Here is a replacement for Social Security

Published 9:31 am Tuesday, April 16, 2013

Column: My Point of View, by Al Arends

Our current Social Security system is currently running an annual shortfall of about $200,000 billion a year. It will only get worse as more baby boomers retire and, according to current estimates, the trust fund could be fully tapped by 2033. This requires serious congressional action. The conversion from a defined benefit plan to a defined contribution plan limiting liability of the government is very important. It still requires employee and employer participation, but it does put more responsibility on the employer and the employee.

Al Arends

Al Arends


A Social Security replacement plan

1. 5 percent by employer, 5 percent by employee to a private plan for employees 30 and younger.

2. They control the investments 20 percent automatic to government infrastructure.

3. Government bond for infrastructure pays 2 percent less than prime rate.

4. Employees can direct an additional 20 percent to bond.

5. Administered by private administrators.

6. Employees age 30 to 40 can divert half of their current plan to this program.

7. Those over 40 remain in current system.

8. A rescue tax of 1 percent added to all U.S. sales to cover, if needed additional revenue.

9. Once adopted, no changes for 10 years.

10. An additional 4 percent employee and employer are required contribution for a disability plan for employee.

11. Conversion of account values to an annuity with several options should be required of the balance in the Social Security portion of the plan.

12. The first $30,000 based on today’s dollar value should be income-tax free on the Social Security replacement portion.


A supplemental plan

1. Employee can contribute up to 7 1/2 percent in addition to plan 401k add on.

2. Employee can match up to 7 1/2 percent.

3. Maximum contribution is $30,000, but have up to 3 percent inflation rider.

4. Twenty percent of contribution must be invested in government infrastructure bond with an additional 20 percent optional by employee.

5. The employer gets a double deduction for his contribution to the supplemental plan.


In conclusion

The welfare of our workforce is very important, but the government should not and cannot take full responsibility for their future. Some responsibility must be assumed by each individual who is capable of making decisions. It is much like buying a house. When they have ownership, they are much more likely to do a better job of maintaining it. This approach should also be used when addressing Medicare, which faces a much bigger problem.


Albert Lea resident Al Arends is a member of the Freeborn County Republican Party.