In the heat of the congressional moment, President Obama and his posse on Capitol Hill are learning about a possible new type of retirement savings. The Association of Mature American Citizens (AMAC) believes Social Security IRAs are a good fix for the budget fights. While AARP holds it stance on no changes to Social Security, the AMAC got inventive. But what the heck is the SS IRA?
The SS IRA protects. After conservative politicians, like Texas Senator Kay Bailey Hutchison, posed raising the age for Social Security benefits from 62 to 66-69, senior citizen groups froze in fear. AMAC had to find a way to protect those who were affected by the change. Their invention is a tax deductible and payroll-deducted product that goes automatically into a worker’s private IRA account. Weekly contributions would be as little as $5. Withdrawals could happily start at age 62 to 65.
“It is unfair to force Americans to continue to work until age 69, especially those who work in occupations that require physical labor,” says AMAC founder, Dave Weber. “People who are farmers, construction workers, laborers, skilled tradesmen such as carpenters, plumbers, electricians, masons and other workers have punished their bodies after years of labor suffer from various ailments that white collar workers generally avoid.”
This type of plan would keep Social Security benefits available for those who need it early and need it badly.
The SS IRA also takes bets. Since traditional IRA and 401k companies would manage these accounts, parts of the account will be invested. Fifty percent would have to be invested in guaranteed interest accounts so the funds would gain enough to compare to Social Security amounts.
“The biggest risk would be that people that depend on Social Security the most would not be able to handle the ups and downs of the markets and would make poor investment decisions if left to their own devices,” says Benjamin Stacy, senior vice president of investments at Hager Dennerll & Stacy Wealth Solutions of Raymond James & Associates.
The SS IRA would give more financial power to the individual. Unfortunately, the citizens it wants to protect may not have the power to protect their assets. The SS IRA may resolve current budget tensions. But it could create future conflicts.