I was surprised when President Bush said last week that Social Security reform was one area on which he hoped to reach an agreement with the new Congress. After all, Bush’s plan for private accounts was a nonstarter with many Democrats — and couldn’t even get a hearing in the GOP-controlled Congress. But Sen. Jeff Sessions, R-Ala., also promoted private savings accounts as a bipartisan solution in a Washington Post op-ed piece this week. Under his plan, an individual personal retirement account would be “established for every American at birth and would be endowed with a $1,000 contribution from the federal government.” Then, beginning in 2009, “1 percent of every worker’s paycheck would be automatically deposited into his own account for the first $100,000 earned annually, with his employer required to match this 1 percent contribution.” Assuming a 6.59 percent rate of return, Sessions calculates that someone making the median household income ($46,000 in 2005) would retire with almost $300,000, and that money could be passed on to heirs.
Posted by Phillip Brownlee
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