Focus Point - Riding Out the Market

Commentary by Pete du Pont

I'm Pete du Pont with the National Center for Policy Analysis. You could get seasick watching the DOW and the NASDAQ rise and plunge, but should that throw cold water on the idea of letting people put part of their Social Security payroll tax into personal, market retirement accounts?

No. This isn't day trading. The money would be professionally managed and conservatively invested, probably in the equivalent of an index fund. You'd get bored watching, but your money would slowly grow for two reasons: a market history of annual real growth and the enormous power of compounding.

Also, most reform proposals call for a safety net, a government guarantee of a minimum retirement benefit.

We can't wait on this one. By about 2015 there won't be enough payroll tax revenue to pay benefits. Many young people just entering the workplace are skeptical of ever receiving anything from Social Security. Optional personal retirement accounts can be the first step in a transition to funded benefits that can save Social Security for the young, and for future generations. We need to begin offering them now.

Those are my ideas, and at the NCPA we know ideas can change the world. I'm Pete du Pont. Next time, the equal pay day hoax.

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