10 November 2008

Perhaps The First Act Of The 111th Congress?

Congress has already nationalized Fannie & Freddie, and bailed out all those banks with your tax money.

Aren't you excited that they're all set to absorb everybody's retirement accounts under the oversight of Social Security?

Democrats in the U.S. House have been conducting hearings on proposals to confiscate workers’ personal retirement accounts — including 401(k)s and IRAs — and convert them to accounts managed by the Social Security Administration.

Triggered by the financial crisis the past two months, the hearings reportedly were meant to stem losses incurred by many workers and retirees whose 401(k) and IRA balances have been shrinking rapidly.


This may be the case... however, it would be far better to just let the market and the 401(k)'s and IRA's recover on their own. Later in the article, it's noted that the accounts that would be formed are 'Guaranteed Retirement Accounts,' with a fixed three-percent annualized rate of return. Sure, that may be appealing now - but if all that retirement money were just left in the market, the market would probably recover more quickly. Then, in a year or three, all those 401(k)'s and IRA's would probably be back to making the ~5-10% that I think they were making before. If this GRA conversion/confiscation happens, I foresee a self-fulling prophecy: all the money being pulled out of the market will cause the market to crash - and then the people that made it happen will crow joyously at how they "saved everyone's retirements from the impending market collapse!"

Ugh.

A question to chew on... do you really want the same institutions that manage Social Security to be managing the bulk of your retirement fund?

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