SIGNIFICANTLY REDUCE THE FEDERAL DEBT/CUMULATIVE POTENTIAL DEFICIT;
REDUCE FEDERAL EXPENDITURES $750 BILLION OVER THE NEXT TEN YEARS; AND PERMANENTLY "FIX" THE OLD AGE, SURVIVORS AND DISABILITY INSURANCE PROGRAM ("SOCIAL SECURITY" OR THE "PROGRAM")
HYPOTHETICAL SOCIAL SECURITY INVESTMENT PORTFOLIO OF A WAGE EARNER AFTER 45 YEARS EARNING 60% OF THE SOCIAL SECURITY BASE EARNINGS LIMIT BORN: 1946 STARTED WORKING: 1967 STARTED COLLECTING SS: 2012
(Semi-annual rather than monthly contributions/withdrawals are used for the sake of brevity)
(Actual Offering Yields for the 10 year US Treasury Bond are used in the analysis)
UNDER THE PRESENT SYSTEM THE DEATH BENEFIT IS $255 AND THE SEMI-ANNUAL RETIREMENT PAYMENT IS $12,048
SS Combined Combined 10 Year Average Cumulative * Base Mandatory SS Insurance USTreasury Portfolio USTreasury Approximate * Earnings FICA Contribution/ Offering Earnings Portfolio Death * Date Limit Rate (Withdrawal) Yield Rate Balance Benefit
06/30/1967 6,600 7.800% 154.44 5.222% 5.22200% 154.44 154.44
12/29/1967 6,600 7.800% 154.44 5.702% 5.46200% 312.91 310.28
06/28/1968 7,800 7.600% 177.84 5.642% 5.52200% 499.30 497.17
12/31/1968 7,800 7.600% 177.84 6.162% 5.68200% 690.92 680.16
06/30/1969 7,800 8.400% 196.56 6.732% 5.89200% 907.11 884.48
12/31/1969 7,800 8.400% 196.56 7.882% 6.22367% 1,130.40 1,082.83
06/30/1970 7,800 8.400% 196.56 7.682% 6.43200% 1,362.13 1,317.80
12/31/1970 7,800 8.400% 196.56 6.502% 6.44075% 1,602.50 1,599.48
06/30/1971 7,800 9.200% 215.28 6.702% 6.46978% 1,869.39 1,856.43
12/31/1971 7,800 9.200% 215.28 5.892% 6.41200% 2,145.14 2,183.00
06/30/1972 9,000 9.200% 248.40 6.152% 6.38836% 2,462.31 2,481.23
12/29/1972 9,000 9.200% 248.40 6.412% 6.39033% 2,789.36 2,787.48
06/29/1973 10,800 9.700% 314.28 6.942% 6.43277% 3,192.77 3,145.93
12/31/1973 10,800 9.700% 314.28 6.902% 6.46629% 3,609.74 3,564.16
06/28/1974 13,200 9.900% 392.04 7.642% 6.54467% 4,118.49 4,000.21
12/31/1974 13,200 9.900% 392.04 7.402% 6.59825% 4,645.30 4,544.41
06/30/1975 14,100 9.900% 418.77 7.962% 6.67847% 5,217.32 5,049.11
12/31/1975 14,100 9.900% 418.77 7.762% 6.73867% 5,810.31 5,657.10
06/30/1976 15,300 9.900% 454.41 7.862% 6.79779% 6,460.49 6,285.59
12/31/1976 15,300 9.900% 454.41 6.812% 6.79850% 7,134.48 7,131.66
06/30/1977 16,500 9.900% 490.05 7.202% 6.89750% 7,867.05 7,800.53
12/30/1977 16,500 9.900% 490.05 7.782% 7.00150% 8,628.42 8,455.34
06/30/1978 17,700 10.100% 536.31 8.622% 7.15050% 9,466.79 9,143.65
12/29/1978 17,700 10.100% 536.31 9.152% 7.30000% 10,341.56 9,923.01
06/29/1979 22,900 10.160% 697.99 8.812% 7.40400% 11,417.02 11,052.17
12/31/1979 22,900 10.160% 697.99 10.332% 7.52650% 12,537.67 11,856.78
06/30/1980 25,900 10.160% 789.43 10.092% 7.64700% 13,798.92 13,130.31
12/31/1980 25,900 10.160% 789.43 12.432% 7.94350% 15,115.96 14,024.45
06/30/1981 29,700 10.700% 953.37 13.862% 8.30150% 16,669.69 15,332.34
12/31/1981 29,700 10.700% 953.37 13.982% 8.70600% 18,314.98 16,932.78
06/30/1982 32,400 10.800% 1,049.76 14.442% 9.12050% 20,161.99 18,676.16
12/31/1982 32,400 10.800% 1,049.76 10.389% 9.31935% 22,131.19 21,675.46
06/30/1983 35,700 10.800% 1,156.68 10.899% 9.51720% 24,319.11 23,702.46
12/30/1983 35,700 10.800% 1,156.68 11.801% 9.76215% 26,633.04 25,712.77
06/29/1984 37,800 11.400% 1,292.76 13.839% 10.07200% 29,225.78 27,634.72
12/31/1984 37,800 11.400% 1,292.76 11.514% 10.27750% 31,990.35 31,303.31
06/28/1985 39,600 11.400% 1,354.32 10.179% 10.38845% 34,988.59 35,132.58
12/31/1985 39,600 11.400% 1,354.32 8.986% 10.44965% 38,160.29 39,403.41
06/30/1986 42,000 11.400% 1,436.40 7.321% 10.42260% 41,590.50 45,114.53
12/31/1986 42,000 11.400% 1,436.40 7.223% 10.44315% 45,194.31 49,224.01
06/30/1987 43,800 11.400% 1,497.96 8.367% 10.50140% 49,052.12 51,554.74
12/31/1987 43,800 11.400% 1,497.96 8.859% 10.55525% 53,125.66 55,160.08
06/30/1988 45,000 12.120% 1,636.20 8.873% 10.56780% 57,565.64 59,764.72
12/30/1988 45,000 12.120% 1,636.20 9.137% 10.56705% 62,243.55 64,191.92
06/30/1989 48,000 12.120% 1,745.28 8.077% 10.53030% 67,277.48 71,364.44
12/29/1989 48,000 12.120% 1,745.28 7.935% 10.41045% 72,565.02 77,092.59
06/29/1990 51.300 12.400% 1,908.36 8.412% 10.32645% 78,250.55 81,812.29
12/31/1990 51,300 12.400% 1.908.36 8.067% 10.10820% 84,199.17 88,460.16
06/28/1991 53,400 12.400% 1,986.48 8.227% 9.82645% 90,441.16 93,957.78
12/31/1991 53,400 12.400% 1,986.48 6.699% 9.46230% 96,871.21 104,862.98
06/30/1992 55,500 12.400% 2,064.60 7.121% 9.09625% 103,518.94 109,261.83
12/30/1992 55,000 12.400% 2,064.60 6.686% 8.91110% 110,291.71 117,732.72
06/30/1993 57,600 12.400% 2,142.72 5.776% 8.65495% 117,348.53 129,046.61
12/31/1993 57,600 12.400% 2,142.72 5.794% 8.35460% 124,569.48 135,579.92
06/30/1994 60,600 12.400% 2,254.32 7.320% 8.02865% 132,027.44 134,583.76
12/30/1994 60,600 12.400% 2,254.32 7.822% 7.84405% 139,581.77 139,660.46
06/30/1995 61,200 12.400% 2,276.64 6.203% 7.64525% 147,332.84 154,184.85
12/29/1995 61,200 12.400% 2,276.64 5.572% 7.47455% 155,241.46 165,842.85
06/28/1996 62,700 12.400% 2,332.44 6.711% 7.44405% 163,375.70 166,944.85
12/31/1996 62,700 12.400% 2,332.44 6.418% 7.40380% 171,789.03 177,066.36
06/30/1997 65,400 12.400% 2,432.88 6.500% 7.31045% 180,581.37 185,084.51
12/31/1997 65,400 12.400% 2,432.88 5.742% 7.15460% 189,614.90 198,944.40
06/30/1998 68,400 12.400% 2,544.48 5.446% 6.98325% 198,942.48 210,173.63
12/31/1998 68,400 12,400% 2,544.48 4.648% 6.75880% 208,433.28 227,364.48
06/30/1999 72,600 12.400% 2,700.72 5.780% 6.64395% 218,177.79 224,700.10
12/31/1999 72,600 12.400% 2,700.72 6.442% 6.56930% 228,126.33 229,027.92
06/30/2000 76,200 12.400% 2,834.64 6.031% 6.45025% 238,454.12 241,769.39
12/29/2000 76,200 12.400% 2,834.64 5.112% 6.30250% 248,979.20 260,575.83
06/29/2001 80,400 12.400% 2,990.88 5.412% 6.16175% 259,816.04 267,014.75
12/31/2001 80,400 12.400% 2,990.88 5.051% 6.07935% 270,811.53 281,838.61
06/28/2002 84,900 12.400% 3,158.28 4.797% 5.96313% 282,201.60 295,929.25
12/31/2002 84,900 12.400% 3,158.28 3.816% 5.81963 293,773.89 324,623.62
6/30/2003 87,000 12.400% 3,236.40 3.513% 5.70649% 305,558.56 343,707.77
12/31/2003 87,000 12.400% 3,236.40 4.246% 5.62907% 317,513.30 338,208.16
06/30/2004 87,900 12.400% 3,269.88 4.581% 5.49210% 329,719.69 342,841.90
12/31/2004 87,900 12.400% 3,269.88 4.218% 5.31191% 342,043.83 359,781.02
06/30/2005 90,000 12.400% 3,348.00 3.913% 5.19741% 354,476.35 377,747.05
12/30/2005 90,000 12.400% 3,348.00 4.391% 5.13836% 367,036.14 379,528.29
06/30/2006 94,200 12.400% 3,504.24 5.136% 5.05963% 379,970.20 378,834.37
12/29/2006 94,200 12.400% 3,504.24 4.722% 4.97483% 393,086.98 397,296.39
06/29/2007 97,500 12.400% 3,627.00 5.024% 4.90105% 406,491.69 404,495.80
12/31/2007 97,500 12.400% 3,627.00 4.023% 4.81511% 420,079.87 436,617.22
06/30/2008 102,000 12.400% 3,794.40 3.969% 4.74126% 433,987.92 450,876.38
12/31/2008 102,000 12.400% 3,794.40 2.212% 4.61948% 448,070.57 545,578.52
06/30/2009 106,800 12.400% 3,972.96 3.533% 4.50711% 462,392.78 487,903.97
12/31/2009 106,800 12.400% 3,972.96 3.837% 4.37685% 476,786.01 490,207.91
06/30/2010 106,800 12.400% 3,972.96 2.931% 4.22185% 491,193.06 534,453.77
12/31/2010 106,800 12.400% 3,972.96 3.294% 4.13093% 505,534.73 531,242.79
06/30/2011 106,800 12.400% 3,972.96 3.16% 4.01833% 519,949.32 548,195.24
12/30/2011 106,800 12.400% 3,972.96 1.876% 3.85959% 534,368.91 647,348.26
06/29/2012 (66 YEARS OLD) (12,048.00) 1.645% 3.70201% 532,633.12 665,854.87
(12,048.00) 1.500% 3.58621% 530,444.18 677,992.88
(12,138.36) 1.511% 3.48610% 527,817.22 665,764.11
(12,229.40) 1.523% 3.34996% 524,787.95 650,755.75
(12,321.12) 1.534% 3.19763% 521,256.92 634,317.27
(12,413.53) 1.546% 3.06399% 517,177.32 618,804.08
(12,506.63) 1.557% 2.94620% 512,593.82 604,051.36
(12,600.43) 1.569% 2.80508% 507,544.41 587,540.24
(12,694.93) 1.581% 2.62729% 501,967.99 568,455.49
(12,790.14) 1.592% 2.47081% 495,771.93 550,468.18
(12,886.07) 1.604% 2.29981% 489,010.64 531,406.79
(12,982.71) 1.616% 2.17946% 481,651.08 515,209.29
(13,080.08) 1.628% 2.06244% 473,819.70 499,071.26
(13,178.19) 1.641% 2.03386% 465,527.63 487,837.70
(13,277.02) 1.653% 1.93988% 456,984.70 472,845.74
(13,376.60) 1.665% 1.83131% 448,040.58 456,966.76
(13,476.92) 1.678% 1.76865% 438,666.16 443,411.10
(13,578.00) 1.690% 1.68850% 428,967.40 428,866.53
(13,679.84) 1.703% 1.61566% 418,909.12 414,604.45
(13,782.43) 1.716% 1.60765% 408,510.76 403,354.46
76 YEARS OLD (13,885.80) 1.729% 1.61184% 397,908.66 392,524.28
(13,989.95) 1.742% 1.62393% 387,125.54 381,887.07
(14,094.87) 1.755% 1.63611% 376,173.99 371,083.72
(14,200.58) 1.768% 1.64838% 365,050.72 360,110.96
(14,307.09) 1.781% 1.66074% 353,752.35 348,965.47
(14,414.39) 1.795% 1.67320% 342,275.41 337,643.85
(14,522.50) 1.808% 1.68575% 330,616.39 326,142.59
(14,631.42) 1.822% 1.69839% 318,771.65 314,458.13
(14,741.15) 1.835% 1.71113% 306,737.50 302,586.82
(14,851.71) 1.849% 1.72396% 294,510.12 290,524.90
(14,963.10) 1.863% 1.73689% 282,085.64 278,268.55
(15,075.32) 1.877% 1.74992% 269,460.08 265,813.83
(15,188.39) 1.891% 1.76304% 256,629.36 253,156.73
(15,302.30) 1.905% 1.77627% 243,589.31 240,293.13
(15,417.07) 1.191% 1.78959% 230,335.64 227,218.80
(15,532.70) 1.934% 1.80301% 216,863.97 213,929.43
(15,649.19) 1.948% 1.81653% 203,169.82 200,420.59
(15,766.56) 1.963% 1.83016% 189,248.58 186,687.73
(15,884.81) 1.978% 1.84388% 175,095.55 172,726.21
(16,003.94) 1.993% 1.85771% 160,705.88 158,531.26
86 YEARS OLD (16,123.97) 2.007% 1.87164% 146,074.63 144,097.99
(16,244.90) 2.023% 1.88568% 131,196.73 129,421.41
(16,366.74) 2.038% 1.89982% 116,066.96 114,496.38
(16,489.49) 2.053% 1.91407% 100,680.01 99,317.63
(16,613.16) 2.068% 1.92843% 85,030.39 83,879.78
(16,737.76) 2.084% 1.94289% 69,112.50 68,177.29
89 YEARS OLD (16,863.29) 2.100% 1.95746% 52,920.60 52,204.49
(16,989.77) 2.115% 1.97214% 36,448.78 35,955.57
(17,117.19) 2.131% 1.98694% 19,691.00 19,424.55
(17,245.57) 2.147% 2.00184% 2,641.05 2,605.31
91 YEARS OLD (17,374.91) 2.163% 2.01685% (14,707.43) -----
METHODOLOGY:
1. The SS Base Earnings Limit Column contains Social Security Base Earnings Limit amounts for the time period 6/30/1967 through and including 12/30/2011.
2. The Combined Mandatory FICA Rate column contains the combined employer and employee FICA annual percentage rates for the time period 6/30/1967 through and including 12/30/2011.
3. For the time period 6/30/1967 through and including 12/30/2011 the Combined SS Insurance Contribution/Withdrawal column contains the results of the following formula: SS Base Earnings Limit * .6 (60%) * Combined Mandatory FICA / 2 which represents a semi-annual contribution for an individual earning 60% of the SS Base Earnings Limit. From 6/29/2012 on the amounts represent semi-annual benefit payments arbitrarily increased for inflation by .0075 (.75%) semi-annually or 1.5% annually.
4. For the time period 6/30/1967 through and including 12/30/2011 the 10 Year US Treasury Offering Yield column contains the actural closing offering yield to maturity for the 10 Year US Treasury Bond on the correcponding date in the Date column. From 6/30/2012 on the yield to maturity is arbitrarily increased by .0075 (.75%) semi-annually.
5. The average US Treasury Earnings Rate column contains the average yield to maturity interest rate for the previous ten (10) years.
6. The Cumulative US Treasury Portfolio Balance contains the face amount of 10 Year US Treasury Bonds that are accumulating in the wage earner's portfolio account. The Bonds are being purchased with each semi-annual contribution and with semi-annual interest payments received on the portfolio of US Treasury Bonds.
7. The Approximate Death Benefit column illustrates that the market value of the wage earner's portfolio would have been higher when the current interest rate was lower than the average interst rate on the portfolio and, conversely, a lower market value when the current interest rat was higher. For example, if the wage earner passed away prematurely on New Year's Eve in 2003 the sale of the wage earner's $317,513.30 portfolio of US Treasury Bonds would have realized greater proceeds.
NOTE 1: US Treasury Bonds pay interest Semi-annully based upon a set interest rate and not on a yield-to-maturity as used in this analysis. However, this short cut version does not detract for the purpose of this analysis and the results (i.e. the Cumulative USTreasury Portfolio Balance) would not be materially different if a more detailed projection were made.
NOTE 2: Approximately six million Americans become Social Security beneficiaries each year. If half of them that retired last year fit the profile of the wage erner used in this projeciton they would own over $1.5 trillion in US Treasury Bonds in their Social Security account. Adding the hypothetical holding of those with the same profile that retired in the last five years and those who will retire in the next five years would result in them owning all of the debt of the United States ($17 trillion). The reader is welcome to contemplate the plethora of complications that would have occurred if the Program was actually operated as a savings/pension system.