When designing a retirement system which works for ALL, there are a few key ideas I believe will help make something which works for everyone.
- A dollar deposited is counted as a dollar.
- Retirement savings must have a balance in a fully convertible currency (no Bitcoin) which belongs to the beneficiary.
- The average retirement account for the average worker must gain interest past inflation and withdrawals.
- All money left over when someone dies is property of the deceased and is inheritable pursuant to the laws of the state the deceased resided in.
Social security breaks all of these rules, as I have described before, and fails to increase social mobility for families, which is one major advantage of having a 401k. Both sets of my grandparents have IRA accounts, as do many people of their generation, and when my Washington GET program ran out (it was designed very similarly to a Ponzi scheme or OASI) one set were able to use their retirement to reduce the student loans I would have needed to take out. My great grandparents had traditional pensions, and their main retirement plans disappeared upon their death. We shouldn’t go back.
The more I think about the retirement crisis, the more I am convinced we should give people the opportunity to privatize their Social Security accounts. The Old Age and Survivors Insurance program has a serious racist aspect to it. White men live to be in our mid-70s on average, while the average African American man does not live to his 70th birthday. A regressive tax for Social Security further reinforces this racist inequity. If someone had the option to privatize their social security, the average person would be better off than they would be under the current system, and if they die in their 60s will be able to leave a legacy to their next of kin, usually children, as opposed to the current system where the government keeps the difference. Unlike other welfare programs in the United States, OASI transfers money from the working poor to people who live longer, who are usually richer and white. Source
Giving people the choice to deposit 100% of their social security taxes into their IRA, which can also be used for a down payment on a house (since owning a home is the major way middle class families in the United States accumulate wealth) will solve the retirement crisis for my generation. It wont help current seniors, they screwed themselves through their generations politics where Republicans created the student loan crisis, did not do any of their ideas for social security, and Democrats insisted any criticism on Social Security is an attack on the middle class. One important concept in economics is liability, and the problems which arise when people do not see consequences for their actions. We must avoid the moral hazard of not reforming Old Age Insurance, which will perpetuate down future generations with higher taxes and fewer benefits if we maintain the status quo.
The problems with social security are already here, and the longer we let dogma stand in the way of good policy, the more we will allow people to be seriously harmed. Perhaps Social Security is a sacred cow because it is one of the most effective transfers of wealth from the poor to the rich in America, so neither party will touch it, while we can’t even get every Democrat in Congress to back a public option, which has the possibility to save us $2000 per capita per year or more if it helps push our average cost of health care down to the cost other countries pay, which is the equivalent of over $6 trillion per year households will be saving in sum.
We need a better system for retirees in America today. 13.4% is far more than sufficient for the vast majority of Americans to invest for their retirement. When economic studies like this pop up on my feed regularly, we MUST fix our retirement crisis as soon as possible and put people over dogma.