Read more discussion about this post on HumbleDollar.
First we eliminate all existing retirement vehicles – 401k, 403b, IRA, Roth , etc. all terminated.
They are replaced with one standard plan whether employer-based or not. One set of limits, rules and regulations. All contributions on an after-tax basis. All earnings tax-free upon withdrawal but not before age 55 or disability. Voluntary employer contributions permitted, taxed as ordinary income upon distribution.
Social Security
Increase the payroll tax from 6.2% to 10% on employers only.
Social Security will be solvent over the next 75 years, but 20% of the gap between spending and revenue remains in the 75th year, meaning the program is not yet sustainable. Apply adjustments to funding gradually to assure sustainability by the 75th year.
Possible consequences
Employers may attempt to adjust future wages, some may modify retirement benefit contributions, [but employers will still need to compete for workers] there may be some minor price adjustments , some minor stock market impact, but so what, all of it will eventually be absorbed into the economy. A transition period. I would simply allow transfer of all existing funds into the new plan.
There may also be room for improvements in the Social Security formula.
The benefits are obvious
The greater ability to retire, increased net retirement income, less administrative complexity and cost, a more mobile workforce especially at older ages, increased sustainable buying power among retirees.
Now all we have to do is convince every employer in America, 340 million people and the ideologues in Congress.
QUINNSCOMMENTARY 
“… Increase the payroll tax from 6.2% to 10% on employers only. …”
If you go back to prior posts, you will see my Trumpian Social Security funding solution, where he will take action late in his second term. It was something like this:
What Trump Should Do – A Politically Savvy Alternative
However, the fool Trump has an opportunity, in the last year of his 2nd Administration, he could propose in September 2028 (long after R’s have nominated his successor) three changes as part of a budget reconciliation proposal (or hold up budget action past September 30th, 2028) to avoid shutting down the federal government.
He would be able to take credit for “saving” Social Security without cutting any existing retiree’s benefit or cutting the vast majority of future retirees’ benefits, by raising funding (and resolving the short and intermediate funding issues). The change would be in three parts:
First, increase the 12.4% FICA OASDI tax rate to 16.4%, to take effect a year or so after he leaves office (January 1, 2030), by raising the 6.2% paid by employers to 10.2% (which will hide it from workers who are not paying attention, and pander to D’s and populists who think employers should pay more),
Second, gradually raise the Social Security Normal Retirement Age to 70, and
Third, prospectively REDUCE the wage base subject to FICA taxes (currently $176,100) to perhaps $100,000, and apply $100,000 as the cap in calculating benefits for all prior years (ignoring wages in excess of $100,000 going back to 2008 and capping AIME indexation only up to $100,000 a year),
Those actions will disproportionately impact a larger percentage of individuals who wouldn’t vote for a Republican successor to Trump anyway (as opposed to other solutions, such as applying FICA taxes on wages in excess of today’s $176,100 wage base, or the proverbial $400,000).
Assuming the R’s retain control of both the house and senate, in 2026, I think there are 5 – 10 Democratic senators who would join the populist Republican faction and sign on to this effort so that they can take credit for “saving” Social Security without raising worker paid taxes while blaming Trump for going back on his pledge not to raise taxes or cut benefits.
LikeLike
Oops, a fourth item is part of my Trumpian change – when raising the Social Security Normal Retirement Age to 70, concurrently raise the Deferral age from 70 to 75, to match RMD for those born after 1959.
Eight years from now, gradually move (delay 8, then phase in over 12 years (20 years total), 3 months per year, first year would be 67 and 3 months, etc. ) the Full Retirement Age fromn 67 to 70 would be coupled with proportionately reducing the early retirement benefit. Why wait 8 years? That leaves the current system in place for anyone already age 62, who may have expectatiuons regarding claiming. And, at 3 months a year, for the next 12 years, individuals can effectively achieve the comparable result by working an extra 3 months in the first year (or simply delaying commencement 3 months), an extra six months in the second year … to working an extra three years after the full 12 year phase in. So, a $1,000 benefit at Full Retirement Age 67, which would be $700 at age 62 today, becomes a $1,000 benefit at Full Retirement Age 70, which would be $520 at age 62 once fully phased in.
Those changes will fully fund the liability indefinitely.
LikeLike
But, the Trumpian solution shown above, is NOT my preferred solution. You can find that in prior posts as well.
LikeLike
the self employed tradesman will be on the hook for 16.2% plus health insurance plus whatever can be put aside for retirement. Sounds like it might start getting rough to fund the rest of the household budget.
LikeLike