look - i don't know what bush's plan will really look like so i'm not basing my thoughts on his plan.
despite tw's frequent cries that this is a ploy to make stockbrokers wealthy and HM's concerns that this will screw over the little people, i think individual accounts are a good idea.
1) since tw has brought up the idea of individual accounts making brokers (such as myself) wealthy i'll respond to that. most of us when talking it through have come to the conclusion that a solid ownership system would most likely take clients away from us, not add additional funds to our management. the government system isn't going to call XYZ broker and say "i'll take 1,000 sh of Worldcom" - by necessity, they would have their own licensed traders who will buy straight from the street without the markup of a middleman.
as people get comfortable with the new system, human nature would set in and they would realize that they can invest less $$ in their outside accounts because of the stability within their gov't personal acct.
2) i know that many, like HM, are concerned that people will make foolish decisions with their personal accounts and retire with nothing.
A) If there are only five different options to choose your balance from, and they are all designed by prospectus to be managed in a conservative nature (as are many of the TSP's already in use) then that should alleviate the concern about JOhnny PUblic putting all of his money into a speculative venture.
B) I put together some numbers in another thread that showed what $100/month over a forty year career looks like in a Conservative Equity fund and a conservative bond fund.
You can find it here .
C) I would not support anything that completely leaves people hanging in the wind. If at any point in time, a person who starts to withdraw from their personal account would receive a smaller benefit than those who didn't opt-in - then the gov't would have to make up the difference until the personal account returns to a position of strength. In short, it would be impossible to lose real benefits by choosing the personal accounts. That is more a peace of mind measure than anything because participation over a 20/30/40 year period in the individual account system will leave a large enough balance to ride smoothly through the down years.
3) Bruce's hot button is the hardest to deal with, because it is the most emotionally charged. Who gets what? Why does someone born a day later, get something different? There isn't a simple answer for the question. There will have to be a birthday cut off somewhere. i think 55 years old is too late. i think an incremental phase-in system from age 35-50 would be fair, with age 51 and above locked into the existing system with their expected benefits, unless they choose to opt-in. The most important thing to remember is that no one will lose any benefit that they have lived their life expecting.
4) How do we pay for it? well, i would think that my generation will probably pay the most for it. if our SS tax remains the same and roughly half goes into our personal account and the other half goes to the existing obligations, we have enough years to allow our personal accounts to compound and we can honor the promise made to those nearing retirement.