Back in 2011, I wrote a column about Social Security and how it is essentially a Ponzi scheme and how devastating it is to real retirement planning. Governor Rich Perry of Texas took a lot of heat during his presidential campaign about it when he said essentially the same thing—social security is essentially a rip-off. Now California wants to form a state based retirement system, and double down on the federal government’s fiasco.
California plans to enforce a mandatory 3% payroll deduction to provide a state based retirement plan for private employees which puts money into a state government pension for retirees. It would be mandatory, but the details of the plan are sketchy. Their argument is that people just aren’t putting enough away for their golden years, or in the case of California, their cat food eating years.
I say cat food eating, because once again, the state is forcing something no one wants down the throats of taxpayers.
The bottom line is that the liberal left want to live your life for you, and worse charges a premium to do. Worse, the manager for this retirement system will be interests controlled by the Soros brothers- Secure Choice by the New America foundation. Naturally, such a retirement system would be a boon to the company and essentially entrench the progressive left into California. Not happy with being elected into power, the progressive left wants to institutionalize their theories.
While the President makes false claims that the government might not make its August 3rd Social Security payments because of the Republican roadblocks, and California is teetering on the brink of bankruptcy, they are proposing they control more of your money. Or mis-control depending on your point of view. Suffice to say, they are getting desperate to seek new forms of revenue or more money in which to leverage more loans and bonds.
I’m sure this will drive even more productive people out of the state and to places like Texas, AZ or the Dakotas, where people are taxed at a more reasonable rate. Of course this mass exodus of productivity will make California an even worse place to live. Nice weather and a beachfront view are all well and good, but you can hardly enjoy them in a state where roving bands of thugs are allowed to roam freely and they take a third of your paycheck ‘for your own good’.
It will also drive more people into a second rate life style in their retirement years. That 3% could be better invested privately, and most people will make up that 3% by simply reducing their 401k deposits or their savings plan. That reduction most likely will affect their retirement fund dramatically- perhaps as much as 20%.
More power to the state, more government, and more poverty.
For those that have no 401k now, it will mean a smaller paycheck. Usually people who are not putting money in their 401k or don’t have access to one, are living on the edge anyway. That means they will delay getting that much needed new car or maybe it will mean putting off buying that new home until things get better.
In California, it may be a long wait.