Former Treasury Secretary Paul O'Neill believes that future generations of Americans all could retire as millionaires if the federal government followed this plan:
_Upon each child's birth, the government opens an investment savings account in his or her name and puts $2,000 into it. Every year afterward until the child turns 18 the government puts another $2,000 into the account. The money then would be left to grow at a compounded rate until the individual reaches the retirement age of 65.
_Assuming a 6 percent continuously compounding rate of return over 65 years, money in the account would exceed $1 million. There'd be no lump-sum payment; the money would be put into a 20-year annuity paying about $82,000 a year.
_Assuming 4 million births annually, O'Neill estimates it would cost about $144 billion to fund accounts for each year's babies for 18 years.
_After 65 years, this would eliminate any need for Social Security since all Americans would retire rich. His plan doesn't address funding the system's current projected shortfalls.
———
(c) 2005, Knight Ridder/Tribune Information Services.
Need to map