For years I have read on ways to "save" or "fix" Social Security. I honestly never came across many exceptional proposals. At best a decent solution would be taking various aspects of certain solutions and mixing them with other solutions. As someone who is only 30 years old I honestly don't believe I will get Social Security. Also I don't believe I should be responsible for other people and they save for retirement.
Social Security was created back in August 14, 1935. Social Security was created as a means tested program for the elderly that was designed to help the victims of the Depression. It also provided support to the unemployed. However, history shows that even when people didn't have the means to support themselves individuals would reach out to their fellow man through charitable actions. Back in the early 1900's there were hundreds of charities listed in local directories that would assist people during rough times.
The total unfunded liabilities of Social Security is $26 trillion according to a 2015 Senate Trustees report. What this figure represents is if you had to pay off all the liabilities for Social Security today you would need $26 trillion in the bank account to cover the liabilities. It is important to point out that over time this figure will continually increase as more people are entering the Social Security system.
The total unfunded liabilities of Social Security is $26 trillion according to a 2015 Senate Trustees report. What this figure represents is if you had to pay off all the liabilities for Social Security today you would need $26 trillion in the bank account to cover the liabilities. It is important to point out that over time this figure will continually increase as more people are entering the Social Security system.
The question is how to pay for the unfunded liability of Social Security. Does the government have assets it could sell to fund this? The answer is the government has plenty of assets it could easily sell to pay off the unfunded liability. A study done in 2015 shows that the approximate land of the United States is worth $23 trillion and $1.8 trillion of the value is held by the federal government. One idea could be to swap government land for Social Security benefits. Say the present value of your Social Security benefits are worth $100,000 the government could offer you an equal amount worth of land (preferably land that is in the state you live in). This would reduce future liability of current retirees off the books. Recipients of the land could sell the land to others if they wanted to and put the land to better use.
The Institute for Energy estimates that the government has roughly 1,194 billion barrels of oil and 2,150 trillion cubic feet of natural gas. Currently, a barrel of crude oil is worth ~$43/barrel would yield ~$51 trillion in value. Natural gas is worth ~$2.92/thousand cubic feet would be worth about ~$6 trillion of value. In total between the crude oil and natural gas would be worth almost $57 trillion (note I did these calculations based on recent crude oil and natural gas prices). Of course the government could wait until crude oil hit a high in order to sell (doubt this will happen as we can't give the government credit for understanding how markets work). A combination of land, oil, and natural gas can be sold either to individuals, public corporations, private corporations, and even internationals companies and investors. This would not only raise revenue but would be more productive since the assets would be put to work.
The unfunded liability for Social Security of $26 trillion could be met by selling a portion of the $57 trillion in assets in oil/gas assets. After we paid off the unfunded liability of Social Security with government assets I would make some changes to Social Security (this would be phased in over a period of 5 years). The first would be to increase the age in which you can take Social Security to 70 years old. Currently individuals who wait every year past full retirement age (FRA) receive an additional 8% of retirement benefits. I would end this additional increase of 8% in benefits as well. Only the government is generous/foolish enough to offer an increase in benefits of 8% when even public equity markets can't guarantee this. However, I would keep the cost of living adjustment that Social Security offers. The maximum you would be able to collect is the amount you are eligible for at full retirement age. With advances in medical technology life expectancy will continue to increase allowing people to live comfortably into their 80's and 90's.
Also I would allow younger people to opt out of Social Security and have the opportunity to save and invest that money for their retirement. Currently, the government taxes 6.2% on the employee and 6.2% for the employer for a total tax of 12.4%. A Reason poll from 2013 shows that 62% of Americans favor the opt out of Social Security. There should still be an option for people that want to stay in Social Security. Currently, Social Security benefits are either taxed at 0%, 50%, or 85% depending on the income of the individual or couple. One possible fix is increasing the taxation of Social Security to 100%.
The bottom line is that Social Security that can be fixed with a combination of selling government assets. The unfunded liability of $26 trillion can be solved by: swapping government owned land for Social Security benefits selling a portion of $57 trillion of natural gas and oil that the government owns. Also over a 5 year period I would increasing the minimum age to collect Social Security to age 70, increase the taxation on Social Security to 100% (up from a maximum of 85%). Once the unfunded liability of Social Security is paid off young people should be allowed to opt out of Social Security. These steps listed would allow Social Security to wind down in a method that wouldn't burden future generations.
