Everyone grouses about the Social Security system (Old Age, Survivors, and Disability Insurance - OASDI) now and then. “It’s my money” is the most common refrain. Well, it’s not so much. It’s a lot of people’s money. In 2025, the base that is taxed for social security is the first $176,100 in earned income, with the assessed rate of 6.2% on both the employer and the worker. At the maximum base amount, the worker contributes $10,918, which the employer matches. Self-employed workers contribute it all.
For someone making $20/hr working a standard 2080 hours a year, their annual base contribution would be $2,579 out of $41,600 in earnings, or $215/month.
Additional funds come into the program through investment in US government bonds of the excess taxes not needed for use immediately. Sometimes, as when a president says that lowering Social Security “contributions” will “help out” the taxpayer (looking at you, Barack Obama), the government lowers the taxpayers’ contribution rate. All that does is short the system.
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I’m a retired fed. When I came on board as a high school summer hire in 1971 and then formally in 1980, we were covered under the Civil Service Retirement System (CSRS) pension plan. In 1986, Congress created a new pension plan, the Federal Employees Retirement System (FERS), which included the Thrift Savings Plan (TSP). As of 1983, employees could choose to stay in CSRS or move to FERS.
The TSP is the federal equivalent of an employer-managed 401(k) plan, and 85% of workers who have access to a defined contribution plan participate. About 56% of all workers participate. It’s a very popular option for saving toward retirement.
Employees can contribute up to the elective deferral limit established by the IRS, plus catch-up contributions. The government automatically contributes 1%, then matches employee contributions up to another 4% of base pay.
The employee then selects the mixture of available investments. All carry a degree of risk, some more than others. Employees can change their mix of investments as they wish. At the end of the day, employees have a balance that has been determined by their choices and market forces on various investment portfolios.
How about if this were half-duplicated for OASDI? First, it should become the Old-Age and Survivors Insurance Program. The disabled should be spun off to the general fund.
The amount received from employers, or half the amount received from the self-employed, should go into the standard Social Security investment in U.S. government bonds. This would be untouchable by the employee and form the base of monthly benefits once retirement age has been reached. Cost of Living Increases would be determined based only upon the success of the investments. We the People would hold our own debt.
The amount from the employee would go into something very like the TSP, with a variety of investment options for the employee to choose from—choices they could change as they wish. This might be quite the incentive for some to strive for a better-paying job.
This fund could also be split into two—one for the employee and one for a spouse. The employee could determine the rate at which this fund is drawn down at retirement. There would be no COLA on these funds. When the account is empty, it is empty. Should there be a beneficiary for any remaining funds in this account upon the death of the employee? Maybe. It’s something to discuss anyway.
This would provide a basic minimum income to the elderly, perhaps significantly more depending on investment choices, and be at least partially under the control of the working contributor. I think this looks like as good a win as we can achieve. It ensures we do not lose it all in the market, and gives us significant control over our benefits.
What does everybody think about this?
Anony Mee is the nom de blog of a retired public servant who X-tweets at oh_yeahMee.