American Fairhope Retirement
Welcome to the worlds of Social Security and Medicare, the third rails of American politics. It has effectively been political suicide, for any politician to speak negatively about these favorite government programs. This appropriate analogy is derived from the third rail of an electrically powered train, which is charged with high voltage and thus lethal to touch.
Social Security and Medicare are Federal Ponzi operations; which are otherwise known as Federal or National Ponzi schemes. Such government behemoths constitute the most dangerous hybrid models of a variant classic Ponzi scheme design. The federal government has enacted these immoral and socialistic wealth transfer schemes into law, which is the crucial problem.
Americans born after about 1965 will be the ultimate victims, of our well intentioned but foolish federal schemes. They will rightfully be angry and perhaps riotous, after paying conscription stakes all of their working careers and then nothing remains for them. Moreover; scheme collapse will occur well before the Boomer's needs have been completely met.
Good Ship SS Titanic
The Social Security and Medicare federal programs can be compared to the good ship SS-Titanic, which has already collided with an iceberg. Unfortunately; such government ships are destined to sink, but there aren't enough life boats for everyone.
Consequently, Americans must be of true character and make correct choices to save their retirement. Social Security and Medicare should be completely privatized, which will effectively throw lifeboats to the Boomer's descendants. Please achieve understanding about how this can be accomplished.
Collapse on the Horizon
With people living longer now, Social Security income will be needed from about age 65 until about age 90; to care for them in old age. The Boomers, who were born between the years 1943-1964, will need Social Security to remain solvent from 2033 until 2054; or perhaps even longer. Caution: Here is where the alarm bell is ringing loudly!
In President George W. Bush's Social Security Speech* of Feb-2005, he stated, "By 2041, ...system will be bankrupt". Therefore, Social Security will be bust before the Boomer's needs have been fully met. Moreover and very sadly, Social Security doesn't appear to be on the horizon for the Boomer's children, grandchildren and great grandchildren. President Bush urged for Social Security to be 'fixed' in 2005, but to this date congress has not 'fixed' it. However, beware that Social Security can not be 'fixed' in any way whatsoever; which will effectively save SS from its certain death spiral.
*[Ref; http://georgewbush-whitehouse.archives.gov/infocus/social-security/ ]
Recently the Social Security Trustee Report* of 2011 advanced the date of SS bankruptcy to 2036*. Obviously, the projected date of collapse is now a full five years sooner than President Bush first reported in 2005. Moreover, the projected date of Medicare Hospital Insurance (HI) Trust Fund exhaustion is 2024*, which is also five years earlier than estimated in just last year’s report. Consequently, one does not need to be a rocket scientist to understand this disastrous trend toward an American retirement apocalypse.
*[Ref; http://www.socialsecurity.gov/oact/trsum/index.html ]
Both Social Security and Medicare can be comprehended to be specific models of virtual machines. Attempting to 'fix' such federal Ponzi schemes is equivalent to the futile and vain attempt of making successful 'perpetual' motion machines. But alas, all dream works of foolish men fail 'perpetually'.
American Fairhope Retirement Plan
Please consider the following proposal for privatizing Social Security. The American Fairhope plan permits Americans to have complete freedom to choose their own private investment firms and individually choose investment products. Such a private retirement plan would liberate Americans from bondage to the federal government.
If 100% privatized under the American Fairhope, any such young American could privately invest 15.3% of wages or salary per year (in lieu of SS-Tax and MC-Tax) for the next forty years. Such a rough estimate should yield in excess of about $500, 000 worth of investment principal. Moreover, if this substantial principal is systematically invested over the same period from each paycheck, the ultimate forty year investment is estimated to yield in excess of a million bucks.
Preview of American Fairhope
Key Dollar Points
$ The American Fairhope Retirement Plan permits Americans to have complete freedom to choose their own private investment firms and individually choose investment products.
$ Under Fairhope provisions and if privatization occurred today, persons already over age 50 would remain on 100% Social Security with no change in benefits, unless they elect to do so during open-enrollment for privatization. What will actually be discussed here is the proposed transition plan from Social Security to the completely private American Fairhope plan.
$ Employees and self employed small business owners, who are minimally age 31 but less-than age 50; would be contributing to both Social Security and personal retirement savings plans. The age 31-50 band should be considered as the transition phase or gap in smoothing the impact of such retirement change. Please note that age 40 is the transition point for 50% Social Security and 50% Private participation. Young Americans, who are under age 31, would entirely be on a 100% Private personal plan.
$ An open enrollment period is provided, for one full year; before the privatization plan becomes effective. Any tax payer can elect to increase their private participation, up to 100%; and consequently decrease their Social Security participation, down to 0.0%.
$ Employee retains future Social Security and Medicare taxes, or a pro-rata share thereof; according to Table-I participation factors. Of the privatized portion, the federal government forfeits (employee acquires) both components of the employee’s taxes and employer’s matching taxes. Such taxes should be directly deposited into the employee's retirement savings plan (RSP). To clarify further, the government retains both components of the non-privatized portion, according to Table-I.
$ Prior taxes should be refunded to American workers, based upon their total lifetime Social Security and Medicare taxes paid. Refunds should be a pro-rata share, as determined by Table-I; or by elections made during open enrollment.
$ Retroactive Investment gains should be provided by Uncle Sam, who should be decent and choose to do the right thing. The author suggests a federal government retroactive payment; of 3.0% APR, compounded annually. Such return is a reasonable and modest expectation, for federal use of our money; to run the federal Ponzi operations.
$ Refunds should be made by federal government bonds, which pay the prevailing treasury rate to tax-payers. However, such a treasury certificate may not be redeemed; except for approved retirement after age 65, or for major-medical needs or disability.
Such deferred and distributed bond redemptions permit American Fairhope to become an affordable plan for the nation. Moreover; the participants who are paid-off; cease to become a financial liability for the SS system, in later years. The author believes that such an arrangement is a win-win plan for America.
$ The complete process, which is envisioned by the author, would require about fifty years before Social Security can be dismantled and completely eliminated. However, due to natural mortality of Social Security participants, the Social Security administrative complex would be continually down-sized over the next half century.
$ American patriots should get their personal money returned and thus not be required to gamble in the federal Ponzi games anymore. However; the grandest prize is freedom from bondage to the federal government, as a conscription investor. Such a prize is worth more to Americans, than all of the other dollar signs listed herein.
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