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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.
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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.
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.