Yep, and it's crazy to think poorly educated people who can barely read or do math could manage private retirement investments or Obamacare replacements like Health Savings Accounts. They can't do it.
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I'm a huge fan of HSAs and private retirement accounts that replace or largely supplement SS. The point about people being unable to manage their own investments is definitely something that scares a lot of people, but there are solutions.
When Bush proposed to privatize SS to an extent, it was largely modeled on the Federal Thrift Savings Plan. Democrats went absolutely berserk saying people would blow their retirement money on risky investments and stocks, but the Thrift Savings Plan doesn't allow that. It is very comparable to conservative 401k plans in which investment options are limited to a dozen or so well vetted funds, including government bonds, fixed income, broad stock indices, and age appropriate mixed investment funds.
Here's a link discussing the Federal TSP:
https://en.m.wikipedia.org/wiki/Thrift_Savings_Plan
After the financial crisis, talking about the privatization of SS was more or less a 3rd rail in politics. Ironically, had we started to transition people to the TSP or a similar clone, Social Security would be in MUCH better shape, and for those near retirement age, the losses around 2007-2008 were largely made up (or even saw an increase in value) after 1-3 years.
https://www.tsp.gov/InvestmentFunds/FundPerformance/annualReturns.html
By putting in age restrictions (limiting the amount allowable to be invested in stocks or riskier investments past a certain age to the excess of an account's value in relation to what their Social Security benefit would have been) you could all but eliminate anyone "losing" their retirement because they'd have to keep an amount equal to what their projected SS benefit would have been in the government bond/fixed income funds. So, even if the market crashed and they were about to retire, their account would still have more than enough to pay them what their projected SS benefit would have been before privatization, and any excess that was in riskier funds could simply be left alone until the market recovers.
Been a long time since Bush's proposal, and I don't know if it included those age based restrictions, but there's no reason why such a plan couldn't be proposed today as a way to reform Social Security. Something similar could be done with HSAs as they already require you to have a high-deductible insurance plan to use them.
We could actually create a system for 18 year olds that would give them much more control over their own retirement and healthcare than anything on the table, but the political will is lacking, and special interests always try to block this stuff. AARP doesn't want ANY reform done to SS unless it results in more money for the current system.
Reforming SS isn't easy, but with plans modeled on the TSP, age restrictions, and phase-ins to privatization based on age, you could absolutely make Social Security stronger, better, and more flexible with very little downside. Same goes for HSAs with HDHPs...98% of 18 year olds would end up with a huge chunk of investment money growing and growing that would not only cover their own healthcare, but provide funds for a non-working spouse, children, etc. And for those that are healthy and do the right things that HSA can grow to not only cover their future medical costs but also serve as a retirement vehicle that gives them even more retirement savings.
Just like with Social Security, you could offer age based phase-ins and age based investment restrictions on HSAs based off of the projected Medicare benefit for someone. Instead of the government being on the hook, the person with the HSA might be sitting on 200-300k in an HSA, backed up by a HDHP, and would never ever need Medicare. Their health plan would benefit from having a young worker who makes limited to no claims (while paying an appropriate premium) while Medicare would continue to be funded by a payroll tax AND an account value tax on their HSA payable by accounts that have a value of over X amount. It wouldn't be much of a tax, but it would be the small boost Medicare needs, and it wouldn't be coming out of their paycheck. It is exactly how insurance is supposed to work. If you are young and healthy and able to save a ton in your HSA, a very tiny amount is taxed to supplement Medicare.
Not mentioned is that we should also remove the FICA cap on those making over 102k or whatever the cap is these days.
All of these ideas have been proposed by think tanks and various solution based groups before, but Baby Boomers hate anything that even purports to address Medicare and Social Security. Their philosophy is simple: you pay for all of my stuff because I was promised that's how it would be. I don't care what happens to you. Take that up with the government. Younger people don't vote, so what the Baby Boomers want is what they get.
