Friday, May 13, 2005

Every hand was made productive

Source:"While Bush has been touting the inheritability of the private accounts he has proposed, Hubbard also conceded that not everyone would have an account that could be passed along to heirs. White House aides said about 15 percent of all retirees would likely not be able to pass along an inheritance — a figure that rises to 30 percent for those with lower lifetime wages.

Those retirees would have to spend their entire personal account to make sure they remained out of poverty in their older years, according to tentative administration projections."

I think the number of retirees that will be able to pass their money to their heirs will dramatically decrease if private accounts are implemented. Private accounts will provide an incentive for work. I think that will see more up time over a person's life because they are receiving the reward for their work. Now now matter how much you work or don't work you will retire at a set age and you will get the same reward no matter how much or hard you worked. When the move to private accounts is made, you will receive the reward in proportion to how hard or how much you worked.

When the retirement age was originally set, it was around the life expectancy of that time. The life expectancy has lengthened while the social security retirement age has stayed put. Moving to personal accounts will increase the amount of time people work, because the longer they work the more money they get. Whereas now the more you work, the less you get. This will be a personal decision made by each person based on their individual situation. Of course, lengthening the time people work might also extend life expectancy, but that will be an unexpected, unintended consequence.


No comments: