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Liebman, MacGuineas and Samwick Social Security Plan
August 10th 04:17:07 PM
The Liebman, MacGuineas and Samwick Social Security Plan (shortened to the LMS plan) is the only plan that we're summing up that was created by Social Security wonks rather than politicians. Interestingly, its also the only plan that calls for mandatory PRAs for workers under 55. Those older than 55 would continue using the (unaltered) current system. The retirement age would be gradually raised by 11 years, which would lessen the impact of baby boomer retirement. There would also be a gradual decrease in benefits to a lower level, which would lead to solvency over a 75 year period.
These PRAs would be funded by 3% of taxable earnings. It would also increase the amount that could be taxed, raising it so that 90% of earnings would be taxed. A broad range of index funds would be offered which would achieve two goals: the investor would be able to choose whether to invest more heavily in stocks, treasury bonds, or corporate bonds, but would also be in a diversified, broadly indexed fund that would allow for financial security.
The mandatory participation in PA's is likely to be politically difficult. That being said, it would be easier, not to mention cheaper, to have a single plan, rather than the complicated tangle of bureaucracy that running the current system and Personal Accounts would necessitate.
Posted by Chris Rogers
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