And Now for Something Completely the Same. . .

In today’s WSJ Martin Feldstein,  respected, by some economists, and former member of the Reagan administration proposes a somewhat unique fix to Social Security.  Feldstein supports private accounts, but with a difference.  In his proposal, employees would voluntarily commit an additional 3% of pay to send to the SS administration who would invest the funds in a broad based mutual fund.  The result, according to Feldstein would more than double SS retirement income.

Here’s how it would work.

1. Employees would be enrolled in the program, but could opt out.
2. Assuming a 5.5% real rate of return, at age 67 employees would get about $22,000 in an annual payout.
3. Employees could get their money out before retirement, but probably would not.

Now the really remarkable thing here is not the plan, which is pretty reasonable, but Mr. Feldstein’s apparent lack of knowledge that such a plan already exists.  It is called a 401k plan (or an IRA).  All that has to be done is to raise the contributions limits, if necessary and require automatic enrollment.

http://online.wsj.com/article/SB10001424052748704330404576291452454935100.html?mod=rss_opinion_main

As Howard Cosell used to say, “he has an intuitive grasp of the obvious”.