RE: Second shot Response to PANELIST: Robert D. Reischauer

[Javier Jimenez <jimenj@yahoo.com>]

>>>>>> PANELIST: Robert D. Reischauer wrote:
1. Would personal accounts place an unacceptable amount of risk on some individuals who are ill prepared to bear this risk?
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Workers will not become stock pikers, they would give their money to professional money managers to invest in mutual fund like investments.  For people that are "ill prepared to bear this risk" bond funds, which are available in a large spectrum of risk levels, should be their investment choice until they learn and are able to accept "higher risk" levels.  Education is the key in this solution, so people like yourself could direct workers to these low risk alternative.

>>>>>> PANELIST: Robert D. Reischauer wrote:
2. What would happen to the social assistance now provided by Social Security under a system of personal accounts? After all Social Security is the most effective and least controversial anti poverty program that the nation has. It helps boost the retirement incomes of those who had low earnings during their working years, survivors, spouses with limited attachment to the labor force, and divorcees.
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I don't know about least controversial.  Most effective, I doubt it because countless of individuals have been able to accumulate larger retirement and disability benefits with private pensions and personal retirement account (401Ks and IRAs).  Death benefits are cheap when one looks at private life insurance (for example, at 29 years old, a 20 year term life policy with a $300K death benefit costs me $400/year.  I am considered high risk because I engage in dangerous activities such as sky diving, hang gliding, and scuba diving.  Without those my premium would be $268).

>>>>>> PANELIST: Robert D. Reischauer wrote:
3. Would administrative costs eat up a large portion of the returns in a system of personal accounts? Could such a system avoid excessive complexity?
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Bogus! See comment above. Moreover, I invest in several different mutual funds, all are no-load and the management fees are anywhere between .5% to 1.25% yearly (see the Janus group of funds prospectus for the actual figures on the different categories of investment vehicles).  In addition, my IRA custodian fees are $20/year for the account and is now waived since my account balances are over a set limit.  Limits range from $10,000 - $25,000.

>>>>>> PANELIST: Robert D. Reischauer wrote:
4. And would such a system be politically sustainable?
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Absolutely! Political power will be taken away from retirement issues, and voters will not be dependent on the whim and promises of politicians.  Thus, the total depolitization of benefits, and the re-marriage of hard work and reward will enhance personal freedom and security during retirement away from government dependence.

>>>>>> PANELIST: Robert D. Reischauer wrote:
I think the answers to these questions make personal accounts an inappropriate way to provide American workers with a secure source of basic retirement income upon which other types of retirement income-like pensions and personal saving-should be built.
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Wrong!  I have refuted every point made with common-sense approaches that will re-instill the freedom and security to all workers during their time of need away from government and political dependence.

>>>>>> PANELIST: Robert D. Reischauer wrote:
Worker already have ample opportunity to invest for their retirement through tax advantaged vehicles such as 401(k) plans and
IRAs that offer individual control. Everyone should take advantage of these saving instrumnents. 
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Wrong again!  Not all workers have adequate coverage under this programs.  The limits on IRAs, $2000/year, are too low compared to 12.4% to SS; or, are you saying that the government should be able to provide adequate retirement income with $2000.00 a year of SS contributions.  Moreover 401k plans are only available to a percentage of workers today. And, a number of disadvantages exist, I'll name a few: a) Some companies provide matching funds while others don't; b) some employees in some companies that are considered highly compensated have their contributions limited to 2%, while at other companies, an employee with equivalent income may be capped higher or not capped at all.

To conclude, Privatization will provide greater freedom and security for all workers, rich and poor, away from government dependence.  It will depolitizize the issue of retirement safety.  And will provide out children with a bright future free from the burden of debt and high taxes forecasted to support us in out retirment and the debt we accumulate providing for our parents and ourselves.