While we could create many new benefits, our plan focuses on two benefits. The point is to demonstrate that more choice will save significant dollars for the system. We outline examples of how it can save the system money - see examples.
The plan allows Americans to trade in expensive old benefits for less expensive new benefits. These Americans get what they want, and it saves Social Security money in the process. It works because there are things that people want more than money. In this case, it is certainty and control.
What Is Trade-In?
Nothing is free. These are benefits that will appeal to some and not appeal to others. For someone to get additional benefits they will have to concede quarters worked and contributions. So the base benefit will decrease, but keep in mind this is the price tag of the new benefits and one that the worker wants to pay.
Nothing is more troubling for someone planning retirement than uncertainty. For many Americans certainty is more valuable than the money that they are getting. This isn't true of everyone, but in many cases it is highly valued. We offer that audience a choice. Workers who want this benefit will be trading future benefits for future certainty.
The biggest uncertainty is political risk. What are future voters going to do? Social Security benefits are a legislated benefit not a financial obligation. Congress can change the terms of benefits at anytime. Our plan enables workers to remove a portion of this problem from their benefits. We literally put a portion of your benefits outside the reach of Congress.
Other people may worry about financial risk. The Social Security Trust Fund invests exclusively in obligations of the United States government. The US government's credit rating was downgraded by multiple credit agencies. Some people would prefer to have a diversified retirement plan. Our plan would enable a worker to accomplish this goal.
On the opposite side of fear is greed. Some people want greater returns on their money. The only way to accomplish this goal is to move money out of Treasuries, one of the poorest investments over the past 70 years, and move it into higher yielding assets. Our plan offers these people greater control of their money – but it there is a price for the new benefit.