A Different, Fairer System: Personal Retirement Investment Accounts (PRIAs)
Instead of tinkering with Social Security’s current framework, I propose replacing it with a system of Personal Retirement Investment Accounts (PRIAs) paired with a safety net. Here’s how it could work:
Core Structure
Mandatory Contributions: Workers contribute a percentage of their income (e.g., 10%, split between employee and employer, similar to current payroll taxes) into individual, government-managed PRIAs.
Investment Options: Funds are invested in diversified, low-cost portfolios (e.g., index funds tracking the S&P 500 or global markets), with options ranging from conservative (bonds) to growth-oriented (stocks), based on age and risk tolerance.
Ownership and Growth: Unlike Social Security, these accounts belong to individuals. Contributions grow through compound interest and market returns, not redistribution, ensuring long-term sustainability independent of demographic shifts.
Portability: PRIAs follow workers across jobs, like a 401(k), and can be passed to heirs upon death, creating intergenerational wealth—a stark contrast to Social Security’s “use it or lose it” model.
Safety Net
Universal Basic Pension (UBP): To prevent poverty among those with low lifetime earnings or disrupted work histories (e.g., caregivers), a modest, tax-funded UBP would provide a floor—say, $800/month in today’s dollars—adjusted for inflation. This replaces Social Security’s complex benefit formula with a simpler, equitable baseline.
Funding the UBP: Revenue could come from general taxes, a small surcharge on high earners’ PRIA contributions, or reallocating existing Social Security funds during a phased transition.
Transition Plan
Gradual Shift: Current retirees and near-retirees (e.g., 55+) remain on Social Security, funded by a temporary payroll tax. Younger workers transition fully to PRIAs over 20-30 years, with partial contributions to both systems during the overlap.
Trust Fund Repurposing: The existing Social Security trust fund (~$2.8 trillion as of 2025) could seed PRIAs for younger workers or bolster the UBP, smoothing the shift.
Advantages Over Social Security
Sustainability: PRIAs don’t rely on a shrinking workforce. Returns come from market growth (historically ~7% annually after inflation), not a worker-to-retiree ratio. No “bankruptcy” risk like 2037 looms.
Fairness: Workers keep what they earn. Low earners aren’t penalized by a system that redistributes their contributions without growth, and high earners aren’t capped artificially as in Social Security’s benefit formula.
Transparency: No hidden insolvency dates or political promises. Individuals see their account balances and projected retirement income in real time.
Flexibility: Withdrawals could begin at a chosen retirement age (e.g., 62-70), with incentives for delaying (higher UBP or tax breaks), unlike Social Security’s rigid structure.
Addressing Criticisms
Market Risk: Critics might argue markets aren’t guaranteed. True, but diversified funds over decades have proven resilient (e.g., the S&P 500 recovered from every crash since 1929). A government-backed guarantee could cap losses in extreme cases.
Inequality: Wealthier workers might accrue more in PRIAs. The UBP mitigates this, ensuring a dignified baseline for all, while still rewarding work and savings.
Transition Cost: Phasing out Social Security isn’t cheap, but delaying reform only deepens the 2037 hole. A mix of temporary taxes and trust fund reallocation makes it feasible.
Why This Beats Social Security
Social Security’s Ponzi-like traits—dependence on new contributors, no real investment, and an expiration date—make it a relic of 1930s economics. PRIAs align with modern realities: longer lifespans, mobile workforces, and access to global markets. They empower individuals, not bureaucrats, and sidestep the demographic trap. The UBP ensures no one’s left behind, balancing individual responsibility.
