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Megan McArdle

Don't Count On Government to Do Your Saving for You

If you want to have enough income in retirement, don't count on a government guarantee to protect you from life's vicissitudes.  

California is considering implementing a version of the Ghilarducci Plan, in which automatic payroll deductions are used to create a defined-benefit fund run by the government, guaranteeing a modest minimum return, which is then rolled into an annuity at the age of 65. The Guardian's Helaine Olen likes the idea, which has been put forward by Kevin de Leon, a California state legislator:

Obviously, no one can retire on 3 percent of their earnings. The plan is conceived as a supplement to Social Security benefits. But how good a supplement will it be?