Independent
Thinks s/he gets paid by the post
- Joined
- Oct 28, 2006
- Messages
- 4,629
I'm not sure how this would work out in practice, especially for people at the lowest income levels. Is minimum wage minus "same absolute $$" greater than poverty level, i.e. would someone working full time at minimum wage have enough left to live on in the present, after contributing toward retirement income for the future?
I also wonder how demographics would affect this idea. We've probably all heard about the difficulties expected to arise with SS, at least partly because the soon-to-retire baby boomers are so much more numerous than the generation following us. I just heard recently on the radio that there is a "baby boomlet" expected as the children of the boomers are now reaching childbearing age themselves, so the demographic issue may arise again 70 years from now when all of the boomers' grandchildren are retiring. I've also heard (but it was quite some time ago, so it may not be what current population projections are saying) that by mid 21st century, the U.S. population will level off and then start to decrease, which would make the demographic of a smaller generation coming after a larger one more or less permanent. Would a minimum retirement benefit funded by equal absolute dollar contributions from all workers be financially sound under those circumstances?
I also wonder if the $800 amount was a serious suggestion for the income to be provided by these benefits. That's less than $10K a year. I doubt that it's enough for rent, food and utilities, even sharing living space. Never mind medical care. To me, "retirement security for all" means that nobody, including minimum wage earners, works their whole life only to wind up old and destitute. A benefit of $800 a month doesn't meet that standard, IMO. Or was that just a number pulled out of the air?
I respect the effort it took to pull all those scattered comments together and try to make sense of them. I'll try to respond from my perspective.
When I said "paygo" I intended to mean "pretty much like SS, just scaled back benefits". So I envisioned a payroll tax, but everyone gets the same monthly benefit. The benefit would be lower than the current average benefit, so the payroll tax rate could be a little lower. I think Sam may have had a different view on the taxes.
Low income people could "afford" that tax to about the same extent they can afford the current payroll tax. Note that the current Earned Income Tax Credit is essentially a payroll tax rebate for some workers, I wouldn't change that.
IMO, demographics impact all retirement income schemes, it's just more obvious with a public paygo system than with others. (One reason I don't see the gain from mandatory savings plans.) If you index the retirement age to longevity, then the affordability is driven by birth rates. As long as we don't go back to the "3 children per couple" of the WWII generation, we won't get back to their favorable dependency ratio. BUT, it doesn't get worse either, if future generations stay with 2 children per couple.
The $800 was a guess, but something in that range is right. The current average SS benefit is around $1,150, and I assume that means about half the people get less. There's a limit on how much I'm willing to compel people to do. I'm okay with enough so you can live indoors and eat, but I don't know if I'm willing to force taxpayers (or savers, for that matter) to provide a lot more. Note that I would give everyone the choice of how much saving they want to do so they can have more than a basic lifestyle.