Social security

How to privatize social security retirement benefits. For every $100 that social security pays out $78.60 goes to retirement, $12.70 to disability and $8.70 to survivor benefits. The 6.2% deduction from wages means 4.87% is for retirement .78% for disability and .54% for survivor. The disability and survivor deductions would continue to go into the SS fund but the retirement benefit would be privatized. It would be patterned after the federal employees savings plan called Thrift Savings Plan (TSP) and contain three main investment options including fixed, stocks and bonds. This is the federal equivalent of a 401K plan and has been around since 1986. Surveys indicate that employees are very satisfied with the program. The transition to privatization would begin with everyone under the age of 50 and take 30 years to complete. The employees would have the freedom to chose how they invest their funds but they would not be allowed to access those funds until age 62. Comparing someone who starts today at age 22 with someone who remained in the current system and looking 40 years down the road we have the following. The stock market has average 10.7% over the past 100 years. Assuming that rate in the future here is the difference if the two people in out example retired today. Assume that both had a life time earnings average of $60,000 per year. The person who remained with SS would retire at $1,224 per month. The person who chose their own plan and earned 10.7% would have $338,000 in their account. If they invested that in government bonds earning 5% they would have $1,408 per month and retain their principle to pass on to their heirs.