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The Purple Social Security Plan

We, the undersigned, support the following principles governing fundamental Social Security reform and endorse immediate implementation of the Purple Social Security Plan.

Principles of Social Security Reform

  1. Everyone must save for retirement.
  2. The new system should be simple.
  3. The new system should be transparent.
  4. The new system should protect current retirees.
  5. The new system should help those least able to save.
  6. The new system should be fully funded.
  7. The new system should be generationally equitable.
  8. The new system should improve work incentives.
  9. The new system should protect dependents.
  10. The new system should have personal accounts.
  11. The new system should invest in the market.
  12. The new system should protect against market risk.
  13. Wall Street should not profit from the new system.

The Purple Social Security Plan

  1. Pays existing Social Security beneficiaries their full benefits.
  2. Freezes existing Social Security system by filling zeros in workers’ earnings records for years after reform begins.
  3. Requires all workers under 60 to contribute 8 percent of their wages to personal security accounts (PSAs).
  4. Each worker's contribution is allocated 50-50 to his/her own PSA and to his/her spouse/legal partner's PSA.
  5. Government matches contributions to PSAs by the poor, unemployed, and disabled on progressive basis.
  6. All PSA balances invested in a global market-weighted index fund of stocks, government bonds, corporate bonds, mortgages, real estate trusts, and other financial assets.
  7. Between ages 61 and 70, PSA balances for each cohort are gradually sold at market and converted to TIPS (Treasury Inflation Protected Securities).
  8. All investing is done by a single government computer at zero cost.
  9. Government guarantees that PSA balances at conversion equal at least what was contributed adjusted for inflation. I.e., government guarantees participants at least a zero real return.
  10. PSA participants who die prior to age 70 bequeath unconverted balances to their heirs.
  11. Starting at age 62, cohort TIPS pool makes payout to surviving cohort PSA participants in proportion to their age 60 PSA balances.
  12. Distribution from TIPS pool is designed to ensure that real (inflation-adjusted) payout to surviving cohort members does not decline through time.