What scam when the early contributors were only mandated 1% of their gross with an employee match? 1% of a thousand dollars is one dollar? How is that a scam if all legal? You can have your opinion, not your facts.
What is full inheritance for your average Joe who does not plan for retirement?
No negatives there. Government mandates.
Your suggestion is nothing new. A flavor of potential problems includes, but is not limited to......
Keep in mind old-age SS was designed as a partial, not a full, retirement plan
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What problems could be predicted by alternative scenarios where government mandates money be taken from employees check and put into 401K programs?
..government mandate diverting a portion of employee paychecks into individual 401(k)-style (defined-contribution) accounts—whether as a partial or full alternative to Social Security—would face several predictable structural, financial, and political problems. These draw from the existing U.S. 401(k)/IRA system’s track record, transition analyses of Social Security reform proposals, and outcomes in countries that have tried versions of mandatory private accounts (notably Chile’s AFP system and Australia’s superannuation).
Transition and Financing Costs
Social Security is largely pay-as-you-go: current payroll taxes fund current retirees. Diverting those taxes (or an equivalent amount) into private accounts creates an immediate revenue shortfall for existing and near-term benefits. Closing it requires some combination of higher taxes on workers, increased government borrowing/debt, or steeper benefit cuts for transition generations. Past U.S. proposals and analyses (e.g., from the SSA actuaries, CBO, and academic work) estimated multi-trillion-dollar transition costs over decades. Younger workers can end up funding both their own future accounts and current retirees, creating a “double burden” that is politically and economically difficult.
Market Risk, Volatility, and Inadequate Returns.....
Fees, Administrative Costs, and Leakage.......
Coverage, Contribution Adequacy, and Behavioral Problems
Many workers (especially low-wage, part-time, or those with career interruptions) cannot easily sustain high mandatory contribution rates without reducing current living standards. Chile’s original 10% employee-only contribution proved too low for adequate pensions for large numbers of people; the government has had to provide substantial minimum-pension top-ups...... |
If they collect that amount of money into the General Fund what makes you think they will forfeit that amount so you can keep your 6.2%? That is 62 dollars on a thousand? At 1% it was 1 dollar on a thousand and you wrote it was a scam from the beginning? One dollar on a thousand?
It is a rosy scenario that will probably fall apart and leave many elderly or otherwise unable to work, destitute and you offer no safety net for them. Not all boomers are hot-tub rich with oodles of property and dying off at 7000 a day, which would mean a huge wealth transfer to survivors since they cannot take it all with them. If boomers own all the property, then they also pay the most property taxes. The more property owned, the higher the amount of property taxes. Property taxes on 1,000 acres of land are much higher than on 40 acres.
The top 10% of boomers hold the large majority of that generation’s wealth; lower-education subgroups often fare no better (or worse) than earlier cohorts at the same ages.Boldin
This asset concentration (homes, stocks, retirement accounts) is partly a natural result of longer accumulation time, rising asset prices, and demographics. It underpins arguments that the average older household is far wealthier than the average younger one today.
Social Security remains critical for many seniors. Official and tax-linked data (preferred over pure self-reports, which can understate other income sources) indicate that roughly 12–15% of those 65+ rely on it for 90%+ of income, with higher figures in surveys and advocacy data (sometimes 25–40%+ for “sole” or majority reliance). For the lowest income quintile it can account for 80%+ of income; for the highest, far less. Aggregate reliance is often cited around 30% of income for those 65+. Average retired-worker benefits are roughly $2,000/month. |
