re: Nikki Haley Says It’s Time to Raise the Retirement Age to Reflect on Life Expectancy

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The IBFreeman solution to SS is more than the average politician can ponder but it is simple and solves the entire program.

1) Benefits stay the same

2) benefits are funded by a national sales tax that will be adjusted every year to pay the amount projected to be paid

3) employees will be required to save 5% of their payroll and employers match it. There will no longer be a payroll tax saving employers and employees the 7.5% currently in place. This saving can be directed to private accounts including 20 year CDs that pay at least 3% interest at FDIC banks (the banks can count a portion of these CDs as capital instead of debt so these CDs would be hybrid debt/equity vehicles)

4) retirees cannot begin drawing Social Security until the savings described in number 3 are withdrawn at the SS monthly rate. SS then becomes a stop gap for the savings instead of a pure welfare payment.

The advantages to everybody of the IB plan are:

1) immediately there will be a lag in paying benefits as new retirees will have some savings they will have to spend first. As the program gets older this will be very significant. In 10 years I project the average age of new people first drawing the now stopgap SS will be over 75 even though they will have retired at 65. In twenty years most people will never have to draw SS and will have more money in saving than they will draw in retirement creating an estate. This will do more to eliminate generational poverty than any previous government program.

2) the US treasury can immediately repatriate the SS trust fund and the debt it holds---the largest single holder of US debt--and will have in one swoop eliminated current US budget.

3) in theory if the politicians do not squander the sales tax will be near zero in 10 years to fund this.

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