Private SS

I was watching Jesse Jackson on TV talking about the situation in Ferguson and I was reminded of the time that President Bush was pushing for privatizing social security and Jackson vigorously opposed such a change. This was proof that Jackson was more interested in politics than in helping blacks. Here is why I say that using the example of a single person. An African-American male who makes it to age 18 will have a life expectancy to 74. This means if he starts collecting social security at age 62 he will collect for 12 years. If he dies before that all benefits stop. A single white female will have a life expectancy of 84. If they both collect $1000 per month the black male collects $144,000 and the white female collects $264,000. The average person’s account value at age 62, based on annuity factors is $200,000. If these accounts were privatized they would be like 401K accounts. This means that when the black male died his account would transfer to his heirs and if his death occurred at age 74 his heirs would get $56,000. If he died the day after starting social security his heirs would get nothing but if he had his own plan they would get $200,000. Federal employees have had just such a plan since 1984 and polls show they are very satisfied. They have a choice of 10 accounts to invest in and these are watched by the government. Typically in a 401K type plan the money is invested in stocks and about 10 years before the planned retirement date the funds are moved into a fixed interest account and the interest is swept into stocks. Here is how it would be implemented. Currently the employee and employer each contribute 6.2% of salary to social security. 2.2% of that will remain in the social security account to cover the cost of disability and survivor benefits. The other 4% will be eligible for transfer to a personal account. It will be done gradually over a 20 year period with 5% transferring each year. The government will make up the immediate short fall through deficit spending but after the 20 years are up the cost to the government for retirement under social security will be eliminated. It will no longer require periodic fixes to keep the fund solvent. I will not show the calculations which I have done a number of times but basically based on past performance if you take the worst 40 year period of the market and using the privatization as outlined about the 401K account would have about $300,000 in it which is $100,000 more than what the social account would have. This would also result in billions of new dollars going into the market to expand the economy.