Social Security is back in the news again. The administration is grinding the same ax and the Democrats have come up with a luke-warm alternative. Bush, of course, is still pushing individual investment accounts and now the Democrats have unveiled “AmeriSave,” designed, they say, to supplement Social Security. It’s supposed to guarantee benefits, according to House Minority Leader Nancy Pelosi, D-California.
We already know the drawbacks and the projected costs for individual retirement accounts. Now “AmeriSave,” which touts matching dollar-for-dollar for the first $1,000 a worker contributes to an IRA, 401(k) or similar plan, is introduced with no estimate of the cost. If only half of those people turning age 65 this year (approximately 1 million) took advantage of this, the fed’s outlay would be $1 trillion. My figures may not be perfect, but you get the idea.
I have been trying to sell my plan to the Democrats since March of this year when I wrote to Howard Dean, Democratic National Committee Chairman. No response. Zilch. You would think that at least a lowly staffer would eventually get back to me and either say my idea is do-do or we’re thinking about it, or just get lost. My latest attempt is to the Governor of Arizona, Janet Napolitano, who is also a Democrat. We’ll see.
To get back to the current discussions over Social Security, my concept uses the revenue from the sale of your name and personal data to supplement social security. I covered this in an earlier post: Junk Mail 101: My Solution for Personal Data Loss. Scroll down to the second post. Here’s a review.
Federal legislation would give each junk mail shopper 100% control over the use of their name and private information. We create a system of checks and balances where you make the decisions while also shouldering some of the burden of responsibility. A unique ID similar to a Social Security number in its originality would be assigned. This ID would be used in every junk mail transaction, including unsolicited credit card offers.
The mechanics are in the earlier post, but the point I want to make here is that it should cost the feds and the taxpayers nothing. Nada. Let the junk mailers develop the system and pay for the administrative costs. The selling of your name has been going on for over 50 years with profits in the billions.
In this business, I have personally witnessed advances in technology that, if applied in another direction, could put your name and personal data on the moon, and in a precise location. The junk mail industry can certainly develop a procedure that will process payments of $2 billion a year (from the total take of $4 billion for your name and personal data) and organize it in a way that pays individuals on a sliding scale, similar to Social Security. In other words, you reap in proportion to what you put in.
And now the numbers you’ve all been waiting for. Let’s look at an age 55 retirement first. Start at age 18 with contributions in a simple interest-bearing account (3%) for 38 years until you are fifty-five. The average minimum supplement payment expected is around $265. Some more, some less, of course, based on a sliding scale. Next, retirement at age 65, starting again at age 18 with the same interest rate, but for 48 years. The average minimum payout is $607, more or less.
I say, “average minimum,” above, because it is always best to be conservative with someone else’s money. These figures are based on paying out only that amount each year equal to the amount taken in (the $2 billion plus interest over 38 and 48 years). We are not dipping into the total available, which is $6.4 billion for those age 55 and $8.6 billion for age 65. It also does not consider the fact that we could achieve better results with a higher interest rate (probably around 6%) if the funds were invested with a secure strategy.
So, what’s wrong with this concept? Tell me if you know something I don’t. The numbers are all done in an Excel spreadsheet formula that gives the future value on an investment, based on the input of specific figures. Try it and see if you don’t come up with the same results.
And, I do realize there are several different ways we might go about achieving the same results. As an example, based on the amount of the surplus, payouts could begin as early as 2018, the first projected crisis period for Social Security.
If you agree, help me get the word out and please let me know what you think.