Investment in annuities would help Social Security

A proposal to reform U.S. social Security.

1.) Forget the stock market and equities completely. The average person doesn’t feel comfortable with these markets, and it is a political loser, which will only lead to “dead on arrival” for any proposal. I say this as one who was a day trader in stocks for over 10 years.

2.) Since virtually everyone feels comfortable with and has a warm feeling for highly rated and conservative insurance companies, let’s use annuities (contracts with an insurance company) as our only vehicle for non-government private investment.

3.) Allow people to put up to 50 percent, if they so choose, of the total Social Security contribution into one or more of a selection of annuities where the money would have to accumulate until age 55 or older before annuitizing. When annuitized, they would receive a monthly check for life, the size of which would be controlled only by actuarial tables and the current value of their contribution. The government will collect the money and forward it to the insurance companies designated.

4.) The government would have to approve of participating insurance companies and be prepared to insure, only the contribution, against default of any such company.

5.) Because there can be no catastrophic loss such as with hurricanes or tsunamis or earthquakes, participation on the part of the insurance industry should not be a problem. Perhaps we could tolerate foreign insurance companies if they confined their investment of these funds to the U.S.A. and maintained acceptable investment quality standards and ratings.

6.) The insurance companies selected would have to conform to conservative investments of the funds, e.g., in bricks and mortar, and U.S. infrastructure, such as highways, pipelines, port improvements, electrical distribution and improvements, communication satellites, Internet improvements, major overhaul of airports including new facilities, and air traffic control etc. The cascading effect of all this money entering the real economy would dwarf the known, extremely positive, effects of the Marshall Plan and the GI Bill combined and should augur well for 20-30 years of tremendous economic growth.

Clifford Dukes
La Aurora de Heredia

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