Social Security – The Founders Weep

How To Privatize Social Security-Part One

Previous posts have outlined how Social Security hurts the poor. We’ve also shown how, instead, we could be a nation of millionaires.

But what might a privatized account look like? How would it work?

Here are the key parts of a Privatized program to which examples in previous posts conform.

1. Payroll withholding is STILL mandatory, no exceptions, just like the current system.
2. Withheld funds are STILL inaccessible until retirement, just like the current system.
3. Withholding rates from the current system are retained in the new system at 6.2% for retirement and 1.45% for medical insurance during retirement.
4. Employee withholdings are FULLY invested in the S&P 500 Index.
5. The Employer matching portion is FULLY invested in the NASDAQ Composite Index.
6. The funds are held in a brokerage account in the retiree’s name.
  1. Congress can’t touch it or spend it.
  2. The employee owns the account in full. In the current system, the employee has NO right to any of the funds withheld from their paycheck.
  3. Therefore, the account is inheritable by the employee’s designee.
7. To be very clear, the employee has NO direct control of the way the withheld funds are managed or invested, just like the current system. This means NO stock picking or trading. (No Enrons)
8. Because the system is so simple and the dollar amounts and number of accounts are so vast, fees would be quite minimal.
9. Distributions from the retirement fund will use the “4%” rule; meaning that no more than 4% of the retirement fund balance may be withdrawn in any year of retirement.
  1. Importantly, this means that the retirement fund will last twenty-five years, until the retiree reaches ninety-one years old.
  2. And the previous point assumes that the retirement fund earns zero after retirement.
  3. To those who are risk averse, the retirement fund can be changed in whole or in part to fixed income instruments. Even that will extend the time horizon beyond the age of ninety-one years for the retiree.
10. The accumulated amount generated by the 2.9% currently earmarked for Medicare MUST be used to purchase a catastrophic healthcare plan when retirement begins.

Leave your thoughts and comments below, please.

#PrivatizeSocialSecurity
#ANationOfMillionaires
#ItsJustMath
#TheFoundersWeep

“Socialist” Security Or Privatization???

Social Security hurts the poor. We can, instead, have a nation of millionaires. The first case study focused on a fictitious individual who worked his entire life at minimum wage.

Yes, the individual received a wage increase ONLY when Congress mandated a minimum wage increase. That individual would have accumulated $374,608 in retirement funds, and $79,860 with which to purchase a catastrophic health care plan in the private market. (well….if the private market isn’t destroyed by politicians….)

Combined, that is $454, 468. If our fictitious individual married someone who also worked their entire career for minimum wage, their household would have $908,936 in wealth on their day of retirement.

I’d call that nearly a million dollars!!!

The retirement portion $374,608 provides $1,248.69 per month until the individual is ninety-one years-old. Or $2,497.38 per month for the household. That compares with the Social Security benefit of $1,056. 50 for each individual, $2,113.00 for the household.

Between retirement age and age 86, the private solution earns the household $92,251.20 MORE than the Social Security “benefit”. Being as the privatized monthly amount covers the retiree until age 91, an inheritance would be available to their heirs, if they pass away when Social Security believes they will.

And please do not forget that the household also has a combined $149,720 on the day of their retirement with which they can purchase a catastrophic healthcare plan.

Not bad for a couple who never earned more than minimum wage!!

Is this perfect?

No.

Are

- ownership,
- inheritability,
- a higher monthly retirement check that lasts until your 91,
- a smaller government bureaucracy,
- a pool of capital that will grow by a trillion dollars a year for a generation,
- low interest rates because we are awash in capital,
- and a nation of MILLIONAIRES

worth a try?

I think so.

And The Founders Weep.

Please follow this blog and leave your thoughts and comments!

#SocialSecurityHurtsThePoor
#ItsJustMath
#TheyCantGiveItToYouUnlessTheyFirstTakeItFromYou
#TheFoundersWeep

Social “Security”, In The Words Of A SUPPORTING Organization…..PART 2!!

The previous post demonstrated these three points about America’s first Socialist program, Social Security:

1. That Social Security benefits DEcrease as retirement eligibility age increases.
2. That the retiree receives barely a third of what they earned while working.
3. The benefits will DEcrease as the Unfunded Mandate of Medicare continues to skyrocket.

For this post, we will focus on the following quote from this site: https://t.co/Y16JzxSkQz

“The [Social Security] trustees estimate that, if policymakers took no further action, Social Security’s combined Old-Age and Survivors Insurance (OASI) and Disability Insurance trust funds will be exhausted in 2034. After 2034, even if policymakers took no further action, Social Security could still pay three-fourths of scheduled benefits, relying on Social Security taxes as they are collected. Alarmists who claim that Social Security won’t be around when today’s young workers retire either misunderstand or misrepresent the projections. The long-term gap between Social Security’s projected income and promised benefits is estimated at 1 percent of gross domestic product (GDP) over the next 75 years (and 1.5 percent of GDP in the 75th year).

“Policymakers should address Social Security’s long-term shortfall primarily by increasing Social Security’s tax revenues. Social Security will necessarily require an increasing share of our nation’s resources in the coming decades as the population ages, and polls show a widespread willingness to support it through higher tax contributions. Recent trends also justify boosting Social Security’s payroll tax revenue: Social Security’s tax base has eroded since the last time policymakers addressed solvency in 1983, largely due to increased inequality and the rising cost of non-taxed fringe benefits, such as health insurance.”

YAY!!! Social Security is “only 1% of GDP for the next 75 years. GREAT NEWS, right??? Maybe not. United States GDP is $20.66 Trillion. There are 118,825,921 households in the United States.

It seems that each household would need to “only” contribute an additional $1,738.67 for each household in the United States, every year, for seventy-five years.

Do you have your checkbook out yet?

So, decreased benefits, or increased taxes, or both. AND, it hurts the poor the most.

Or…..do we modify the Social Security system to privatize the withdrawals, invest them in broad based stock indices, and create a Nation of Millionaires?

#ItsJustMath
#SocialSecurityHurtsThePoor
#TheyCantGiveItToYouUnlessTheyFirstTakeItFromYou
#TheFoundersWeep

Social “Security”, In The Words Of A SUPPORTING Organization…..

A gentleman said some unflattering things about me on Twitter because of my position on Social Security. I responded stating that I provided facts and data and challenged him to do the same.

His entire response was this URL: https://t.co/Y16JzxSkQz

There is far too much to address on Twitter, hence this post and several future posts.

Briefly, much of what is presented by The Center On Budget and Policy Priorities supports my positions. Following is ONE quote from the URL, titled (no joke) “Social Security Benefits Are Modest”. (EMPHASIS in quote below are added)

“For someone who worked all of his or her adult life at average earnings and retires at age 65 in 2018, Social Security benefits replace about 39 percent of past earnings. This “replacement rate” will slip to about 36 percent for a medium earner retiring at 65 in the future, chiefly because the full retirement age, which has already risen to 66, will climb to 67 over the 2017-2022 period.

“The average Social Security retirement benefit in June 2018 was $1,413 a month, or about $17,000 a year.

Moreover, most retirees enroll in Medicare’s Supplementary Medical Insurance (also known as Medicare Part B) and have Part B premiums deducted from their Social Security checks. As health care costs continue to outpace general inflation, those premiums will take a bigger bite out of their checks.”

So….they admit

1. That benefits DEcrease as retirement age increases.
2. That the retiree receives barely a third of what they earned while working.
3. The benefits will DEcrease as the Unfunded Mandate of Medicare continues to skyrocket.

The existing system is a slow motion train wreck. It represents a massive unfunded mandate. The “Promise” must be broken, because #ItsJustMath My modest proposal gives the retired worker OWNERSHIP of a benefit that pays more, for a longer period of time.

#ItsJustMath
#SocialSecurityHurtsThePoor
#TheyCantGiveItToYouUnlessTheyFirstTakeItFromYou
#TheFoundersWeep

How Is Social Security NOT Regressive?

As we’ve seen, Social Security hurts the poor and, instead, should have made us a Nation of Millionaires.

But WAIT!! There’s MORE.

A general impression among The People is that the money withheld FROM THEM is held FOR THEM in a Trust Fund.

They are wrong.

The Trust Fund exists. But NO ONE has ANY claim to ANY of the money withheld from their paychecks. Those funds can be (and are) redistributed in any way the government may choose.

One simple, unalterable, undeniable, fact illustrates this quite clearly.

Assume that our minimum wage couple planned a trip celebrating their retirement. Their children are grown and are no longer dependents. The couple has not received their first Social Security checks.

Tragically, the couple die in a solo car accident on the first day of their retirement trip.

Who receives the $506,000 that the couple would have received from Social Security if they lived to eighty-six? Indeed, who receives the more than $130,000 that was withheld from this couple? Surely their children will AT LEAST get back what was withheld from their parents?

No.

The federal government keeps ALL of the money. There is absolutely NO benefit to the couple’s grown children or other chosen heirs. The money confiscated from them is gone, completely and irretrievably gone.

How does this socialist program benefit the poor?

- - - The payroll withholding is MASSIVELY REGRESSIVE.
    - The poor have NO ownership of the funds withheld from them “For Their Benefit”.
    - The rate of return provided by the Socialist program is far below that provided by a privatized (real) solution.
    - The privatized solution pays 18% MORE than the socialist “solution”.

And The Founders Weep

#TheFoundersWeep
#SocialismHurtsThePoor
#SocialSecurityHurtsThePoor
#PayrollTaxesAreRegressive

A Nation Of Millionaires

It is tragic that so many of We The People believe that “government solutions” exist. Calls for Socialist “solutions” is gathering momentum. Nothing could be more disastrous for you as an individual, or for our country.

A central goal of this blog is to fully expose and demonstrate the fallacy of that cornerstone of progressive “solutions”, Social Security.

Establishment “solutions” to “fix” the myriad problems surrounding Social Security are always “more of the same”: less personal Sovereignty, more government intrusion, higher taxes, or lower benefits.

The TRUE solution, always ignored by The Establishment, creates a nation of Millionaires.

The attached spreadsheet assumes that an individual starts working at eighteen years old, and works their ENTIRE CAREER at MINIMUM WAGE.

The spreadsheet then calculates the Social Security benefit as prescribed by law. Under current law, that “benefit” is calculated to be $1,056.50.

The spreadsheet also calculates the monthly income if the employer and employee withholdings are, instead, invested in the S&P 500 and NASDAQ Composite indices. That monthly income is calculated to be $1,248.69, and would be available until the taxpayer lived to ninety-one-years-old, well beyond the current life expectancy.

So, the Socialist “solution” is $192.20 per month LESS than the Privatized solution.

The total accumulated by investing as described is $454,468.73.

It is important to understand that this accumulation was amassed during a time that includes the DOT COM bubble burst, the great recession of ten years ago, 1970’s “stagflation”, and other crashes and detrimental events.

The two indices include thousands of stocks. So, the investments are VERY diversified. (SAFE!!!)

If the individual marries someone who lived the same career path, their household would have total assets of $908,937.46. I’d call that damn close to a million dollar household…..but that isn’t true with the Socialist “solution”.

Click HERE to see the calculations supporting this post. Link will open in a new tab.

#ItsJustMath #TheyCan’tGiveItToYouUnlessTheyFirstTakeItFromYou #SocialismHasNeverWorked