The $20 Trillion Social Security Solution
Jacob Wade recaps the Social Security Trustees warning that benefits will only be payable at 77% starting around 2033 unless reforms are made. The usual mainstay is to raise payroll tax rates and/or the wage cap so more earnings are taxed. While that can ease a little, Tim Schmidt, founder of IRA Investing, said a more involved solution could help. “The establishment of a National Retirement Fund (NRF) could be a novel idea,” he said. “The NRF would be a voluntary, government-backed investment fund to which people could contribute throughout their working lives. Contributions would be tax-deductible, similar to a 401(k) or Individual Retirement Account (IRA), motivating participation. The funds would be invested in a diverse portfolio managed by financial professionals with the goal of long-term growth.”
Schmidt added, “As the NRF expands, it will earn significant profits, supplementing Social Security reserves. Individuals might receive regular pension-like payments from the NRF upon retirement, or they could convert a portion of their balance into an annuity to complement their Social Security income.” Read the full piece here.