Roadmap for the 21st Century: Social Security and Medicare
This Roadmap paper describes how personal savings and investment accounts could entirely eliminate the unfunded liabilities of Social Security – and eventually Medicare.
The Roadmap for the 21st Century Project is a collaboration of free-market experts nationwide reflecting their views on the major public policy choices facing the nation, particularly those affecting economic growth and prosperity.
In this Roadmap paper, the authors first document the funding crisis facing Social Security. They write:
The latest Annual Report of the Social Security Board of Trustees projects that Social Security will run short of funds to pay promised benefits as soon as 11 years from now, in 2028. Social Security’s disability insurance is running out of funds to pay promised benefits this year, assumed to survive only by a reallocation of funds from the rest of Social Security, which will make the rest of the program run out of funds sooner.
They explain why fully funding Social Security through personal savings, investment, and insurance accounts is the only real solution to the problems of the program. They describe how such accounts would make it possible for most workers -- from high-wage two-earner couples to single workers in minimum-wage jobs -- to retire with at least hundreds of thousands of dollars, and in some cases, millions of dollars in an account set aside for retirement. This is something that cannot be accomplished by the pay-as-you-go, tax-and-redistribute Social Security system we have now. The authors write:
[T]hrough such personal accounts, retirees of all income levels and family combinations would receive much higher benefits and substantial lifetime accumulations of wealth. Those lifetime accumulations of wealth would do far more to reduce inequality than any policy ever proposed, ultimately providing trillions of dollars in accumulated wealth to working people across America.