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Suprise!...it comes with a mandate!
https://www.aarp.org/content/dam/aa...mental-transition-accounts-for-retirement.pdf
The proposal involves something tagged “Supplemental Transition Accounts for Retirement” (START), and it’s being touted by AARP. The proposal is the work of Jason Fichtner of George Mason University, Bill Gale of the Brookings Institute and Gary Koening of AARP’s Public Policy Institute. The basic concept is to help people postpone claiming Social Security benefits (the most common age to start claiming remains 62) since — as an executive summary of the proposal indicates — between the ages of 62 and 70, monthly Social Security benefits increase by about 7% to 8% for each one-year delay in claiming.
This is accomplished by creating the aforementioned START accounts, which are funded by a new layer of mandated withholding: 1% each from workers and employers (2% combined) up to the annual maximum subject to Social Security payroll tax (self-employed individuals pay both parts, as they currently do with Social Security). Worker contributions are post-tax and employer contributions are pre-tax — oh, and there is a federal government contribution for lower income workers (up to 1% for married filing jointly with adjusted gross income less than $40,000) as well.
Individuals wouldn’t be directing these investments. Rather, they would be “professionally managed in a pooled account with an emphasis on keeping administrative fees as low as possible,” with the oversight of an “independent board” that would “select the private investment firm(s) responsible for managing START assets” and setting the investment guidelines.
https://www.aarp.org/content/dam/aa...mental-transition-accounts-for-retirement.pdf
The proposal involves something tagged “Supplemental Transition Accounts for Retirement” (START), and it’s being touted by AARP. The proposal is the work of Jason Fichtner of George Mason University, Bill Gale of the Brookings Institute and Gary Koening of AARP’s Public Policy Institute. The basic concept is to help people postpone claiming Social Security benefits (the most common age to start claiming remains 62) since — as an executive summary of the proposal indicates — between the ages of 62 and 70, monthly Social Security benefits increase by about 7% to 8% for each one-year delay in claiming.
This is accomplished by creating the aforementioned START accounts, which are funded by a new layer of mandated withholding: 1% each from workers and employers (2% combined) up to the annual maximum subject to Social Security payroll tax (self-employed individuals pay both parts, as they currently do with Social Security). Worker contributions are post-tax and employer contributions are pre-tax — oh, and there is a federal government contribution for lower income workers (up to 1% for married filing jointly with adjusted gross income less than $40,000) as well.
Individuals wouldn’t be directing these investments. Rather, they would be “professionally managed in a pooled account with an emphasis on keeping administrative fees as low as possible,” with the oversight of an “independent board” that would “select the private investment firm(s) responsible for managing START assets” and setting the investment guidelines.
