Running for Benevolent Dictator

Following the Democratic presidential debates, I feel like I could have qualified for a spot among the 20 or even 10-person debate stages, if I’d only rolled out my platform sooner.

I know we can do better on the personal financial policy side. Here are my three big ideas on retirement.

Oh and by the way I’m not running as a Democratic Presidential candidate per se. Rather, I’m declaring my candidacy for National Personal Financial Benevolent Dictator – or NPFBD, which just rolls off the tongue nicely – a position that happens to also include extraordinary legislative power needed to pass my most important ideas.

My first three policy ideas deal with the crisis of retirement.

This is the crisis: About half of American households have zero net worth, and 29% of older Americans have virtually no retirement savings. The returns on Social Security savings are low, the enrollment in workplace retirement accounts is weak, and the costs of investing are too high. As NPFBD, I will solve all this.

I’m not a member of a party. Rather, as NPFBD I’m embracing “Paternalistic Capitalism” as my ideological mantle. For you fervent capitalists, very little will change under my dictatorship – you can continue to save and invest as you always have, and the program is revenue neutral. Read my lips: No new taxes. For you budding socialists, I think you will find my benevolent dictatorship addresses the problem of poverty and financial insecurity at retirement through important government interventions.

Policy #1 – Automatic enrollment in workplace retirement accounts. 

About once a day I remember that not every single person with a job is enrolled in a their workplace tax-advantaged retirement account – like a 401(k) or 403(b) – and then I get heart palpitations and red in the face. Gah! Why is this still allowed? 

As benevolent dictator, my fellow Americans won’t be able to make that mistake. The day you start your job is the day the HR department at work directs a portion of your paycheck to a retirement account. No ifs, ands, or buts. You’re also automatically invested in an age-appropriate investment fund. You can improve upon that fund choice later by taking charge of your investments, but the default fund will be thoughtfully chosen (by me, your NPFBD, according to your age, and adjusted annually).

Policy #2 – Private market investing of federal payroll deductions 

In addition to automatic enrollment in a workplace tax-advantaged defined contribution plan, I’m going to reform the nation’s primary defined-benefit plan for retirees.

So part of every paycheck you receive will be withheld by the federal government, and you get the money back at retirement, but more. Through the decades of your working life this money will be invested by the federal government in private high-return assets, like diversified stock mutual funds.

Now, you’re probably thinking, “So, let me see here…the feds take part of every paycheck throughout my working life, and then I get my money back in retirement…Well um, that’s…that’s Social Security!…This blogger thinks he’s just invented Social Security.” 

And fine, yes, there’s a resemblance. But the improvement I’m highlighting as NPFBD is that the money taken throughout our working life is actually invested, under my plan. Like, invested in stocks and mutual funds and stuff that grows in value over time.

Currently, our Social Security taxes are not invested over decades. Rather, our money is either transferred to retirees or loaned to the federal government and earns a very low rate of return. Actually investing our money over decades would, under many scenarios, grow tremendously over forty years of compounding returns. My own calculation recently was that I would have a monthly income about 2.7 times larger if my specific Social Security taxes in my lifetime had been invested, rather than simply earned a low government loan interest rate.

Ok so yeah, it’s a partial privatization of Social Security. Deal with it. You elected me to be NPFBD for a reason. 

Also, In order to make this partial privatization the best deal possible, we have to roll out policy #3 at the same time.

Policy #3 – Universal access to the Thrift Savings Plan (TSP), currently only open to federal employees

Even as you read my third policy, the investment management industry (aka Wall Street) is already typing up its response to me. Something along the lines of “Shhh…Shut Up!” 

Now, I sense your instinctual suspicion about expanding government-managed retirement funds like TSP. Something like “Gub’mint git yer gosh-darned hands off my mutual funds,” or whatever. 

But firstly, private sector managers actually run most of the money, subcontracted by the TSP. Currently, BlackRock is the manager for the TSP stock funds. The federal government just did the important work of simplifying and driving down costs, a major part of successful investing. 

Anyone who is a federal worker with access to TSP retirement accounts already knows that these funds are amazing. Amazing – not because they employ brilliant managers of money, as brilliance in money management is over-rated – but because they offer some of the lowest cost funds in the world. All I can tell you – if you haven’t experienced it – is that the TSP is a delightful program, and we should all be so lucky as to have access to it. 

As my campaign for NPFBD continues to gather momentum, I will release further plans in the future. In the meantime you are welcome to send me your own crazy-but-good ideas for me to roll out, as your benevolent dictator.

A version of this post ran in the San Antonio Express News and Houston Chronicle.

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