Nobel laureate Richard Thaler’s controversial plan – a 401(k) to get more Social Security?
Nobel laureate Richard Thaler is a behavioral economist and professor at the University of Chicago Booth School of Business. He notes that those saving for retirement face two problems when it comes to managing their money: how to effectively save for their golden years, and then how to make that pot of money last for the rest of their lives. Higher debt and carrying a mortgage in retirement is something new to those entering retirement today.
Thaler’s plan would let one take a portion of 401(k) benefits (up to $250,000) and send it to the Social Security Administration, and the return would be only the indexed annuity that’s guaranteed by the federal government at a fair actuarial value. Thaler explains the system already adjusts benefits for one’s age for each year of work and the income one takes in while receiving benefits.
Not all agree with this idea. Boston University economics professor Laurence Kotlikoff said he thinks Thaler’s plan is “dicey”. Other experts on Social Security worry how the scheme would impact the future of a program headed for insolvency by reminding all that less than 80% of benefits can be paid starting in 2034 without congressional action before then. Read the pros and cons in the full article here.
The Association of Mature American Citizens (AMAC) believes Social Security must be preserved and modernized. This can be achieved by making modest changes in cost of living adjustments and the retirement age, with no additional taxes on workers. AMAC advocates for a bipartisan compromise, “The Social Security Guarantee Act,” taking selected portions of bills introduced by former Rep. Johnson (R-TX) and Rep. Larson (D-CT) and merging them with the Association’s own well researched ideas. One component is Social Security PLUS, a new yet voluntary early retirement plan that would allow all earners to have more income available at retirement. This component is intended to appeal especially to younger workers. AMAC is resolute in its mission that Social Security be preserved and modernized and has gotten the attention of lawmakers in DC, meeting with a great many congressional offices and their legislative staffs over the past several years. Read AMAC’s plan here.