social_security

To get your attention

MAJOR SAUL A ROSENTHAL, USAF(Ret)
P.O. BOX CK
BARSTOW, CA 92312-3041

This proposal is abbreviated, since I cannot anticipate every contingency. It can be done in a combination (percentage) with the current Social Security. I must warn you that as employees receive their "semi-annual status report" on their investment they will wonder why the whole amount isn't invested. I guess the proposal could include a percentage choice.

Setting aside money to save Social Security leaves it with the Federal Government and can be taken at any time. Maybe if we took a large portion of the Surplus and the current Social Security Trust Fund and invested it we could start the program. This would sustain the current program and fund a phase in for new employees lets say within 10 years. Should there be a need for it the Government could guarantee a floor equal to the present system. The only solution to Surpluses is TAX CUTS. When the economy recesses then you can cut programs. You could raise taxes slightly if you think you can get away with.

If this system is good enough for Federal Employees why not Senior Citizens

SOCIAL SECURITY PROPOSAL

Assumptions

Salary $20,000 per year for 45 years
Social Security contribution (12.8%, employee & employer) - $2,560/year
Social Security is converted to a system identical to the Federal Employees Thrift Plan(TSP).
TSP has averaged in its most conservative Fund has been about 6% to 7%. (Most market investments average at least 10% over 45 years. The Standard & Poor' 500 Composite was 25 in 1952 and rose to 525 in 1997, an increase of 2,000% in 45 years).
Money is invested in the Market by an independent Federal or private agency, with Government oversight.
Employee starts work at age 20 and retires at age 65.
The market over 45 years will increases, despite fluctuations.
Pay out annuity is figured for 25 years, to age 90.

**Computations**
Rate per year	Value at age 65	Annuity per year	Annuity per month
10%	$1,840,396	$202,752	$58,563
7%	$731,518	$62,771	$5,231
6%	$544,623	$42,604	$3,550
5%	$408,832	$29,007	$2,417

If we give the investing agency 1% to 2% for managing the Funds. (Reducing the employee's pay out by a small amount.)
It would save the entire Budget funding for the Social Security Administration
The employee will receive, in his retirement years, a significant pay increase. (He only made $20,000 per year)
The employee would know, by semi-annual reports, the entire value of the annuity.
The balance left after the employee dies could be passed on to his heirs, less some service fee to cover other expenses.
One other benefit would be the added Capital infused into the economy.

Why should Seniors of lower level salaries be deprived of the same opportunities of Federal Employees and the rich. The following is a page from the Federal Employees Thrift Saving Plan web page.

C, F, and G Fund Rates of Return - 1988 - 1997
The monthly C, F, and G Fund returns represent the actual total rates of return used in the monthly allocation of earnings to participant accounts. The returns are shown after deduction of accrued TSP administrative expenses. The C and F Fund returns also reflect the deduction of trading costs and accrued investment management fees.

Summary of TSP Annual Returns:
10 Year Compound Annual Returns for Related Securities

10 Year Summary of TSP Returns

  
Year         C Fund %   F Fund %       G Fund % 
 1988         11.84       3.63           8.81 
 1989         31.03      13.89           8.81 
 1990         -3.15       8.00           8.90 
 1991         30.77      15.75           8.15 
 1992          7.70       7.20           7.23 
 1993         10.13       9.52           6.14 
 1994          1.33      -2.96           7.22 
 1995         37.41      18.31           7.03 
 1996         22.85       3.66           6.76 
 1997         33.17       9.60           6.77 
 1998         28.44       8.70           5.74
10 Year
Compound      19.13       9.01           7.27

10 Year Compound Annual Returns for S&P 500 Index, LBA Index, and G Fund Related Securities (The figures for each year represent the compound annual returns for the preceding 10 years.)

  
 
Year       S&P 500          LBA              G Fund 
           Index            Index            Related Securities
             %                %                   %
                                                  
 1987      15.17            10.44               11.02 
 1988      16.23            11.13               11.09 
 1989      17.46            12.43               11.04 
 1990      13.85            13.10               10.78 
 1991      17.53            14.09               10.19 
 1992      16.15            11.71                9.57 
 1993      14.93            11.85                9.03 
 1994      14.40             9.96                8.45 
 1995      14.87             9.63                8.03 
 1996      15.29             8.47                7.89 
 1997      18.05             9.18                7.69
 1998      19.21             9.26                7.35

Standard & Poor's 500 stock index is calculated by Standard & Poor's Corporation. The C Fund tracks the S&P 500 index. Lehman Brothers Aggregate bond index is calculated by Lehman Brothers. The F Fund tracks the LBA index. Calculated by the Board.

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