Adam Fischbaum Blog | Third Rail...Anyone? | Talkmarkets - Page 2
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With over 20 years of professional investment experience under his belt, Adam Fischbaum’s work has appeared on Yahoo Finance,,, Seeking Alpha, and his soon to be more frequent blog When not  working as a financial advisor, ... more

Third Rail...Anyone?

Date: Thursday, February 18, 2016 4:59 PM EDT


Look, Social Security is basically a classic Ponzi scheme. New investors are required to pay in so the original investors can get paid and at the rate that worker incomes are NOT rising versus the rate people are retiring and collecting benefits and living longer thanks to medical science, it’s pretty freaking unsustainable.


I’ve come up with a rough solution. It’s a partial privatization. Okay, I’m a bit of a crank when it comes to these things. I actually typed this plan out on a piece of paper, put it into an envelope and slipped it to my Congressman when I visited his office with my son’s Boy Scout troop. He smiled, nodded, and looked at me with that 1,000 yard, light’s on but nobody home stare they all have. Anyway, for what it’s worth, here goes.


  • Working adults earning $35,000 and up annually who are age 50 and under have the ability to “opt out” of the traditional Social Security System.


  • If you opt out, you would receive your paid in employee portion minus interest and a 30% opt out tax. You would NOT receive the employer portion. Roughly, you’d get 70 cents on the dollar of your original principal. Believe me, you could do a lot worse.


  • You would then be required to “roll over” the proceeds into a mandated “MyRA”  style account. You would invest in a multi asset, target date fund, based on your age and risk tolerance. The investments would grow tax deferred. The employee portion you had been paying into the traditional system would be directed to this new account and would be mandatory just like the old system. There would be no employer portion going forward.


  • No withdrawal, whatsoever, would be allowed until mandatory retirement age. Defined contribution plan participation would still be allowed and encouraged.



Account administration and investment management would be handled by government sponsored private vendors similar to the privately sold 529 education savings plans. I’ve watched this program since inception and it seems to have evolved efficiently.

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