Let’s K.I.S.S. Social Security Goodbye: Part 5

Existing Social Security Recipients:

If we are serious about solving Social Security, this isn’t as difficult as one would think, and arguments could be made for several methods. But in keeping with the K. I. S. S. principle, let’s start with the oldest Social Security recipients first and work backwards. Politicians on both sides of the aisle can be heroes to their elderly constituents. Every year, every Social Security Retirement Program provider will be required to use 1% of the Trust Fund to annuitize existing retiree benefits. The Social Security Administration would coordinate this benefit buyback with the private sector in a seamless fashion (we can hope, can’t we.). The objective of the exercise would be to have every Social Security check issued by the private sector within 5 years. It is likely that the federal government would have to chip in a few billion to accomplish this.

Existing Social Security Account Holders:

While this major transitional process is being tended to, keep in mind that no new dollars are entering existing Social Security Accounts. All Social Security participants are funding their new retirement accounts with thousands of different financial institutions. Starting with participants age 60 at the inception of the program and working lower, existing balances will be paid back as follows over the same five year period. Each year, participants will be required to elect either to: (1) apply up to 50% of their existing Social Security Balances to their Federal and/or State Income Tax obligations until it is used up with the balance going immediately into their Trust Fund account, or (2) to have their entire Social Security Balance deposited to their Trust Fund Account over a five year period.

New SSRP Accounts: The Rules

Very few rules are needed. Every employee, regardless of how he is compensated, is required to participate, including government workers at all levels right up to the President. Absolutely every citizen, and every non-citizen in any capacity, who is working in the United States must contribute. 

There is no ownership of SSRP deposits. Accounts can't be borrowed against, assigned, or touched in any way until retirement is elected to start on the January 1st of the year following the attainment of age 60. Age 60 is the first year of eligibility, but participants can continue to contribute to the SSRP and choose to retire at any age. This holds for both men and women, employed or not at the time of election. Retirement benefits will be slightly smaller for women than they are for men, recognizing the differences in life expectancy.

Every participant will be able to name up to three human beneficiaries, entitled to receive a lump sum payment from the SSRP in the event of the participant's death. The lump sum is equal to the sum of the contributions the participant has made to the SSRP in his lifetime. The distribution must be rolled over into a conventional IRA if there is one, or into a ROTH IRA if there is not. Any conflicts will be settled solely by an arbitration panel within the Social Security Administration.

If any of this makes sense to you, it's really easy to contact your congressman at:

 http://www.visi.com/juan/congress/

BUT, don't expect to get a real live response... I've tried. We really need too power wash congress!

Your Contributions (These ideas may or may not support my own, but they are certainly better than either what we have now or the politically motivated changes that are being proposed):

"I suggest changing the rules to permit Social Security funds to be invested directly by the Feds in the same market investments as are currently proposed for individual accounts. This would: spread the risk (over individuals and generations) as befits an insurance program; provide an even better rate of return than individual private accounts due to reductions in administrative expenses; eliminate an added paperwork burden on taxpayers." [Bill B., April 29th, '05]

"Social Security is not in deficit; it is currently running large surpluses, and will into the foreseeable future.  To truly reform Social Security, we need to do the following: end PAYGO, which siphons-off payroll taxes to pay general obligations; eliminate the ceiling on income subject to the payroll tax; invest payroll tax surpluses in Ginnie Maes, Fannie Maes, and Freddie Macs, so the funds can earn a decent return (and) benefit America; stop allowing government workers and other to fund alternate, more favorable, retirement programs, in lieu of making their contribution to Social Security; make benefits commensurate with contributions. [Larry B., April 30th, '05]