My idea is simple. We start with the current functionality of the SS system and establish a line between the socialist functionality and the personal responsibility side of it.
The socialist part of it (i.e. to each according to his needs, from each according to his ability) is currently used to give benefits to disabled people and other people who didn't pay in. We shouldn't make that go away, but we can nail down the portion of the total SS money that is reserved for that.
The other part of it, the part where people who paid in get money later is another story. Right now, every dollar goes into the system and people who pay in get some money back later. Some have estimated that the equivalent rate of return (if you were to treat one's SS contributions as an investment) is 1% (inflation adjusted).
What I propose is that we nail down the boundry between the socialist side of SS and the personal responsibility side.
Here is a spreadsheet that I came up with that illustrates what I am talking about:
Click here...
The yellow squares are places you can edit. You pick the percentage of ownership (I like 70%) and the esitmated yearly salary growth and starting salary. I compare my system to the government taking all 12.4% of the contribution and giving back 1%. If you adjust the percentage of ownership (the 70% number) and the estimated rate of return (the 2.75%) you can see where in time you break even with the current system.
ping
Another distinction that should be made is that between a defined benefit (current SS) and a defined contribution (401K) plan. The defined benefit can easily degrade into a Ponzi scheme, because there is not one to one link of personal responsibility. The defined benefit of SS adds to the humongous Natonal deficit, while the personal account contributes to surpluses. Your plan sounds good. I was unable to open your file. I encourage you to educate your fellow citizens with your plan to relieve social security angst. Please visit generationstogether.net.
I tried downloading your spreadsheet. Windows could not find it.
We need to establish the role of government. We are compasionate conservatives. We care about the disabled and don't want runaway monopolistic capitalism. So the government needs some sort of role.
Nice work! Thanks!