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Look at it this way: If the individual is supposed to personally save for his own retirement, you'll have 20% or so that will not have any money when they retir

Look at it this way: If the individual is supposed to personally save for his own retirement, you'll have 20% or so that will not have any money when they retire. So your society, whatever it is, will have an extremely poor and old social class. These are the people who will also have the most problem with health care. When they get sick, the hospitals will not let them die - their medical care will be paid - by the government. Those people will turn to begging, alcohol and create a new class of homeless people. It's nice to want to put responsibility on the individual, but those 20% will make your society an unpleasant place to live in. Are you willing to deal with all this? Retirement has to be be made into an institution that runs on its own. Don't let people work their entire life, and then retire into hell.

dkokelley 18y ago
It's a matter of personal responsibility. Granted, there will be people who A: Don't save, B: Invest their savings foolishly, or C: Fall on hard times and burn through their savings, but guaranteeing a retirement income will push more people into the A and B categories. I believe that society should help people who fall into the C category, either through welfare programs or nonprofit organizations, but it hurts the rest of society when the people who acted responsibly are required to subsidize those who are in the A or B category. My argument is that it hurts society more to pay for the A and B people than it does to let the A and B people take the consequences of their actions. I argue that the more retirement is subsidized, the more people will rely on the subsidies. The only way to make retirement an institution that runs on its own is to make it the responsibility of the individual.
- drusenko 18y ago
  Why would it be so bad to force people to save a percentage of their income? If you don't, and guarantee benefits for the C category, then there's a perverse incentive: don't save any money your whole life, get bailed out at the end. In any case, those who choose to not save any money for retirement (whether willfully or ignorantly) are a huge burden on society, one that the rest of us who did save will have to pay for. In that sense, examine this solution: we each have a "personal retirement account", with rules set up in such a way that you can only invest the amount of money above what would provide for a minimally sufficient retirement in "riskier" investments, such as the stock market, and you are forced to save 10% of your earnings into this account, which would follow you from job to job. End result: Everybody has a personally accountable retirement benefit that they directly contributed to their whole life -- it's their money that they saved, and their money that they get. You cannot place the minimum amounts at risk, but you are free to choose how to invest anything above the minimum amounts as you wish. Given that we (eventually) eliminate all social security obligations, we can also completely remove that tax, and several others that currently pay for it.
  - dkokelley 18y ago
    I like the mandatory savings plan, provided it is offered as an alternative to social security. The thing with mandatory savings plans (such as 401k's, were they mandated) is that ultimately the money belongs to the individual, and you can effectively access the money as you like when you borrow against it. My point is that the people who are not likely to save on their own accord are the same ones who will effectively spend their savings through debt.
brc 18y ago
In Australia, we have something called 'Superannuation' which is a bit like a 401k plan, except it's mandatory. The employer must pay 9% of your total wages into the plan. You can also contribute extra if you like, and some employers offer terms matching your contributions. You are not allowed to draw down on your 'super' plan until you are at retirement age, and even then there are rules as to what you can take as a lump sum, and what is paid as an annuity. After a certain point (I'm not an expert) you actually get your money out tax free. You take this super plan with you from employer to employer as you move jobs, and you're free to transfer the money from one fund to the other. You have to choose the fund yourself, and you can even create your own fund to invest in whatever you like (there are rules on size and reporting, and you can't leverage your fund with debt). These rules enforce saving for the people who can't do it themselves, because they never see the money. They are a little annoying to people who can quite capably invest for themselves, but there is enough incentives and flexibility to cater for the self-directed investor. It was actually the unions who pushed for this system as they could see the folly of the employer-funded pension scheme. Plus they formed their own 'funds' which their members use - the management fees probably brings in more income for the union than the union dues do. In addition to super funds, Australia has a universal health care system which you pay with a 2.5% tax on your income. This system covers everyone who is a citizen,whether they are working or not. You may also opt for private healthcover, and there are tax incentives for people on higher incomes to do so (both for the employer and the employee). With this system there are no co-payments or anything like that : just turn up at either the public or private hospital, and get treated. Elective surgery (knee reconstructions, etc) goes onto a waiting list for public, private hospitals you get it done sooner. The system has it's flaws, but for the most part it works, and you don't get companies with massive pension and healthcare liabilities. It also means that employees are more confident to move between jobs knowing that their pension and healthcare are not tied to a particular employer. Finally, and most relevant for this discussion, it allows startups to run much leaner because they don't have to worry about pension and healthcare for their employees. And, to answer the question, on average, an Australian worker pays less tax (local, state, federal) on their income than the equivalent worker in the USA. So it's not about paying less tax and choosing : it's about building a national system that has lower running costs but still allows for choice where the individual can afford it.

dkokelley 18y ago

It's a matter of personal responsibility. Granted, there will be people who A: Don't save, B: Invest their savings foolishly, or C: Fall on hard times and burn through their savings, but guaranteeing a retirement income will push more people into the A and B categories. I believe that society should help people who fall into the C category, either through welfare programs or nonprofit organizations, but it hurts the rest of society when the people who acted responsibly are required to subsidize those who are in the A or B category. My argument is that it hurts society more to pay for the A and B people than it does to let the A and B people take the consequences of their actions. I argue that the more retirement is subsidized, the more people will rely on the subsidies. The only way to make retirement an institution that runs on its own is to make it the responsibility of the individual.

drusenko 18y ago
Why would it be so bad to force people to save a percentage of their income? If you don't, and guarantee benefits for the C category, then there's a perverse incentive: don't save any money your whole life, get bailed out at the end. In any case, those who choose to not save any money for retirement (whether willfully or ignorantly) are a huge burden on society, one that the rest of us who did save will have to pay for. In that sense, examine this solution: we each have a "personal retirement account", with rules set up in such a way that you can only invest the amount of money above what would provide for a minimally sufficient retirement in "riskier" investments, such as the stock market, and you are forced to save 10% of your earnings into this account, which would follow you from job to job. End result: Everybody has a personally accountable retirement benefit that they directly contributed to their whole life -- it's their money that they saved, and their money that they get. You cannot place the minimum amounts at risk, but you are free to choose how to invest anything above the minimum amounts as you wish. Given that we (eventually) eliminate all social security obligations, we can also completely remove that tax, and several others that currently pay for it.
- dkokelley 18y ago
  I like the mandatory savings plan, provided it is offered as an alternative to social security. The thing with mandatory savings plans (such as 401k's, were they mandated) is that ultimately the money belongs to the individual, and you can effectively access the money as you like when you borrow against it. My point is that the people who are not likely to save on their own accord are the same ones who will effectively spend their savings through debt.

brc 18y ago

In Australia, we have something called 'Superannuation' which is a bit like a 401k plan, except it's mandatory. The employer must pay 9% of your total wages into the plan. You can also contribute extra if you like, and some employers offer terms matching your contributions. You are not allowed to draw down on your 'super' plan until you are at retirement age, and even then there are rules as to what you can take as a lump sum, and what is paid as an annuity. After a certain point (I'm not an expert) you actually get your money out tax free. You take this super plan with you from employer to employer as you move jobs, and you're free to transfer the money from one fund to the other. You have to choose the fund yourself, and you can even create your own fund to invest in whatever you like (there are rules on size and reporting, and you can't leverage your fund with debt). These rules enforce saving for the people who can't do it themselves, because they never see the money. They are a little annoying to people who can quite capably invest for themselves, but there is enough incentives and flexibility to cater for the self-directed investor. It was actually the unions who pushed for this system as they could see the folly of the employer-funded pension scheme. Plus they formed their own 'funds' which their members use - the management fees probably brings in more income for the union than the union dues do. In addition to super funds, Australia has a universal health care system which you pay with a 2.5% tax on your income. This system covers everyone who is a citizen,whether they are working or not. You may also opt for private healthcover, and there are tax incentives for people on higher incomes to do so (both for the employer and the employee). With this system there are no co-payments or anything like that : just turn up at either the public or private hospital, and get treated. Elective surgery (knee reconstructions, etc) goes onto a waiting list for public, private hospitals you get it done sooner. The system has it's flaws, but for the most part it works, and you don't get companies with massive pension and healthcare liabilities. It also means that employees are more confident to move between jobs knowing that their pension and healthcare are not tied to a particular employer. Finally, and most relevant for this discussion, it allows startups to run much leaner because they don't have to worry about pension and healthcare for their employees. And, to answer the question, on average, an Australian worker pays less tax (local, state, federal) on their income than the equivalent worker in the USA. So it's not about paying less tax and choosing : it's about building a national system that has lower running costs but still allows for choice where the individual can afford it.