FARK.com: (1376526) New Social Security proposal would give each newborn a $2000 account and then $2000 each year until 18, allowing retirement at age 65 with $1 million dollars, which, adjusted for inflation should cover the seniors' dinner special

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		New Social Security proposal would give each newborn a $2000 account and then $2000 each year until 18, allowing retirement at age 65 with $1 million dollars, which, adjusted for inflation should cover the seniors' dinner special (seattletimes.nwsource.com)		206
		More: Interesting

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Doolspin		2005-02-27 02:15:44 PM

Good headling, to bad it prolly won't get green'd becuase of the reg. req.

Mike_3486		2005-02-27 02:16:41 PM

Hey Morans!
People under 18 don't vote. Don't do jack shiat for them.

/Pissed 19 year old waiting for $349 refund check

damageddude		2005-02-27 02:31:27 PM

Good headling, to bad it prolly won't get green'd becuase of the reg. req.

Went right through for me, no registration required

RyoShin		2005-02-27 02:33:12 PM

$2000 * 18 = $36000 != $1 Million

/DRTFA

Fnord		2005-02-27 02:35:17 PM

RyoShin: $2000 * 18 = $36000 != $1 Million

Compound interest.

Confabulat		2005-02-27 02:40:31 PM

Hey, let's give it a shot, what the hell.

Arnold T Pants		2005-02-27 02:44:56 PM

can someone paste the article?

Cinema Simulated		2005-02-27 02:48:24 PM

Same story:

No reg required

voodoochild		2005-02-27 02:51:29 PM

i'm no expert, but that sounds like a really good idea

Code_Archeologist		2005-02-27 02:53:01 PM

Just did the math on that.

Asuming 5% on the savings account anually and 2% inflation annually and only getting $2000 added to the account from age 1 to 18. At Age 65 a person would have a total of $585,000 in their account, but because of inflation that money would only be worth $160,000 in actuallized dollars from the time that they were born. Giving them about 8 years of very modest income.

D2T		2005-02-27 02:55:59 PM

Well, I don't think it's safe to assume annual interest. Isn't it at least monthly?

/has only a checking account, DRTFA, DDTFM (didn't do the farking math)

voodoochild		2005-02-27 03:03:42 PM

youre right code, the math dosent really add up.

at the age of 18 the total contributed by uncle sam will be $36,000. at 6% interest, compunded monthly for 47 years, the result will be about $599,000.00

Code_Archeologist		2005-02-27 03:04:24 PM

D2T I did annual interest just to make the math easier on me. And the difference between monthly or quarterly compounded interest vs. anual simple interest is only going to make a difference of 2-3% in the final total.

wyohome		2005-02-27 03:05:44 PM

What about the first 18 years? Didn't do the math.

voodoochild		2005-02-27 03:08:22 PM

hmm, i didnt adjust for inflation. my math skillz are pretty weak, but the total still comes in under $650,000.00

KnumbKnuts		2005-02-27 03:09:07 PM

Somebody cut and paste this article.

/refuses to reg for a rag like Twin Cities whatever press

Tr0mBoNe		2005-02-27 03:09:34 PM

whatever it is, it sounds good... people like getting 2000 a month... that's awesome.

But hey... i really don't care... im takin care of my retirement myself... with long term mutual funds and securities ventures. I want to live comfortably... that, and I'm canadian... so im practically set as it is.

Fookin		2005-02-27 03:14:40 PM

I'm an American who was born in Australia and during that time (1977 - not sure if it's still going on), all babies born had an account opened for them by the government. They would put a few pennies a day in that account and the child would be able to withdraw it after their 18th birthday. I withdrew mine after I graduated college and it helped with a down payment on my condo. Thanks Oz!

/dual-citizenship rocks

Jabber		2005-02-27 03:18:27 PM

It sounds like a good idea, but I have a feeling that it would make inflation go out of control. What would our economy be like if everyone was a millionaire?

wyohome		2005-02-27 03:21:03 PM

I didn't do all the math, but this will add up I think to over $1 million. The first $2000 will be worth $6876 by year 18, the year that most of you started your calculation. The second year will have grown to about $6500 by that time. If you start with those numbers (all 18 years) for the next 47 years the total will be much higher.

Code_Archeologist		2005-02-27 03:23:17 PM

voodoochild if you start the 6% interest from year one you end up getting about $1 million. But 1 million dollars in 65 years will be worth about $275,000 today. A repectable ammount... but using just that income and spending what would be the equivalent of $25,000 a year 65 years from now (or about $91,000 annually) and still compounding the interest the savings give out after about 14 years... or at age 79.

Arnold T Pants		2005-02-27 03:28:17 PM

Code_Archeologist

Are you saying that a million dollars won't be enough 65 years from now. That may be true, but it is a pointless argument. Under the current system, people born today shouldn't count on getting anything when they retire. A million dollars is much, much better than anything that has ever been proposed.

HaywoodJablonski		2005-02-27 03:29:01 PM

This has "Bad Idea" written all over it.

wyohome		2005-02-27 03:34:31 PM

To sum this up:
1) Some think they can project the future inflation rate, although it has changed from high teens during the Carter years, to very low now.
2) Some have their panties in a bundle because it's not right to have a lot of money for retirement.
3) This was a work of a former Bush offical, making it BAD.

jenlen		2005-02-27 03:36:46 PM

It sounds good to me... I do think the idea might be that this account would also get contributions from the owner over the years too (like 401K). If so, it could end up being a LOT of money.

Code_Archeologist		2005-02-27 03:40:13 PM

For that proposal to work so that retirees at age 65 have enough money to be able to live out their golden years they would have to put $5500 into the account annually so that the retiree would have a total of $2.75 million in their account at the age of retirement. This will be enough of a savings so that they have enough to live modestly on the interest of the savings account and still be gaining enough in interest to not lose their savings to inflation.

darkhorse23		2005-02-27 03:41:52 PM

it won't work. someone somewhere will fark it up.

damageddude		2005-02-27 03:43:36 PM

Pioneer Press is already farked up. Here;s the same article (more or less) from the Seattle Times:

Accounts could help Americans retire rich

By Kevin G. Hall

Knight Ridder Newspapers

WASHINGTON One new proposal emerging from the national debate on how to overhaul Social Security could make every American a millionaire at age 65.

Paul O'Neill, President Bush's first treasury secretary and a former chief executive officer of aluminum giant Alcoa, proposes having the government stake every American baby at birth to an investment savings account. By the time the child retires, the account would contain $1 million or more. The idea is drawing attention from an unusual coalition of lawmakers from both parties, liberals as well as conservatives.

This is how it would work:

Upon each child's birth, the government opens an investment savings account in his or her name and puts $2,000 into it. The government puts another $2,000 into the account every year until the child turns 18. The money then would be left to grow at a compounded rate until the individual reaches the retirement age of 65.

Assuming a 6 percent continuously compounding rate of return over 65 years, money in the account would exceed $1 million. The money would be put into a 20-year annuity paying about $82,000 a year.

Assuming 4 million births annually, O'Neill estimates it would cost about $144 billion to fund accounts for each year's babies for 18 years.

After 65 years, this would eliminate any need for Social Security since all Americans would retire rich. His plan doesn't address funding the system's current projected shortfalls.

"It's a way to think about creating financial security for the entire population and growing into it," O'Neill said. "It hastens the pace to convert the whole society into what I think is a hell of a lot more equitable system."

SurgeonDryHog		2005-02-27 03:46:10 PM

Here's a link to a compound interest calculator.

Assuming an interest rate of 5.5% per year, compounded monthly, the infant would have $66,929.50 at age 18 and $882,478.04 at age 65.

If you factor in inflation to estimate a real growth of around 3.5% per year, compounded monthly, the infant would have the equivalent of $53,948.60 at age 18 and $278,839.80 in real dollars at age 65.
I'm no economist though, so call me out if this is off base.

Code_Archeologist		2005-02-27 03:48:37 PM

Arnold T Pants If we are going to fix the system we should at least make sure that it is going to be able to support people for lifespans well into their 100's considering the progressively longer life spans that our elderly are experiencing.

Its no use to simply rebuild the system throw up our arms and say, well its good enough.

TheOnion		2005-02-27 03:53:50 PM

I wonder what the average life expectancy will be 65 years from now

jenlen		2005-02-27 03:58:58 PM

Code_Archeologist:

For that proposal to work so that retirees at age 65 have enough money to be able to live out their golden years they would have to put $5500 into the account annually so that the retiree would have a total of $2.75 million in their account at the age of retirement. This will be enough of a savings so that they have enough to live modestly on the interest of the savings account and still be gaining enough in interest to not lose their savings to inflation.

Well, assuming this replaced Social Security, it could work. Each year your SocSec gets 7.6% from you and 7.6% from your employer. Factor that in, along with Medicare tax and 401K and it would work out well. (For myself it worked out to like $8000 per month, your mileage may vary, void in Arkansas and Wyoming, etc etc)

HaywoodJablonski		2005-02-27 03:59:46 PM

So what happens to the uncollected funds? Do the dependents get it, or does it go back to the government?

DRTFA

jenlen		2005-02-27 04:01:53 PM

Gahhh, $8000 per year, LOL.

robmilmel		2005-02-27 04:05:18 PM

Just where does the gov't get all this money from to put in these accounts? Using the repub's argument that the retiree/worker ratio is farked, isn't this unfeasable?

Code_Archeologist		2005-02-27 04:13:14 PM

robmilmel Just where does the gov't get all this money from to put in these accounts? Using the repub's argument that the retiree/worker ratio is farked, isn't this unfeasable?

It would of course have to come from funds collected from workers through taxes. Since it pays out to people in the first 18 years of their life the worker to retiree ratio does not apply. Though a baby boom could bankrupt the system much as the baby boom of the 50's is threatening the system right now.

voodoochild		2005-02-27 04:18:51 PM

So what happens to the uncollected funds? Do the dependents get it, or does it go back to the government>

doubt it would be inheritable, it would probably go back into the system as a supplemental funding source. i would think.

robmilmel		2005-02-27 04:29:22 PM

I should have said: worker to child ratio. Same basic problem, reversed ages.

Arnold T Pants		2005-02-27 04:54:22 PM

Code_Archeologist:

If we are going to fix the system we should at least make sure that it is going to be able to support people for lifespans well into their 100's considering the progressively longer life spans that our elderly are experiencing.

At least make sure that it will support people well into their 100's? And what, at most support them into their 200's? SS was never meant to support people living this long, and it can't without seriously raising the retirement age.

theflyingdutchman		2005-02-27 05:39:07 PM

Code_Archeologist:

The problem is that you are assuming no other private investment and no assets (neglect liabilities here, I do not want to get into it).

For the most part people have some type of savings and at least some assets (investment properties, securities, etc.) The funding here would be enough to supplement existing accumulated wealth.

If we are going to fix the system we should at least make sure that it is going to be able to support people for lifespans well into their 100's considering the progressively longer life spans that our elderly are experiencing.

If useful lifespans do continue to increase at large enough rate changes would need to be made (people would work longer). If people achieve longer lifespans but have little utility, society will eventually start killing the old useless people (Now people would say that such talk is crazy, but no one is going to want to care for useless people especially when there are a lot more of them).

And you have to understand that social security was never meant to allow people and their families to live for the rest of their life. It was originally a retirement program (until 1939) that covered only the primary worker in a household. And that average life expectancy in 1935 for all people was 61.7 years according to NCHS statistics.

In 1900 according to information from death registration states, the average life expectancy was 47.3 years.

SurgeonDryHog		2005-02-27 05:48:17 PM

This is slightly off topic, but "average life expectancy" is something of a fallacy. Ancient Romans lived to be very old too. The steep increase in life expectancy over the years is due to a sharp decrease in infant death, not a sharp increase in how old people got before they died. I imagine that if one were to calculate average life expectancy of ancient Romans who lived past age 4, the "average life expectancy" would be much closer to our current standards. I sincerely doubt that our average life expectancy will continue to increase at anything like the rates we've seen in the last 100 years, and considering the U.S. obesity problem, it may even level off or go down. Men in particular are self-destructive by nature, and I do not think we will be living to 150 years of age by 2065.

TheOmni		2005-02-27 05:49:46 PM

Well, I'm opposed to it.

SurgeonDryHog		2005-02-27 05:58:41 PM

Me: The steep increase in life expectancy over the years is due to a sharp decrease in infant death, not a sharp increase in how old people got before they died

I am aware that this sentence makes no sense. I meant that our increased life expectancy is not due to a sharp increase in how old ADULTS get before they die.

Not being able to see into the future, I cannot be certain that we will not concoct ways to live to 150 by 2065 through abilities to grow organs in labs and whatnot. However, as theflyingdutchman noted in a very strange manner, the likelihood that our brains will extent their capabilities long beyond their current span is fairly low as I see it (since we know very, very little about the brain at this point in our history). Jack Kevorkian may be less of a pariah in the future than he is now if we continue to generate technology that can sustain life well beyond its current span without also being able to sustain brain functions.

damageddude		2005-02-27 06:08:57 PM

Here's a question: current social security takes care of somebody who becoems disabled and is forced to retire early (think of a 55 year old who has a stroke or heart attack). While that person may not get what he/she would've gotten per month if they had worked up till 65, they get a decent percentage. What happens if that person gets disabled early under this plan?

theflyingdutchman		2005-02-27 06:09:34 PM

SurgeonDryHog:

You realize that average life expectancies are gauged at different ages right? It is not just life expectancy at birth.

Usually you will see age at birth and 65 years (and 75 years is becoming quite popular are at which to gauge life expectancy). This would serve to correct for decreases in infant mortality rates.

Life will be measured in utility instead of age. It will have to be. No one like old people.

theflyingdutchman		2005-02-27 06:10:31 PM

...a quite popular age at which one gauges...

palad		2005-02-27 06:11:21 PM

The solution to the Social Security crunch is simple. Start randomly killing thousands of people aged 64.

SurgeonDryHog		2005-02-27 06:23:25 PM

theflyingdutchman: You realize that average life expectancies are gauged at different ages right?

I haven't seen that done very often, and I think most people don't realize that we're not becoming exponentially older. Many people think that 35 year-olds were considered old during ancient times, which they weren't. Averaging the life expectancy of people aged 75 is useful, I can see. Only if we already keep in mind what percentage of people get to be 75 though. As for your comment "Life will be measured in utility instead of age." I think you underestimate the power of religion and the emotional attachment of family.