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Privatized Pensions No Cure-All
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  • Jacksonian_Libertarian

    And still Chile is the wealthiest country in Latin America because of this one difference, and they don’t even have any oil. If Chileans are complaining now, what shape are the rest of Latin America’s people in. US Social Security only pays a few hundred dollars a month to Seniors, and it is a drag on the economy unlike the Chilean SS System.

    • Andrew Allison

      Although I usually share your sentiments, I must disagree. Are retired Chileans really worse off than those of other South American countries? Of course nobody in this day and age is satisfied with what they are extracting from the State. So what? FWIW the average social security benefit is not a few hundred dollars a month but $1,341 for individuals and $2,212 for married retirees, and the only drag on the economy is the brain-dead who can’t wait to grab what they can and remove themselves from the workforce.

      • M Snow

        Although I usually share your sentiments, I’m wondering why you call anyone who opts for early Social Security “brain-dead.” Especially for women, but true for men as well, there may be very good reasons for leaving the paid work force early. Considerations of one’s own health and probable life expectancy, the need to care for aged parents or to help with grandchildren, or even the desire to accomplish some charitable goal can go into the decision. Laziness or greed may come into the decision as well, but it seems unfair to paint all with the same broad brush.

        • Andrew Allison

          You are correct, my brush was too broad. There are, as you point out, good and sufficient reasons to take early social security but I find it hard to believe that they apply to the roughly half of those reaching 62 who do so. The price is high, currently a permanent 25% reduction in benefits, rising to 30% for those born in 1960 or later.

          • M Snow

            Thank you for clarifying.

  • Fat_Man

    ” the pensions aren’t what many expected, averaging just $340 a month,”

    Let us unpack the rhetoric of that sentence. The “what many expected” is a feint. Who are he “many” and how “many” of them are there? 2? 10? 10 Thousand? 10 Million? It makes a difference doesn’t it?

    Did they put in their 10%? how was it invested? Who made the investment decisions? Did they have the opportunity to save more? How did they form their expectations? were they provided with accurate actuarial information?

    ” averaging just $340 a month” What does that mean? What is the cost of living there? Does the average include a lot of part time or chronically unemployed workers? I heard about a man who drowned in a lake that had an average depth of 1 foot.

    I could go on. But the Chilean system does not sound bad to me. Details are important, to be sure, but whining about OECD averages is not a matter of concern.

    I think the US should also replace the paygo social security system, which will most assuredly bust, with a savings system. But, I think the only investment should be a special series of savings bonds with inflation adjustment bearing modest but meaningful interest rate like 3%. The form of payout should be a fixed annuity savings bond payable over 30 years beginning at age 70, which would be inheritable. Given the current OASDI rate of 12.4%. It ought to produce a substantial pension for most full time, full career, workers.

    • LarryD

      And who would be paying the interest and principal on those bonds? If it’s the government, what’s the difference between these and 30 year Treasury Bonds?

      • Fat_Man

        The savings and annuities bonds would refinance a portion of the existing $19 Trillion of Federal debt, and would be paid by the taxpayers through general revenue taxation, just like the debt that was refinanced.

        The difference between these savings and annuity bonds and existing 30 year bonds is that they would not be tradeable, nor would they have minimum denominations of $100,000 like tradeable 30 year bonds. The Federal government would not have to worry about market manipulation of these bonds.

        The savings bonds, would be sold at par, on any business day, for any amount that is invested. They would mature only on the owners 70th birthday, and they would only be redeemed by the issuance of the annuity bonds. The savings and annuity bonds would not be transferable except by inheritance or divorce decree. They should be sold to IRA investors subject to the same rules on maturity and transfer.

    • Bystander

      US 2015 GDP per capital was $55,800 while Chile’s was $13,400. Below, Andrew Allison noted average US Social Security payment was $1341 per month. In Chile, it is $340. I have no idea what the cost of living there is like but both Chilean GDP and retirement payments are (very) roughly 1/4 of those of the US.

      • Fat_Man

        Like I said, the contextless factioids of these articles are intended to mislead, not to inform.

  • LloydDaub

    Or perhaps people– even The People– should think ahead and do for themselves and save up. And take care of their families.

    • Andrew Allison

      Perish the thought!

  • Andrew Allison

    Another utterly confused post. What it should have explored is whether the expectations are realistic and why the benefits are so disappointing.

  • Frank Natoli

    The problem with our pensions now isn’t that pensions aren’t for the most part too high
    Too high in what respect? Too high in pay-out? Or in pay-in?
    Note to author: the pay-out in numerous states and muncipalities is bankrupting the states and municipalities. That is what most people understand to be “too high”.
    It also means the pay-in was inadequate. Then again, how do you essentially double the national debt in one Presidential administration and then insist on Acts III and IV of same? Answer: make the pay-out wildly greater than the pay-in.

  • LarryD

    10%? I put more than that in my 401(k) before employer matching.

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