Heir Today Gone Tomorrow

The stock market is a rough place, as it proved to us again today. It’s almost enough to make you want to swear off the markets for good, and invest in something guaranteed to pay you a 3% return.

A lot of investors felt that way as they pushed yields to what are truly ridiculous levels just so that they wouldn’t be exposed to the stock market. More interesting than investors’ whims, however, is a little known proposal smouldering inside of congressional staffers’ briefcases.

The United States, as you may know, is in a little bit of financial trouble itself. With $10 trillion in debt, and new debt accumlating exponentially, it sure would be nice if there were a new revenue source for the government. Increased taxes are a given at this point, but continuing to raise taxes offers diminishing returns and is never a good way to get reelected.

Enter the Government Retirement Account – GRA for short. So what is it? Well, basically you take ideas from IRAs, 401ks and Social Security and throw them up in the air – whatever lands is what will be the GRA. Like a retirement account, you will have a specific account that “belongs” to you that you earn interest on – the current proposal is that magical 3%. Unlike risky retirement accounts, investors will be “protected” from making “bad investment decisions” so that no investor can ever lose money – that 3% will just keep racking up!

Naturally, in exchange for this generous guarantee, GRAs won’t be fully inheritable like a retirement account. Don’t worry though, you will automatically be enrolled at work, with 5% of your paycheck being transferred to your GRA, just like how your Social Security is currently deducted from your paycheck. Saving money has never been easier!

Of course, to get the system started, we’d need to convert all of the existing retirement accounts over to the new system – and there is a proposal to do just that. If such a “retirement safeguard” passes, we will be safely following in the footsteps of Argentina, which last month decided to convert private pensions to public pensions.

This turns out to be a win-win situation. The government gets an infusion of capital so that it can continue to pay the interest on its debt, and Americans get yet another layer of retirement security, and are spared from risky schemes which could trick them into losing retirement money in the volatile stock market.

Just when you thought your government wasn’t going to take care of you in your retirement, along comes the GRA! Sleep well.