We, the undersigned, support the following principles governing fundamental Social Security reform and endorse immediate implementation of the Purple Social Security Plan.
Principles of Social Security Reform
- Everyone must save for retirement.
- The new system should be simple.
- The new system should be transparent.
- The new system should protect current retirees.
- The new system should help those least able to save.
- The new system should be fully funded.
- The new system should be generationally equitable.
- The new system should improve work incentives.
- The new system should protect dependents.
- The new system should have personal accounts.
- The new system should invest in the market.
- The new system should protect against market risk.
- Wall Street should not profit from the new system.
The Purple Social Security Plan
- Pays existing Social Security beneficiaries their full benefits.
- Freezes existing Social Security system by filling zeros in workers’ earnings records for years after reform begins.
- Requires all workers under 60 to contribute 8 percent of their wages to personal security accounts (PSAs).
- Each worker's contribution is allocated 50-50 to his/her own PSA and to his/her spouse/legal partner's PSA.
- Government matches contributions to PSAs by the poor, unemployed, and disabled on progressive basis.
- All PSA balances invested in a global market-weighted index fund of stocks, government bonds, corporate bonds, mortgages, real estate trusts, and other financial assets.
- Between ages 61 and 70, PSA balances for each cohort are gradually sold at market and converted to TIPS (Treasury Inflation Protected Securities).
- All investing is done by a single government computer at zero cost.
- Government guarantees that PSA balances at conversion equal at least what was contributed adjusted for inflation. I.e., government guarantees participants at least a zero real return.
- PSA participants who die prior to age 70 bequeath unconverted balances to their heirs.
- Starting at age 62, cohort TIPS pool makes payout to surviving cohort PSA participants in proportion to their age 60 PSA balances.
- Distribution from TIPS pool is designed to ensure that real (inflation-adjusted) payout to surviving cohort members does not decline through time.