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How is this different from SS? It technically a 2.5 tax in addition to 6.75%(or close) to SS, for self employed people, it would be 5% tax on top of 13% tax rate. I have a self employed kid, this would be 18% tax on top of everything else they have to play.
SS is an insurance plan, with a weighted return favoring lower earners. This is a pension plan where the contributions basically become an annuity.
Generations often start off slow in wealth building. Seems it is somewhat, if not completely the nature of the beast. This generation's - Millenial - slow start is exacerbated by the 2008 meltdown, slow job growth bounce back, particularly of quality jobs, misfit of skills to quality employment, the immigration mess and outlandish student debt. I say outlandish because a lot of the student debt is not smart debt; wrong education, lifestyle enhanced (whatever happened to the poor student).
Not a great hand dealt, but not insurmountable. Solution is simple but not easy. Roll up the shirt sleeves and get to work. Work meaning work, paying down debt, retooling, modest living. The answer is in the mirror, every day. I do not think yet another government controlled, instituted, behavior controlling program is the answer.
...which is why Dr Ghilarducci included a provision for a tax credit as part of her comprehensive pension reform proposal:
The Guaranteed Retirement Account (GRA) proposal mandates a contribution of five percent of earnings for all workers – evenly divided between an employer contribution of 2.5 percent and a participant contribution of 2.5 percent. Under the GRA the federal government through the Social Security Administration would administer the plan and the Thrift Savings Plan would manage the pooled assets. Contributions to Guaranteed Retirement Accounts would be deducted from payroll. The 2.5 percent employee contributions would be offset by a $600 refundable tax credit provided to all participants.
I was all set to say she should go back to making chocolates but she has successfully bought me off!
Generations often start off slow in wealth building. Seems it is somewhat, if not completely the nature of the beast. This generation's - Millenial - slow start is exacerbated by the 2008 meltdown, slow job growth bounce back, particularly of quality jobs, misfit of skills to quality employment, the immigration mess and outlandish student debt. I say outlandish because a lot of the student debt is not smart debt; wrong education, lifestyle enhanced (whatever happened to the poor student).
Not a great hand dealt, but not insurmountable. Solution is simple but not easy. Roll up the shirt sleeves and get to work. Work meaning work, paying down debt, retooling, modest living. The answer is in the mirror, every day. I do not think yet another government controlled, instituted, behavior controlling program is the answer.
I hear about the "lifestyle debt" of students and maybe it's because I'm a little older, but I never really saw that in college five to ten years ago.Most everyone I knew drove average, older cars. Not junkers, but nothing fancy. I don't know anyone who was living lavishly, even if someone was, it was probably off mommy and daddy's dime, not through a loan. I'm sure you'll find a few idiots doing what you say, but the number of those folks is by no means significant enough to make a generalization.
I was in the bad off boat a couple years back and I worked much, much harder at my low paying call center jobs than I do now. It wasn't about "rolling up my sleeves" and getting to work - I was working. I had a decent major in college (economics), internship related to major (local brokerage), and had worked regular jobs, and still fell flat on my face.
I don't think more government is the answer either, but simple bootstrapping doesn't really do justice to the problems Millenials face.
How is this different from SS? It technically a 2.5 tax in addition to 6.75%(or close) to SS, for self employed people, it would be 5% tax on top of 13% tax rate. I have a self employed kid, this would be 18% tax on top of everything else they have to play.
With the Ghirarducci plan, the additional 5% would go into a private account with your name on it, earning interest. It is just a mandatory savings or investment account.
With Social Security, your contribution goes into a pool and when you retire, what you get back is determined by a complex formula that redistributes income in favor of those who paid in less.
With the Ghirarducci plan, the additional 5% would go into a private account with your name on it, earning interest. It is just a mandatory savings or investment account.
With Social Security, your contribution goes into a pool and when you retire, what you get back is determined by a complex formula that redistributes income in favor of those who paid in less.
The two systems are really quite different.
The trick is what age do they let you take the private pension out. 55 if not then it could be worthless, because SS kicks in at 62, unless they are raising this age.
The trick is what age do they let you take the private pension out. 55 if not then it could be worthless, because SS kicks in at 62, unless they are raising this age.
The other problem is if you die only half of the balance goes to your estate. The balance stays in the pool for others.
The other problem is if you die only half of the balance goes to your estate. The balance stays in the pool for others.
But the other half was money your employer matched, not money you contributed, correct?
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