The Social Security reform plan emerges

It looks like the Bush Administration has decided on a proposal for Social Security reform. More importantly, they’ve picked a winning sales pitch. Repeat after me: 401(k), 401(k), 401(k) – from the Boston Globe: “Bush plan similar to 401(k)”

President Bush's advisers have settled on a proposal for structuring the personal accounts they hope to create in Social Security, and the accounts would resemble those of many company-sponsored retirement plans, with just a handful of investment options.

Under a plan advisers said this week they had recommended to Bush, the personal accounts filled with funds diverted from Social Security would be specifically modeled on the Thrift Savings Plan for federal employees, which is similar to a 401(k) offered by private companies. Both defer taxes on retirement savings.

About 45 million Americans currently participate in the popular 401(k) programs, holding assets in excess of $2 trillion. Most of these workers are already sold on the idea of personal savings accounts. As a marketing tactic, this is a step in the right direction.