How to Protect Your Retirement
Preview: Everyone knows that Social Security is headed for insolvency. We owe it to our seniors and workers today to do better.
The Social Security Administration projects (https://www.ssa.gov/oact/TRSUM/index.html) that, if nothing is done, benefits across the board will have to be cut by 20% by 2034. Yet, even this unsustainable system fails at covering everyone. Those senior citizens who have not had enough work history in their lives, particularly divorced spouses, may not receive anything from Social Security.
No one is willing to discuss solutions to these problems, and when they do, they usually propose increased taxes, reductions in benefits, or raising of the retirement age.
My plan saves Social Security, not by increasing the retirement age, but by reducing it to age 21. By phasing out all our welfare and entitlement programs, we can free this money up to return to everyone in the form of a universal basic income of $16,000 per year starting at 21. It lowers overall government spending and allows everyone to start investing early for their own retirement.
Meanwhile, all current retirees and those within 30 years of retirement could choose to continue with their existing Social Security benefits or switch to the universal basic income, knowing that my plan maintains the long-term solvency of the entire system.
For young people, the new system would start paying them benefits right away, allowing them to save for a much better retirement than what they could expect from the current system. Let’s say you were to invest $6000 per year of your $16,000 universal basic income in a retirement fund starting at age 21. If the average growth rate were 5% (a conservative estimate), by 67 years of age your total retirement savings would be just over $1 million. That would fund an annuity that would pay out at least $4,500 per month for the rest of your life plus the continuing $1000 per month of universal basic income.
This total retirement income of $5500 per month is significantly higher than the current individual maximum Social Security payment of $3822 per month at age 67, available only to those who have earned $168,000 or more per year for 35 years. By contrast, the $5500 per month retirement is within reach for everyone, and the system is sustainable for the long term. This comparison demonstrates how inefficient the current Social Security system is at providing retirement benefits. With my plan for a universal basic income, everyone can have a comfortable retirement, not just the wealthy.
This example presumes that people will be wise with their money and plan ahead for their retirement, and that is as it should be. The plan provides the freedom to make such individual choices about one’s life yet also encourages individual responsibility. But even those who fail to save would be protected, as they would continue to receive an inflation-adjusted universal basic income for the rest of their lives.
