Social Security PLUS – A Voluntary Companion Benefit

In my nearly 15 years teaching high school economics classes, no single lecture ever garnered higher interest and attention than the one I dubbed, “How to Be a Millionaire by 45”.  With “Pay Yourself First” written on the whiteboard behind me, I introduced eighteen-year-old students to terms most had either never heard or only vaguely heard before, including mutual funds and individual retirement accounts (IRAs). This was a 60-minute lesson on the magic of compound interest and the time value of money.  The message was simple: save as much as you can, as soon as you can, starting today.   I promised the students that in 20 years they would likely never say, “Gee, I wish I spent more in my 20s and 30s and not saved so much.”

Enter AMAC’s Social Security PLUS plan.  The “PLUS” denotes an early retirement account that may be accessed at age 62 or later that is in addition to the Social Security program from which 61 million Americans currently receive benefits.  Fifty million Americans have no retirement plan, and the average person receiving retirement benefits collects just above $16,000 per year.  Accordingly, the majority of retired workers rely on Social Security as the largest portion of their retirement income, and for many Americans, Social Security is their only source of income.  Hence, AMAC is responding to the urgent need to help workers save more for retirement.

The AMAC plan is voluntary for both employee and employer, and its goal is quite simple—to provide additional retirement monies for all workers with access to the funds as early as age 62, the current early retirement age for Social Security.  This is neither big government dictating behavior, nor an employer mandate, nor a new regulation on any entity.  Some of the specifics of the plan include these: employee is the owner of the funds; no taxation to employee on growth or receipt of funds and no required withdrawals (like Roth IRA); employer contributions are tax deductible; employee contributions are after tax; employer contributions may be stopped or started at any time.  AMAC suggests an investment option of 20% of the funds invested in guaranteed interest accounts or annuities and the other 80% invested in any approved investment (i.e. S & P 500 index).  Investment choices would be similar to those used in 401k plans and IRAs. and the cost of administration would be borne by the same providers who offer those plans, not the federal government.

Turn $25 into $1 Million

A 23-year-old employee contributing only $25/week in the first year and an employer contributing $15/week, with both adding 4% annually thereafter, in a mix of 80% stock funds and 20% conservative investments, would accumulate over $1 million by age 65.  If the employee started at $40/week, using the same other assumptions, he would accumulate $1 million just after age 61.  While current retirees would not be able to take advantage of Social Security PLUS, we believe the idea is a game changer and essential in assisting the next generation and beyond to safeguard their futures.  Who wouldn’t want to see their children and grandchildren delay a little gratification in their younger years for the promise of a financially secure retirement?  And remember, Social Security PLUS is in addition to, but not in any way a replacement of, traditional Social Security benefits.  We urge you to call or write your member of Congress.  Ask that they support the idea that no one has more of a right to their own savings and for it to grow than the individual who earned and saved the money.  Ask them to support Social Security PLUS.  To learn more about this exciting idea and AMAC’s plan to guarantee Social Security for all Americans, click here.

Jeff Szymanski works in political communications at The Association of Mature American Citizens (AMAC).  This piece is an attempt to inform Americans of the reality of Social Security’s precarious financial situation and promote AMAC’s plan to preserve and modernize the program.

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