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Monday, February 28, 2005

An excellent idea. 
Former treasury secretary Paul O'Neill wants to render Social Security obsolete, by allowing every American as yet unborn to retire a millionaire without Social Security:
1.) The Federal Government should open a tax deferred savings account for every child on the day of his or her birth, and deposit $2,000.

2.) Every year thereafter, the the Federal government will deposit an additional $2,000 into the account, until the child turns 18 years old.

3.) Assuming a 6 percent annual rate of return, that money will exceed 1 million dollars at age 65, and will be enough to fund an 82,000 dollar per year annuity for every retiree.

Nice bit of sales. And yes, we should do something very similar. But the way this is presented is a bit disingenuous, because the article makes no mention of the effects of inflation.

It would be great if IRA rules were liberalized to allow parents to a couple of grand aside for their children from birth.

Of course, Democrats will argue that any such provision will amount to a huge tax giveaway to the rich and will oppose it, tooth and nail, just as they opposed increasing IRA limits for years (Clinton vetoed a bill to do just that), and opposed the 401(k) (arguing that they would undercut traditional pensions). Which tells you a bit about where they're coming from.


Splash, out

Jason

Comments:
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