The year is 2100 and a worker is facing retirement. She’s been a conscientious employee, but she hasn’t been able to save much for her future because of years of family caretaking, student debt and low wages.
Not all Americans are prepared for the future. The trust funds that support Social Security — a lifeline for many elderly Americans — are at risk of depletion in the next 15 years, but politicians have yet to decide on a solution. And not everyone has access to a workplace retirement account, or can afford to invest for their old age.
This is how his proposal works. At birth, children would receive an account with $7,500. The money would come from investors, such as corporations, pensions and those who already purchase government bonds, and would be invested in a new type of investment similar to Series EE bonds, an already established interest-bearing account. This new investment would be earmarked specifically for this program. None of the money would come from taxpayer funding.
A $7,500 investment goes a long way. That investment at birth in this type of proposal would grow to become the equivalent of an average person’s Social Security benefit, Edelman said. The average monthly Social Security benefit in June was $1,514, or about $18,170 a year, though how much a beneficiary receives depends on factors including age, when she claimed, earnings through her career and how many years she paid into the system.
Still, something must be done to rectify the retirement crisis. Although there is no magic number someone needs to save for retirement security — that amount depends on numerous factors, including health, location, family and lifestyle — a person could expect to require hundreds of thousands of dollars over the course of retirement.
The other variations of the baby bond proposal focus more on other major life milestones that could help Americans on their journeys to retirement — including those that end up becoming the reasons why people don’t have enough saved for their old age.
COVID19. Cynical.