Presonal Retirement Accounts Benefit Low-Paid Workers Most

[Carolyn Cox <CarolynSCox@csi.com>]

As has been pointed out, public policy now forces every worker to pay 12.4% of her/his productive labor to a program that guarantees a negative return on that money to a 21 year-old entering the workforce today.  Further it returns only between and 1%-2% return for middle aged workers.

Pay-as-you-go Social Security is neither a good insurance program nor a good retirement program.  More affluent workers realize Social Security is a bad deal and they supplement their retirement income with IRA's and 401(k)'s.  But the low paid worker may not have the extra $100-$200 per month to do that.  It is disgraceful that pay-as-you-go Social Security traps our most vulnerable citizens in the lowest yielding "retirement" program.  It is the low paid worker who MOST NEEDS a market rate of return on her/his money.

In the private sector, any worker who saves 12.4% of gross pay throughout her/his working lifetime would have plenty of money to purchase both disability and life insurance and with the balance provide a retirement somewhere between twice to three times what the worker gets from current Social Security.

There is not a one of you in TIAA-CREF or any other retirement program for public employees that is invested in the private sector that would willingly trade your retirement program for Social Security.  Why don't you want to open up personal wealth creation for EVERY working American?