Change hurts. Change always hurts someone. Change also, every time, benefits someone as well.
Change can be very good though as it can allow new information to be incorporated into an existing system in an effort to strengthen that system and allow said system to continue to be relevant.
Social Security clearly is in need of some change. SS has, from my understanding, always been a hot button topic in this country since it was first introduced. There are numerous opinions about the SS system, none of which I feel like getting into here, now. Either way, there are numerous aspects of the system that are indeed in need of change.
While it is a generalization to say what I am about to say, it also isn’t too far from the truth to say it either. Many opponents of SS tend to lean right and fall into Republican, Tea Party & Libertarian camps, among others. Many of the same opponents of SS also tend to believe in a person’s right and duty to take care of one’s self. You are responsible for your own actions. Your failure to plan accordingly is your own fault and the onus to assist you when you are “down on your luck” should not fall on society as a whole.
While I personally tend to hold many left leaning, or liberal ideals, my politics are and have always been a continuously evolving set of beliefs and principles. In my set of beliefs, I could not agree more with right leaning persons. I do not like being told what to do, I make my own choices and I live with and deal with the consequences of my choices. So too should everyone else. I have good, prosperous times in my life, and I have had bad, destitute times of my life already, and I am only in my early thirties. I also tend to be a bit pragmatic as well and recognize that there is a clear difference between those who make an effort and those who simply do not even try. For those that do not even try to better their own lives, and instead defer all of their crap onto society as a whole, I have no toleration and only contempt. Welfare, is a long winded discussion with me. But that is not the point of this article at all.
The fact of the matter is, I believe that SS should be an optional system. An opt-in system if you will. Now, before I get more into this, I first must state that I am not outlining the entire blue print for how these revisions would be implemented. There are many people in this country who are far better at match and economics than I am.
When you first start working, and everytime you start a new job, you should have the option of whether or not you want to feed Social Security. The monies you feed in are tracked by SSN (as currently happens) and would probably be handled the same way they are now. In this regard, maybe (probably) there is a better to handle\deal with the monies in the fund, but that is beyond my scope.
The age of retirement would be changed. We would allow a person to choose when they are ready to retire and would only set the base age to be, let’s say greater than 40 years old (for the sake of discussion). When you feel you have reached retirement, you can then start drawing on the monies you have allocated over your working life. Let’s say that you always chose to feed SS since you started working at 18 and you decided you wanted to retire at 50. If we expect you to live to the age of 100, your funds would be broken up into equal monthly payments spanning your remaining 50 years. If you die before you reach 100, the remainder of your “balance” can be either sent to a beneficiary, or added to the general trust for others to use. Again, this is a choice you get to make. I’m thinking, there is zero reason a very simply, basic website couldn’t be built that allows you to login and view\change this information anytime you feel like it. Another option you should be able to do is choose HOW your monies are handled. EG: diversify your holdings just like you would with a 401K.
Okay, so that is gist of that. Are there holes, issues, trouble spots in my SS theory? Probably, like I said, I’m not an economist and I have no actuary training. Either way, I highly doubt that there any issues in my basic premise are insurmountable, should something to similar to what I am proposing be pursued. I feel that the basics of this system would allow us to change SS in such a way that it becomes a more “Fair and Balanced” system and removes the “required” part of the equation which so angers so many. Further, it helps modernize it in such a way that we would really bring a 20th century concept full steam into the 21st century.
So, how do we get there?
Well, like I said. Change hurts. Change can hurt a little, or change can hurt a lot. SS is going to hurt a lot of people if we do absolutely nothing but keep kicking the can down the road. Depending on how, exactly, we were to implement the needed changes to SS.
First things first, we would need to means of allowing people to manage their “settings” in regards to SS. EG: we will need that website to be built.
Next, we need to allow people who are going to choose to opt-out, to receive their due monies. Monies which they were required to pay towards a system they don’t agree with anyway. This is the most crucial challenge in changing over the system. Failure to properly execute this could lead to a run-on-the-bank type of situation. My current thoughts on this are; people who are over the current retirement age should be given all of their monies in one tax-free lump sum. I feel it is probably best just to pay this group of people out of the system as they have been involved with it longer. Next, we deal with all the parties who are under the age of retirement. In this case, we might look to doing a sliding scale payment system where people can choose to receive their monies over the course of 1,3,5,7,10,15,20 years. Those closest to the current age of retirement can choose the smaller repayment windows whereas those furthest from the age of retirement are made to choose higher repayment windows.
Of course, this is not the most fair response to the given situation. However, all things considered, until you knew exactly how many people wanted to opt out of SS, you cannot start to understand how much capital outflow there will be. It is entirely possible that the population of opt-outs, and their cumulative “earnings” is small enough that you can just pay everyone out at once. It is highly unlikely that that would be possible, but it is indeed possible. That is optimal though because you can quickly start with a cleaner slate and work from there.
So, there we go. The basic framework of a non-forced, optional system for providing benefits to individuals who have spent their working lives paying into a fund so that they can continue to financially support themselves when they choose to retire. This system removes much government control over their rightful monies and allows them, through modern technology, to manage their path to retirement as they see fit. Further, this system removes the generic attribute of a retirement age and allows the individual to decide when they have worked enough.
And, some possible side effects.
Q: What if said person runs out of money before they’re dead?
A: They will need to either go back to work, or borrow monies from a friend, relatives fund.
Q: What if an opt-out party comes on hard times and cannot afford to retire?
A: Sucks for them. Beg, borrow or steal dude, I don’t know what to tell you. Your lack of proper planning is your problem and your problem alone. Better hope there are some people out there with kind souls willing to take you in.
Q: What if a person retires and dies before all their monies are paid out?
A: They have access to those choices anytime from the website to decide how they want their benefits to be handled.
Q: What if the government needs monies for something that it would normally have taken from the SS trust?
A: They can petition all active members to borrow the money from them. Systems like Kiva or Prosper are prime examples of how this model works in practice.
Q: Wouldn’t it be optimal to completely remove the government from controlling the SS fund?
A: That is the basis of where this self-managed system would lead us. As the kinks are ironed out and the system is matured, it would mandated that there is less and less government control of the SS fund.
And on that last point. It is my personal believe that the system of government we currently have in this country and many of the programs we have, like SS, are archaic and borderline relics of the past.
Modern, networked, connected technology has put this country in a position to do things that were absolutely unimaginable in the past. When the SS trust fund was setup, it would have been completely impossible to implement a system that allowed people to manage their own retirement funds. Now, most people today who have a 401K also have total control over their 401Ks. There is no reason, except lack of will and trying, that every single bill that gets presented to Congress cannot be voted on by the people. Hell, there is little reason that as of today, We The People cannot take an active role in actually WRITING the legislation that gets debated in front of Congress. Don’t think so? Look to Wikipedia to see how collective intelligence can be groomed into coherent information.
There are so many changes we are capable of making today that can help better define our republic, strengthen our unions & treat our citizens in a more fair and just means than ever before. All we need is the will to Try. Not all things will succeed, but the act of trying will help us succeed better than just sitting around, bitching and moaning to each other in our online echo-chambers.
We must do this and the other things, not because they are easy, but because they are hard.....