In a "manner of speaking"....that's the "plan" to use the word loosely, that's on the table now.....So why not increase business in the defined contribution plan industry, a la "privatizing" Social Security?After all, privatizing Social Security means that a portion of the required 12.4% of gross income (up to the taxable cap) becomes a "defined contribution," but this time it's defined and required by the government and not by the discretion of the individual employee. I believe this provides plenty of incentive for the industry to encourage the shift to privatization.Trust me here....LOL....The financial industry needs NO incentives here to "take your SSI money"....;o)The idea, as I understand it...is to force everyone into a "semi-private" scheme, with govn'mt selected "funds" on a DC contribution basis.....then @ NRA force them to "buy an annuity" with those funds....that's a DB type "distribution" of benefits but shifted from the govn'mt tax coffers to the insurance industry.......If there is any money left in the fund, after the forced purchase of the annuity.....then that would supplement benefits or be passed on to heirs of the beneficiary.....annuities don't carry a death or joint & survivor benefit generally speaking.......Sounds good, except when you factor in the issue of "timing" of your DC account payment into an annuity. What happens if your NRA happens to fall in markets down swing, like in 2001 for-instance. Your money will buy much less then you prob. need to cover the full lifetime benefit that you would "receive" under the old plan? And since the Govn'mt has "cut your DB benefit" to account for the lesser contributions through the private accounts, you will likely wind up with a much lesser benefit then you'd receive under the old plan.That's the "handicap" imv with the "privatization scheme"...it counts on markets forever trending up, and offers no guarantee when the markets....through no fault of your own......come crashing down......especially, in light of the coming "Distribution Phase" of paper assets by the "Boomer Invester Class".....which has been on a tear of "Accumulation" all these years.And I'm "one of em"....getting ready to retire, and NOT looking forward to "buying an annuity" with a 4% yield....for my lifetime remainder. Noooo, I'd rather stick with the present guaranteed DB benefit, and remove the market cycle from my calculations entirely.....thank you very much. It ain't much, but it's better then nothing, or trying to time my retirement to the markets cycle.Believe me, when I say this.......and it's not meant to be critical....But anybody that wants to place their faith in the Capital Markets over their next 40 years.....and thinks they can "time the markets" correctly.....just doesn't have a good operating knowledge of the markets.....or history......BWTFDIK?KBM ("The Other BB - tm")
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