Archives for November 2012

Let’s SAVE OUR SOCIAL SECURITY SYSTEM!

 

Confused about your Social Security Program? Welcome to the club.

Here’s a few of the comments that have been in the news lately:

…the Social Security Trust Fund is non-existent…

…the Fund is fine till 2037; then you’ll get 80% of the regular benefits…how long? Who knows.

…the Fund holds 2.46 Trillion in (worthless or fictitious?) securities, and will grow to 4.25 trillion before decline in 2037…

…Social Security outlay in 2011 was 727 billion…4.8% of GDP…

…the Deficit Commission advises that we:

  • Cut benefits
  • Increase FICA tax
  • Extend age limits for benefits
  • Privatize part of Social Security
  • Institute a ‘Means-Test’ so millionaires don’t get so much in benefits

Who’s right? What is myth and what isn’t? Will we have Social Security in the future or not?

Even though our government needs revenue to support our failing Social Security Program, no one likes to pay higher FICA taxes, or wait longer for Social Security to kick in, get reduced payments when it does, or be forced to privatize Social Security,  right?

Hey, Uncle Sam! There’s a better way! And when folks hear about it, they’ll all want to jump on board!

Why? Because this plan has something of immediate value for them, and not one, but multiple $ awards they can see and feel today and into their retirement when they need Social Security to be there for them. But the American people have to support this program for $1 to $25 per week.

  • The first award is that the American people can make Social Security solvent again — that alone is worth an average price of $10/week because it means that Social Security will be there for all at retirement, including our future generations.
  • The second award is $1,000,000 — every week! In the first year, that amounts to 23 millionaires per week! (and that increases every year); that’s over 1200 new millionaires in the first year alone. In 30 years, that’s 40,000 millionaires.
  • The third award is $10,000 — every week! In the first year, that amounts to over 114, 000 awards per week (and that’s only in year-1); that’s almost 6 million $10,000 awards in the first year alone.

And here’s the best news: With this plan there is:

  • No reason to increase F.I.C.A.,
  • No reason to cut Social Security benefits,
  • No reason to increase the retirement age for benefits,
  • No reason to Privatize part of Social Security,

That means that every U.S. citizen benefits in their Golden Years for $10/week!

Did I get your attention, Uncle Sam?

How do we bring about this miraculous feat, saving Social Security while giving huge awards just for participating?

Here’s how:

The American people save their Social Security program, and are awarded for doing so with monetary awards, over and above their Social Security benefits.

First we create a ‘Social Security Revenue Fund’, a totally non-profit Fund which has two main goals:

  • Create revenue year after year for Social Security – over and above the money earmarked for Social Security in our federal budget (How else to delete the coming deficit?).
  • Create capital gains awards for millions of U.S. citizens

For participating every week for $10, this SOCIAL SECURITY REVENUE FUND can:

  • Create billions (even trillions) in Social Security revenue while it increases yearly
  • Add almost 6 million  $10,000 awards in year-one and increase that number every year
  • Create 1,213 millionaires the first year across the nation, and increase that number yearly

And investment in RF is up to each citizen (and even non-citizens who will help make our Social Security program solvent again).

Even citizens who do not participate will benefit from a solvent Social Security Program when they retire. How can you beat that, Uncle?

 Investing $16/month can Save the Whales.
However, investing $10/week, or less, can Save Social Security for all U.S. citizens.
Which investment would you choose?
Sorry, whales.

Here’s how RF works:

  • RF creates an Index Fund with computer-generated gains (but no losses as in a regular Index Fund).
  • Investors invest $1 to $25/week, into RFas follows:
    • U.S. citizens can use funds from IRAs or discretionary income if no IRA, or even through payroll deductions
    • Non-citizens use discretionary income or payroll deductions

Where the money goes:

  • That invested money is divided by RFas follows:
    • 62% to Social Security; at $10/week, that’s 111 Billion in year-1 (based on per capita spending on the program by our population and non-citizens)
    • 4% for administration of RF. That’s 7.13 Billion.
    • 34% to capital gains awards (62.5 billion in year-1) to investors which are distributed as follows:
    • 98% of that 34% is paid out in capital gains awards of $10,000;
    • 2% of that 34% is paid out in capital gains awards of $1,000,000!

Since the capital gains are computer-generated by RF, results can be skewed to favor the oldest group (our seniors); older investors who need income the most would have increased odds of receiving these awards. As the population ages, participants will cross age boundaries and have more chances to be awarded capital gains.
The age skew kicks in is at 50 years of age and increases every ten years for our seniors.

Hey, this is sort of like our state lotteries who direct part of the input to education!

You’re right, but this is on a National level and only for the benefit of Social Security and the American people; there are no mega-million individual awards in this lottery.

If you were planning to play a lottery, wouldn’t this one make sense for your retirement?

As you’ll see, the odds of winning are fantastic!

With that thought in mind, let’s take a quick look at some state lottery statistics to see what the per capita spending on state lotteries has been, using data from 2004 to 2008 as an example. If you’re going to spend $10/week, you should know what others spend.

For instance, Rhode Island per capita spending in 2008 is $2275 per year ($43.75/wk) up from $1373 ($26.40/wk) in 2004, and Delaware is $846 per year ($16.27/wk), up from $773 ($14.87/wk). This suggests that $10/wk is a reasonable price to pay for participation in a national lottery that will not only save Social Security for them, but put money in their pocket, simultaneously.

The Plan’s author has selected a dollar range where everyone can participate based on their own budget. Chosen was $1 to $25 as the range with an estimated average of about $10/week.

It is believed that RF can control any attempts to spend outside these limits by putting a cap of $25 or 25 investment units on the purchase of entries. The RF data base can assure that; any individual investment beyond the limit of $25 will eliminate that person from participation in that week with no refunds. This cap keeps the program within the reach of the majority of average wage-earners.

With this range of spending, you will see that RF generates huge Social Security revenues while also providing huge total awards to millions of citizens.

Let’s look at what RF participation could do.

Based on $10/week per capita as the average expenditure, and assuming that non-citizens can also participate in this program, here are some of the astounding results that can accrue from the Social Security Revenue Fund:

  • First, our Social Security program is made solvent. In the first year of RF operation, Social Security receives $111 billion in added revenue, over and above any Federal government budget for Social Security based on the GDP, and this will increase by year-30 to $3.88 TRILLION! Remember, these funds are in addition to normal Social Security funding by the U.S. government.
  • RF will create over 1213 millionaires in the first year of operation, and that number will increase to 42,537 millionaires by year-30.
  • RF will create almost 6 million winners of $10,000 in year-1, increasing every year to 208 million by year 30. In other words, two-thirds of the U.S. population will get these awards plus a chance at $1,000,000 every week.
  • Participants in RF will include U.S. Citizens and non-citizens, too.
  • That means that non-citizens will help fund our Social Security program!
  • U.S. citizens will use their Social Security number to participate.
  • Non-U.S. citizens will obtain a REVENUE FUND Identity number where they invest in RF, whether a bank, employer, or credit union. This number will go into the RF data base; no one without a number can participate.
  • Although non-citizens are allowed to participate, their winnings are shared with our Social Security system since they are not U.S. citizens. This may induce many non-citizens to apply for U.S. citizenship.
  • The Social Security number and REVENUE FUND Identity number will be used to create an investor database and to generate winning numbers each week from that database. This data base also serves to control the spending cap.

 CONCLUSIONS BASED ON THE ASSUMPTIONS

  • The Social Security Revenue Fund is a new fund created to generate Social Security revenue and provide more retirement income, mainly by creating capital gains awards which are held in special Revenue Fund accounts for each person awarded; however, any interest on these accounts goes to Social Security.
  •  RF is a non-profit fund, since all revenue generated goes to social security and the American people, with an operating budget of 4% of the incoming revenue used for administration of RF (over $7 billion per year and increasing with population growth).
  • By investing your money in the stock market, a standard Index Fund, or a State lottery, you can win or lose.
  • By investing your money in RF you can have additional retirement income and make our Social Security system solvent. There is no loss possible. Even if a U.S. citizen doesn’t win an award, he still wins because our Social Security System will be solvent again! That alone is worth the investment.
  • Our Federal government will collect taxes on trillions of dollars over 30 years when winners pay taxes on withdrawn winnings.
  • Odds of getting capital gains from RF: It was found that in 2004 in the whole U.S. 1136 players won $1 million or more in all state lotteries. In a population of 296,000,000 (plus about 12-million non-citizens) that made the odds approximately 271,126:1

At $10/week invested in RF, the program creates 1213 millionaire winners in year-1  plus almost 6 million  $10,000 winners, and the odds of winning either award are 57.7:1. And that’s only in the first year. By year 30, the odds of winning $10,000 or $1 million are only 1.75:1.

What amazing statistics.

 EVERYONE WINS with the Social Security Revenue Fund: the U.S. population, our Federal government, and even non-citizens — and all for $1 to $25 per week.

The excellent odds in this program are created because the number of new capital gains awards is large, and the capital gains are not only $millions to thousands, but $thousands to millions.

  • The government should allow citizens to invest from their IRA. Since this money is already targeted for retirement income, what better way to strive for more income than to use from $1 to $25 per week? Not only is the money readily available, but its use has no impact on normal living expenses until withdrawal at retirement; and by investing you save the social security system for YOU while the odds are in your favor to increase your retirement savings, simultaneously. And you’ll be helping our Federal government fund Social Security.
  • With such financial power as RF demonstrates, it is conceivable that employers would consider subsidizing employee’s with the funds necessary for investment. This would remove the burden from the investor – or at least minimize the impact on their available savings; a matching-funds program would work well.
  • RF is an ongoing program, so this revenue will continue year after year.
  • Our government legislative bodies must clear the way for Social Security to receive direct support through RF as suggested in this proposal for Social Security to survive and prosper in the years ahead. As mentioned in numerous articles, by 2037, Social Security will no longer be solvent, but must begin to take funds from trusts – which will be decimated by 2040 without major changes.
  • The capital gains awards from REVENUE FUND investing should not be taxed by the Federal government in the year received so that those capital gains can be invested and grow tax-deferred in an IRA or special Social Security savings account until withdrawal.  The federal government does not have to add one cent to to the Social Security budget. Eventually as winners withdraw their winnings, the government will get its share in income taxes, perhaps even at higher tax rates.

 APPENDIX A — TYPICAL ASSUMPTIONS MADE FOR RF CASE STUDIES

  • Population in the U.S. is 343 million in 2012, including another 3% non-citizens; however, the predicted yearly increase in population to 439 million by 2050 is built into the Case studies along with 3% added for non-citizens for a total of 459 million by 2050.
  • Each U.S investor must have a Social Security number in order to receive awards from RF. This may stimulate non-citizens to become U.S. citizens in order to invest for retirement income and million-dollar awards, thereby generating more taxable income for our government and Social Security.
  • Each non-citizen must get a REVENUE FUND Identification number to participate for awards. These numbers will be entered into the RF data base and randomly picked in each week’s drawings on an equal basis with U.S. citizens.
  • For non-citizens inside and outside the U.S. sizable penalties must be levied on awards (50%, for instance), and this revenue will be fed into the Social Security base.
  • Those with no social security number will help fund our Social Security System.
  • The two capital gains awards possible are $10,000 and $1 million.
  • A cap on investments is suggested to be $25 per week. This cap would keep the capital gains awards within the reach of the average wage-earner rather than give high-earners an edge on all that new capital gains income. Also, the cap prevents investors from ‘betting the farm’. Without a cap, the revenues could be astronomical.
  • Capital gains awards are generated and awarded weekly.
  • No cap on the number of capital gains awards is suggested to allow for repeats, including $million awards; many investors would continue to strive for a $Million. With no cap, investors will continue to invest and feed revenue to Social Security. The odds of repeats are minimal. Thus, all winning awardees can still invest for capital gains awards.
  • A split of capital gains awarded is made so that there are 2% Millionaire awards per year, and 98% going to $10,000 awards. There would be no discrimination in each $1 invested, so that anyone could be awarded $1 million or $10,000 – or with a $2 investment, BOTH – every week.
  • Each $1 invested gives the investor one unit in the randomly-generated award pool.
  • Award-winners can opt for a lump sum (in the case of a $10,000 award), or in the case of a $1 million award, the winner may opt for a lump sum (with huge immediate taxes) or a 5- or 10-year annuity, depending on age. With an annuity, Social Security (or RF) retains the winner’s money and collects interest on that money until such time as it is paid out. In any case, any interest accrued on that money goes to Social Security; the winner does not see any interest.

APPENDIX B  

RESULTS OF THE STUDIES BASED ON Excel SPREAD SHEETS

WHERE THE MONEY GOES —  BILLIONS unless noted

Bold underlined numbers are TRILLIONS

$1/week

$52/year                        yrs                  1                      10                    20                    30

Total $ to SocSec                         11.1                 116                  246                  388

$ to $10k awards                         5.94                 62.5                 132                  208

# of $10k awards                    .594 mill          6.25 mill          132. mill          208 mill

$ to $1 mill awards                121 million     1.28                 2.69                 4.25

# of $1 mill awards                121                  1276                2694                4254                                         

$10/week

$520/year                      yrs      1                      10                    20                    30

Total $ to SocSec                    111                  1.16 Trill        2.46 Trill        3.88 Trill

$ to $10k awards                    59.4 mill          625 mill           1.32 Trill        2.08 Trill

# of $10k awards                    5.94 mill          62.5 mill          132 mill           208 mill

$ to $1 mill awards                       1.21                 12.8                 132                  208

# of $1 mill awards                1213                12,765             26,944             42,537


$25/week         

$1300/year                    yrs      1                      10                    20                    30

Total $ to SocSec                    276                  2.91 Trill        6.14 Trill        9..7 Trill

$ to $10k awards                    149                  1.56 Trill        3.3 Trill          5.21 Trill

# of $10k awards                    14.9 mill          156 mill           330 mill           521 mill

$ to $1 mill awards                    3.03                 31.9                 67.4                 106

# of $1 mill awards                3032                31,912             67,359             106,343

On the average at $10/week, 2/3 of the U.S. population would get capital gains awards of $10,000 or $1 million in a 30-year period (208,000,000 + 42,537) and many would get multiple awards; Social Security would receive $3.88 TRILLION in revenue; investors would receive $2.08 TRILLION in awards, and there would be well over 40,000 new millionaires.

At $25/week, everyone in the U.S. would get capital gains awards of $10,000 or $1 million in a 30-year period (521 million + 106,343). This suggests that every U.S. citizen would receive at least one award, and many would get multiple awards. Social Security would receive 9.70 TRILLION in revenue; investors would receive 5.21 TRILLION in capital gains; and there would be 106,343 new millionaires in the nation.

And lest you forget:

With this program:

  • No privatization of Social Security is required
  • No increase in retirement age is required
  • No increase in FICA tax is required
  • No cut in Social Security benefits is required

THAT is the power of the RF investment.

If you think a Social Security Lottery could help us SAVE Social Security, contact your Congressmen, Senators, Representatives, and let them know. Tell them to contact Ray Mathews at:

raysreadingroom@gmail.com

You may save your own Social Security retirement benefits!