ACTUARIAL SUMMARY
The administration agent collects contributions, administers records, and manages defined investments at a fixed cost based on number of plan members or a variable cost based on asset values. Contributions are deposited into individual privately owned trusts of the members.
Guaranteed wealth on retirement will be the ending value of all dollars deposited into the individual's trust over 40 years. The guaranteed minimum ending value of all trusts will be $75 per $1 deposited. The difference between 75 and any actual ending valuation less than 75 will be fully funded and paid to the trust from plan reserves. Note: This has not happened in 98 years of theoretical operation. The statistical past probability is one chance out of fifteen (6.5%).
Reserves: net accumulation of aggregate deposits prior to distribution of individual trusts on scheduled retirement dates plus aggregate accumulation of yearly surplus wealth in excess of the guaranteed maximum ending value of each individual trust, which is $620 per $1 deposited. This has happened 40 years out of the 98 recorded to date, a statistical past probability of 41%.
Notes and Comment. The cumulated net surplus as of the end of 2008 is $6743 per $1 deposited. These are monumental numbers. The next score of years may be heavily biased toward rampant inflation or devastating deflation--either one. None of the brightest brains on the campus can tell you that ahead of time.
It is more likely that sovereign debt will default into bankruptcy than that a broad stock-market index will cease to exist. There is precedent for the former and none for the latter. Debt cannot stand the extremes of inflation or deflation. Stocks care not--and recover first.
Populism in a democracy may result in rancor over the range of wealth earned by individual retirees. The remedy is mathematical smoothing of the results. Well constructed psychological testings can help identify publicly acceptable tolerance ranges in annual wealth disparities.
PLAN SUMMARY
- You put in 6.2% of your salary. Your employer puts in 6.2%.
Both are tax-deductible. This is personal money--instantly. It goes into your own private trust.
- Your trust is invested in stock-index funds that you select.
- The U.S. government guarantees that you will get a return between 125% and 1500% of the total dollars you have put in.
- Your working career is set at 40 years. You have the option to retire earlier or later, depending on circumstances. It does not matter at all how long you live.
- If you suffer premature death or become disabled, your family may elect to inherit your trust or assign it to the government in exchange for a minimum living-level of family benefits.
- You cannot be left without resources. You can accumulate a large fortune.
- This plan is based on actual, documented public information. How and why it works is in the article, Fixing Social Security.*
It will remain just a plan until Congress acts. They will act when you ask them to.
* "Employee Retirement Wealth Ownership Act
of 2013"
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