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Unformatted text preview: President Bush's Ideas to Strenthen Social Security
State of the Union 2005 04:11 President Bush pledged to work with congress to find the most effective combination of reforms Believes we must move ahead with reform, our children's retirement security is more important that partisan politics Bush's principles to guide reform: Must make SS permanently sound Must not jeopardize economic strength by raising payroll taxes o Increasing payroll taxes is a "bandaid," not a permanent solution Must ensure lower income Americans get the help they need to have dignity and peace of mind in retirement Guarantee no change for anyone now retired or nearing retirement o Ensure people over 55 that nothing will change Take care that any changes in the system are gradual so that younger workers have time to prepare for the future Privatize Social Seciruty accounts Personal Retirement Accounts--Privitzation of Social Security Bush's plan o Personal retirement accounts would start gradually o Yearly contribution limits would be raised over time, eventually permitting all workers to set aside 4% of their payroll taxes in their accounts Opportunity for a "nest egg" for retirement that the government can't take away o Provide ownership and control o Can be passed on to children and grandchildren o Make social security better for younger worksersgives yonger workers the chance to receive a higher rate of return from sound, longterm investing of a portion of their payroll taxes o Voluntary system At any time a worker can "opt in" making a one time election to put a portion of payroll taxes into a PRA Able to choose from several funds Able to adjust investment allocations periodically Would not be allowed to move back and forth between PRA and traditional system PRA similar to Federal Employee Retirement Program known as Thrift Savings Plan (TSP) o Contributions collected w/records by a central administrator PRA invested in mix of conservative bonds and stock funds Protected from sudden market swings on the eve of retirement Would not be prone to Wall Street fees o Made possible by economies of scale of a centralized administrative structure as well as limiting investment options to a small number of funds PRA's would not be accessible prior to retirment Not emptied all at once, paid out over time as an addition to traditional SS benefits PRA would be phased in Fiscally responsible o Every dollar borrowed by the Fed fully offset by an increase in savings represented by the accounts themselves Does not add to the total costs that SS faces Thrift Savings Plan Voluntary retirement savings plan offered to Fed employees including congress Basis points--costs of administration--basis points = 60 cents per $1,000 of account balance TSP administered by the Federal Retirement Thrift Investment Board 04:11 04:11 ...
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This note was uploaded on 09/22/2009 for the course PAM 2300 taught by Professor Avery,r. during the Fall '06 term at Cornell University (Engineering School).
- Fall '06