Today U.S. Congressman Sam Johnson (3rd Dist.-Texas) announced that the Social Security Administration has determined the cost of his bill to strengthen Social Security with personal retirement accounts. Johnson’s initiative ranks as the most affordable way to improve the ailing program
Today U.S. Congressman Sam Johnson (3rd Dist.-Texas) announced that the Social Security Administration has determined the cost of his bill to strengthen Social Security with personal retirement accounts. Johnson’s initiative ranks as the most affordable way to improve the ailing program.
“This is great news,” said Johnson, a fiscally conservative member on the Social Security Subcommittee of the Ways and Means Committee. “Why put off until tomorrow what we should today? We must fix Social Security now while there is still time and not saddle future generations with tremendous debt and a broken system,” said Johnson.
The Individual Social Security Investment Program Act of 2005, H.R. 530, strengthens Social Security by allowing younger generations to deposit their half of the Social Security taxes they pay (6.2% of salary) in a personal retirement account. The employer’s share of the tax would be sent to the government to fund continuing retiree benefits, near-retiree benefits for those currently 55 and older, transition financing and the disability and survivors program. Johnson’s plan does not impact current or near retirees. Introduced with Congressman Jeff Flake of Arizona, in the last Congress the proposal garnered the most co-sponsors of any Social Security reform legislation. Currently, there are ten co-sponsors in the 109th Congress.
The cost to fund the current benefits promised if paid today would be $10.4 trillion. Johnson’s plan would cost $6.8 trillion over 75 years. Johnson’s plan costs less than any other proposal and puts Social Security on sound financial footing starting in 2045.
“My Social Security plan is like investing in your mortgage. You pay down a little at a time until you own your home. Up front we borrow a lot of money. At the end of the day, Social Security becomes fully funded forever and ever,” said Johnson.
To view the specifics on the cost estimate, go to http://www.ssa.gov/OACT/solvency/index.html. According to the Social Security Administration, the cost estimate assumes 100% participation for those under age 40 and phasing down to 10% for those who are 54. The estimate assumes a rate of return of 3% on government securities, 3.5% on corporate bonds, and 6.5% on equity investments.
“It’s time to give the American people personal retirement accounts to help them build a nest egg they can pass on to their loved ones. My bill does that,” concluded Johnson.
In a related matter, Johnson joined the Retirement Accounts Public Affairs Action Team. Johnson will be one of the congressional leaders who will aggressively advocate the creation of personal retirement accounts to strengthen Social Security across the country through various media outlets and speaking engagements.
