NCPA - National Center for Policy Analysis


January 2, 2007

Under legislation that Senator Jeff Sessions (R-Ala.) will introduce in the next Congress, an individual personal retirement account -- called a PLUS Account (for Portable, Lifelong Universal Savings Accounts) -- would be established for every American at birth and would be endowed with a $1,000 contribution from the federal government.

  • Funds contributed to PLUS accounts would be the legal property of each account holder, but they could not be touched until age 65.
  • Any funds remaining when an individual died could be passed on to anyone of the holder's choosing (including a favorite charity).
  • Account assets would be protected from creditors and would not be considered in determining eligibility for any federally funded benefits or in calculating estate tax liability.

If we begin PLUS accounts at birth and require a portion of every paycheck to be invested, the average U.S. citizen could retire with a sizable nest egg, says Sessions:

  • Given a 6.59 percent rate of return (the same rate as the TSP's most conservative fund since 1987), someone who makes $46,000 a year -- the median household income in 2005 -- and contributes 1 percent of each paycheck would retire with almost $300,000.
  • If that same individual were to contribute 3 percent over the course of his working life, he could expect to retire with over a half-million dollars (even if his employer never contributed more than 1 percent).

The continued success of the U.S. economy depends on increasing savings for every citizen to provide the investment capital we need to ensure long-term economic growth. Without increased savings, most Americans will not have sufficient money upon retirement to live the comfortable life they deserve after 40-plus years of work, says Sessions.

Source: Jeff Sessions, "Saving America," Fort Worth Star-Telegram, January 2, 2006.


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