Phil Hauck's TEC Blog

Sunday, February 13, 2011

Social Security: An 'Auto IRA' Solution

Michael Kiley, CEO of PAi, DePere, an administrator of 401(k) and payroll plans, has spent much of the last year and a half in Washington, DC, working to create a better approach to funding social security. In a recent presentation to St. Norbert's CEO Breakfast & Strategy series, he noted that we have a national Bill of Rights, but not an accompanying Bill of Responsibilities.
The Social Security Consequence: At least 60%, and perhaps 90%, are on track to not have enough money to retire on (even estimated as low as 70% of final annual income). And THAT's assuming that the current funding levels stay the same, which they probably can't (at least, shouldn't). National figures indicate the AVERAGE retiree now has $25,000 in savings to make up the difference over his/her LIFETIME between the Social Security payment and the dollars needed to live.
There doesn't seem to be an understanding of the urgency of this problem by Congress, nor an understanding by those within a decade or so of retiring, nor by the younger generation, he says. How much will those who have saved have to pay out from those savings to take care of those who didn't?
Alert: He's helped developed an Auto(matic) IRA, which may see the light of day. It will automatically deduct a Congressionally-specified amount from each paycheck to go into the individual's OWN IRA ... untouchable by Congress. Thus, over a lifetime, the necessary dollars will build. Sounds like the foundation of a solution.

1 comment:

  1. Phil, As a recent retiree, I can only caution everyone to save, save, save! Unless people want to live under a rock, Social Security just doesn't cut it... I wonder about the 40 somethings spending too much, or struggling to make ends meet after losing jobs. A mandatory IRA sounds like the right idea at a time that it's badly needed! Take Care, Dave