retirement

The States Have No Business Creating Their Own Retirement Accounts

People have lots of ways to save for retirement. Most employers offer some sort of retirement plan, of course, and people whose employers don’t can set up their own retirement account and get the same tax benefits, albeit without any employer contribution.  Low-income workers at a job without a benefit plan can now participate in Treasury’s new MyRA program, which creates a retirement account for the worker and provides a match for their contributions.

And Social Security, which totals to 15.3% of the first $118,500 of a worker’s income, constitutes a big chunk of most people’s retirement income.

Thirty Years of Private Social Security in Chile

The big international story that broke on Sunday understandably was the death of Osama Bin Laden. But another big story was that May 1 also marked the thirtieth anniversary of the introduction of Chile’s successful private pension system. Implemented by José Piñera (now a Distinguished Senior Fellow at Cato) to replace unsustainable public pensions, private retirement accounts have averaged real annual rates of return of more than 9 percent, contributed to economic growth and the rise in savings, and helped turn working Chileans into capitalists.

Spending Growth: Mandatory Programs

While Congress haggles over Republican ambitions to trim $61 billion in funding for domestic discretionary programs, it’s important to remember that mandatory (or “entitlement”) spending is the main driver of recent and future budget growth.

The following chart compares fiscal 2007 spending to the president’s proposal for fiscal 2012 for the largest areas of overall federal spending:

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