Investing Social Security

By The Reader's Turn
The Reader's Turn
The Reader's Turn
December 5, 2021 Updated: December 5, 2021

Go get your pocket calculator. In the meantime, kudos to The Epoch Times for allowing us to discuss the most important subject to about 75 percent of us (private-sector workers): our pensions, Social Security.

The beginning Dow Jones average of equities on Jan. 1, 1975, was 632. Punch that into your calculator, divide by .092 (an 8 percent return), and hit equals 45 times for 45 years. The answer is 26,932. Forty-five years later, on Jan. 1, 2020, the Dow was 28,538.

Had we and our employer been allowed to invest our 15.3 percent Social Security/Medicare tax, each year, in an equity fund and left it there, unattended, the amount we would now have is staggering. Even a low-income worker would have retired wealthy. Never mind that your employer pays half. It is a tax upon your income, not your employer’s income, and it is intended for your benefit.

The system to do so is already in place, our 401ks. We could name the new fund 401SS. Milton Friedman suggested that we give bonds to current and future pensioners that equal the estimated amount they would have received from the government, and convert everyone to private accounts. We could use U.S. savings bonds to remove the burden of yearly interest expense for the Treasury.

The IRS legislation to do this can be less than a page. Here is my suggestion:

The current 15.3 percent Social Security-Medicare tax shall be privatized beginning January 1, _____. These tax monies shall be owned by their intended recipient (recipient). During the recipient’s taxed years, said funds shall be withheld and sent to the recipient’s chosen range of mutual funds, which the recipient may self-direct. The recipient may not withdraw these funds prior to retirement. The retirement age shall be determined by the U.S. Congress, and initially set at age 62. Said monies are to be owned by the recipient after income tax; however, no government may tax the monies again. Typical and appropriate fund manager rules shall apply. The 15.3 percent tax may not be increased. The tax and the retirement age may be decreased by Congress. Transition to this privatized system shall be an option to the recipient. The recipient may choose to transition Social Security tax monies only and not Medicare tax monies, or not transition to private accounts at all. This legislation shall not expire and is not subject to judicial review despite conflicting decisions of any kind.


James T. Moodey