I've been thinking about the recent scheme by the Republicans and would like to offer a couple of thoughts in hopes that under a Democratic President we will not let such a swindle threaten the American worker again.
My understanding of Bush's "privatizing" scheme was that he would allow a wage earner to put $1,000 a year into a tax deductible account that the employee could manage himself. The average American worker has no doubt impressed our leader with his keen stock market selection ability.
But let us assume that a young (30 year old) working hero could do no better than the DJIA can under a Republican president. As we have seen for the past seven years the Dow Jones Industrial Average has (questionably) managed a 3% annual return.
If we let our 30 year old employee put in $1,000 a year for 35 years, then we would assume he would retire into the lap of (republican) luxury. Such may not be the case. $1,000 a year compounded at 3% would amount to $62,276 in 35 years at age 65.
Where would our now aged citizen place his retirement funds to bring the most return for his retirement ? This morning I saw a web site hawking that very idea :
"...For a more diversified dividend approach, check out Vanguard High
Dividend Yield (VYM; 2.8 percent yield). ..."
http://tinyurl.com/ys586y (that other url didn't work -- sparky)
That's right ! He can then look forward to receiving 2.8% of his fortune to keep him for the rest of his life. That comes to $1,743 a year ! Do you think any frugal American would have trouble surviving on that ? Bush and his fellow pirates on Wall Street don't seem to think so.
Seriously, folks. That Republican scheme is a sick laugh. Let's say that Bush allowed our 30 year old to double his contribution to $2,000. He would then have $3,486 a year retirement. Let's again double the suggested contribution so our young worker puts in $4,000 a year. He would still be lucky to wind up with an income of $7,000. How much Social Security does an average retiree with 35 years of contributions get ? I'm not sure, but I'd guess well over $10,000.
But what about the down side ? What if our investor lost his contributions ? I suppose Bush would suggest offering him lessons in dumpster diving.
You know, many of us disagree about many of the finer points of politics and government. But I don't think any Democrats would force a plan like that on the American worker. Let us work together for the next year to put such a large majority in Congress that we won't have to fear these Big Business solutions for the rest of this century.
Sparky