How to fix Social Security

@Mahkno : We've been here before, many times and Social Security is still here and is still the 3rd rail of politics.

@Mahkno :
Unless the government has rescinded it, there used to be a way to opt out of Social Security. I think you had to prove quarterly that you were investing those dollars into a qualified plan.
If an 18 year old would put that money into a Roth spread across about a 12-15 EFTs, by the time they hit 67, they would have more money than they'd see from SS in several lifetimes. Yes, I know getting people, especially young people, to put $$ away for retirement would be hard. And now with all the entitlement going around, it will be "their right" for the government to take care of them in the fashion they are accustom.

@AntiRanchDrssng :
There are some government positions that don't pay into social security because their employing agencies pay into a pension plan at a higher rate.I don't think opting out of social security to pay into a Roth true.... anyone who collects a pay check can pay into a Roth IRA, regardless of their eligibility for social security. You can have and benefit from both.While it is true that over a lifetime paying into a Roth IRA or any IRA or 401k/457b can benefit you well... it requires some discipline and expertise. Most people who have access to these don't take full advantage of them. a. They don't contribute at all. It is legitimately hard when you live paycheck to paycheck. Saving for retirement is one of the first things sacrificed.b. Most people do not contribute enough. People really need to be saving 15-20% a year. 5% is not enough.c. Even if they contribute, they don't know how to invest it well. The default is almost always a low interest money market account. You won't lose money on that but you are not going to get the compounding you need either.d. They tap that money for other purposes long before retirement, undermining their gains. So by the time they hit 60 they are well below what they really need.e. Social security has always been a backstop for when everything else goes wrong. No expertise required. Not optional in almost every case. If you paid in, you can probably collect when you are retired. Notable exceptions... non-migrant visa holders and the undocumented.f. Whenever you see the modeling for voluntary saving for retirement; it is always premised on people starting on day one of their careers, typically age 22 and that they stay employed in the same tier of job for the next 40+ years. They never really scrutinize what you really need for retirement either. In my view its always deeply low-balled and insufficient.

My formula for figuring what you need is fairly simple...
Figure 80% of your target income in retirement... then divide it by 3%That target income could be 80% of your last year of work.... or whatever amount you are willing or desire to live on. So... if you make $100,000 a year your last few years before retirement. Your target income would be $80,000 in retirement. To retire securely for the rest of your potential life, I figure that to be $2,666,666 is needed in retirement accounts on the day you retire. It is not overly difficult to develop a portfolio that pays out 3%. The S&P has fallen to 1.03%. Historically that has hovered around 2.3%. Other investment choices can yield better without creating too much risk. If you have to tap into the principle it shouldn't be problematic.Most are going to look at the $$ number and laugh... they are a LONG way from that and are probably an impossibility. So as you reduce principle, you either sacrifice income, eg less than $80,000 or duration. Therein is why voluntary retirement savings is deeply flawed and inadequate and why we need something like social security.In the could of, would of department.... if you saved 10-20% a year from aged 22 and broadly invested it, you could reach the figure you need by age 65, adjusting for inflation and all. Again... most do not and cannot. We expect the financially illiterate to manage their 1000s of dollars. Research has shown that the financially literate do tend to do very well with IRAs/401ks. Everyone else... not so much.Privatizing social security would be an unmitigated disaster.

As it is... we are slow rolling into a financial crisis of later Boomers and GenXers who never had access to pensions and without adequate investments for retirement.

@Mahkno : Oh, I realize this. 99% would fail. And you were right about the not having to pay into SS. I guess at one time it was allowed in Texas for some reason, but that loophole has been closed. A classic case in how information turns into misinformation and then spreads like wildfire.