Stuart Butler, vice president of domestic policy for The Heritage Foundation, has seen the future of Social Security, and it is personal retirement accounts (PRAs).
“Americans want to build financial security for their golden years, and ‘big account’ PRAs are the best way to do it,” he said at a press conference convened by U.S. Congressmen Sam Johnson, R-Texas, Pat Toomey, R-Pa., and Jeff Flake, R-Ariz., to announce a reform bill that would let individuals invest the employee share of Social Security taxes (6.2 percent of payroll) in PRAs.
“Big accounts—plans that let workers invest at least half of the current payroll tax—are key to successful modernization of Social Security,” Butler said. “They allow workers of all income levels to build retirement nest eggs rapidly and to enjoy retirement benefits that are far better than those provided by the current system.
“Better yet, since the workers own and control those nest eggs, they can pass the leftover assets to their heirs.” This, he said, can provide low-income families the means to “break the cycle of intergenerational poverty.”
A nonprofit, conservative think tank based in Washington, D.C., The Heritage Foundation does not endorse any specific piece of legislation. However, Butler noted, the approach taken in the Johnson-Toomey-Flake bill is “fully consonant with the general principles that should drive any congressional effort to help Americans provide for a more comfortable, secure retirement.”
In addition to offering individual ownership of “big accounts” that can be passed on to the next generation, Butler said that Social Security reform must assure that:
• Seniors and those nearing retirement are held harmless—i.e., their benefits should be assured and adjusted for inflation.
• Payroll taxes do not increase.
• Future retirement benefits (including those derived from PRAs) are at least as high as those available today, adjusted for inflation.
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NOTE: For more information on Social Security modernization, visit www.heritage.org.