The lock box lie

The third rail, to bring up the lie-propped house of cards, means political suicide.  As Social Security provides only a meager subsistence to its recipients, the fear of losing even one dollar after a lifetime of work generates deep primal emotions.

The disingenuous drum beat of the lockbox-dangerous-stock-market-scheme-they-will-cut-you-off-and-there-is-plenty-of-money-crowd was a great platform used to get elected or re-elected since the seventies.  This tactic has only served to punt the problem to today.

As of February 2009 the Social Security system is in deficit. (Mark Levin)

The classic pyramid scheme is collapsing and the band aids from the lockbox crowd to reduce payouts should not be allowed to last any longer. Al Gore cast the deciding vote and Bill Clinton signed into law the benefit-decreasing tax on Social Security. 

Try to retire at sixty five and see how little the benefit is. Today’s true retirement age is sixty seven and a half.

Promises were made and must be kept; with no quick fixes this plan is based on two truths. First, the most powerful force in the universe is compounded interest. (Albert Einstein)  Second, in today’s world every one that is 65 years old today will be gone in fifty years, with the exception of a handful of amazing people. (Mother Nature)

The plan is simple, over the next fifty years Social Security will gradually move from the Governments hands to the private individual’s hands.  This will happen at a rate of two percent per year for the next fifty years at the current fifteen and three tenths percent Social Security contribution rate of today.   The individual worker's portion will be deposited in a bank of that worker's choosing within his or her community.  This money will earn an interest rate of three percent minimum, compounded quarterly under normal time-tested and time-honored banking practices.  This money, principle and interest will be tax free as it is forcibly removed from any American's production for that American's retirement.

For the first five years of the change-over, those who are sixty and above will receive one hundred percent from the Government and the interest from their account as they retire at age sixty-five.  After the fifth year, benefits will be based on the percent paid to the Government from the change-over scale and the interest from their account.  On year fifty of the change-over, those who are sixty-five will retire on the interest alone from their account.

The money in the individual's account is strictly willable and is in no way attachable.  When an individual passes away, money in the account is transferred first to a spouse if age sixty-five or older; second to children if eighteen or over; third, blood relatives or if none it will be transferred to anyone’s account (s) designated in a legal will.  Where there is no relative or will, the account will be transferred equally to that individual’s city, county, state and fed government.

Survivors' benefits as follows:  Surviving spouse will receive benefits from the Government based on percent on change-over scale and the interest from spouse's account until age sixty-five is reached, when original account balance will be transferred to survivor's account. Retirement will then be based on scale and interest.  Children will receive benefits from the Government based on percent on change-over scale and the interest from parents' account until they reach age eighteen when their portion of the parents' account will be transferred to their own account.

Disability will not change and be based on change-over percents.

As this is a retirement account and strictly willable and not attachable in any way, no moneys involved can be borrowed against or used as collateral in any form. (If it were in the hands of the government it would never be accessible.)

From the pool of retirement money in every bank, thirty-five percent will be made available as thirty-year fixed mortgages. These would be at fair market interest to any qualified borrower, using time-tested banking standards of collateral and ability to repay. Ten percent will be made available for auto loans and thirty-five percent for business loans using time-honored and time-tested banking standards of security and collateral. 

From the start, twenty percent must remain liquid to pay benefits.  As this money will be over and above the regular business a bank does, it can make no more than three percent above what is paid on the retirement account (ie if the return on a home loan is eight percent the bank must pay to the retirement deposits five percent.)

 The plan as set forth is a serious long-term change that will set America head and shoulders above the rest of the world in wealth and prosperity.

Wayland Smalley 5-1-2009

Click...change-over scale to see the math.