5.09.2005

Clawback

If you haven't heard the term "clawback" in terms of Social Security, well you problably need to read the following:

"Clawback" Would Eat Into Any Gains In Accounts. Upon retirement, workers would be subject to a "clawback" and would have to repay the money diverted into private accounts, plus interest, plus inflation, through automatic reductions of their guaranteed benefits. The total interest rate would be 3 percent above inflation annually. Unless the amount in their accounts grew by more than 3 percent plus inflation, the "clawback" would take away all (or more than all) of the value of the account.

What does this mean exactly? Well according to the Washington Post...
If a worker sets aside $1,000 a year for 40 years, and earns 4 percent annually on investments, the account would grow to $99,800 in today's dollars, but the government would keep $78,700 -- or about 80 percent of the account. The remainder, $21,100, would be the worker's.
Aww man, these people are ballsy... unbelievable. This isn't a 'clawback' as much as it is a Knife In the Back...

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