that gradually, the amount of money credited to the Social Security trust fund would more than offset the cost of funding the personal accounts. At the end of 75 years, he said, the program would have a $4.6 trillion surplus.

Well a surplus! That is assuming everyone makes more than 5% return (atrios says sadly no), has more money in their private account than in their social security (highly unlikely since you have to make 10 times more money in your private account to match the contribution to your Social Security, and lets just say that indeed you do that well

well then you wont be worrying too much about your Social Security check anyway because you my friend are a SUPER DUPER INVESTOR!

Better than that character Michael Douglas played in that movie thats for sure...