A Unique Method To Fix Social Security

Privatization of Social Security?

Social Security, as it stands now, is not sustainable which comes as no surprise to most people. The last time major reform that was attempted went nowhere under George W. Bush's privatization proposal.

I will be the first to admit I'm no financial export and my idea may be naive, but the idea of Bush's privatization proposal has merit with a few key adjustments.

It's no secret that if an individual has $100,000 dollars that can be committed to a very long-term investment then greater investment rates can be realized with very good safety margins. I'm talking about a very conservative 2 or 3% annualized over a sixty year period.

I would propose that the government have a collection of regulated, private investment vehicles that have stellar records of integrity. This collection would be comprised of very conservative mutual funds, AAA company bonds, and this may alarm people but also foreign government bonds (I'm thinking of bedrock, stable countries, example, Canada, Sweden, Germany, ect).

Best all around book on Social Security

How This Would Be Accomplished

Here is an oversimplified explanation on how this idea could work. Every newborn that receives a social security number will have $100,000 dollars from government funds moved into these collection of private investment vehicles. The $100,000 dollars would be the maximum the government would pay towards an individual's social security benefits, less then half what the government pays in retirement benefits to an individual under the present system.

Collective payments would be made to the United States government to a highly restrictive, special budget pool that can only be depleted through payments to social security recipients.

Other Important Benefits

Under this plan, government funds earmarked to future social security recipients would be taken out of the reach of lawmakers that have continually raided social security funds.

The government would pay much less in actual social security benefits. The individual would still continue making SS payments but at a reduced, flat rate with an earlier retirement age and the possibility of higher retirement benefits..

I assume over an average person's life time they would repay the $100,000 dollars the government sets aside for their retirement making what the government actually pays in benefits to be almost actually zero.

Obstacles

I understand this could potentially be very expensive to get started as the government would be setting aside money for each new social security number while at the same time paying out SS benefits to our present retirees. Another problem is the savings wouldn't be realized until the next generation. Yes, it would take time but we can't afford to do nothing and wish the problem away.

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Comments 8 comments

kaiyan717 profile image

kaiyan717 4 years ago from West Virginia

There are several reasons that this wouldn't work. Fact is, we have a graying society and there are not enough workers to pay for the larger elderly who are now collecting. Best bet is to invest ourselves, giving the government no chance to take the money, which we all know they will. We will have to continue to pay because those that have paid in their whole lives, deserves it. We as a society must take care of our elderly. Moreover, why would the government pay for our retirement? Younger generations know SS as it stands will not exist, so do not expect the government to help you, that is an error within itself. I say, drop the maximum base to make up the difference.


redwhiskeypete profile image

redwhiskeypete 4 years ago from Indiana Author

I appreciate your comment but your not telling me why this would not work. Your listing problems with SS as it stands now and I agree with you. You repeated the many things I have said such as taking the money to fund our retirement away from the government so they cannot raid the funds.


ib radmasters profile image

ib radmasters 4 years ago from Southern California

The real solution for Social Security is to model it like the Federal Employee Retirement System, defined benefits pensions.

Social Security is not structured as a pension, it is a tax revenue for the government.

Currently only the federal employees have a real pension. Yes they also pay into the SS but it is just a bonus. We need to have one government pension system that is applied to all wage earners.

Either give everyone the federal employee pension deal, or develop one based on 401ks, and remove the defined benefits pensions now backed by the taxpayers for the benefit of the federal employees.

SS is needed by retirees or soon to be retired wage earners, but the system needs to be changed to a real pension for those below the age of say 55. The government created the SS liability and they should pay for it, not the retirees.


kaiyan717 profile image

kaiyan717 4 years ago from West Virginia

It will not work because the government cannot even pay back the huge surplus they blew, let alone start another fund with such an outrageous amount for each new child born. Where would this money come from?


redwhiskeypete profile image

redwhiskeypete 4 years ago from Indiana Author

Well my idea isn't perfect but that "outrageous" amount is less then half what they pay in SS benefits on the avgerage to each individual now and as in my proposal people would still be paying SS so by the end of their working life that "outrageous" amount should be paid back to the government. It's all about the magic of compunding interest.


kaiyan717 profile image

kaiyan717 4 years ago from West Virginia

I think that is what they were going for when Bush called for the "privatization" of Social Security, and it would have worked if they hadn't then borrowed all that money for the wars. I wish your plan would work and thanks for trying to brain storm ideas, because something does have to give. Your plan could work, but I would never trust our government to leave the money alone, you know?


redwhiskeypete profile image

redwhiskeypete 4 years ago from Indiana Author

I understand and that is why I want to take the money out of the governments hand. Let them set aside an amount for each person and let sompound interest do it's magic over 60 years.


ib radmasters profile image

ib radmasters 4 years ago from Southern California

kaiyan

The money comes from where all the government money comes from the printing press, and higher taxes.

In addition, this problem was created by the government.

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