Famed advisor Ric Edelman on Wednesday unveiled his companion plan to supplement Social Security, the Tomorrow’s Retirement for the U.S. Today Fund for America (T.R.U.S.T. Fund for America).
“It’s absolutely impossible to overstate the incredible importance of Social Security on our nation,” Edelman, founder and chairman of Edelman Financial Services, said at a Wednesday press briefing at The National Press Club in Washington to announce the plan.
Under Edelman’s T.R.U.S.T Fund for America, the government would set aside a one-time amount of $7,000 for each child born in the U.S. (approximately 4 million children are born annually), and repeat this for new children annually for the next 35 years.
The money would be invested in a portfolio and managed by a “blue-ribbon” panel of experts appointed by the president and Congress.
After 35 years, Edelman explained, “the government would get back its initial outlay, plus inflation, and use the proceeds to fund the program for children born during the next 35-year cycle.”
The typical American worker, he said, will pay $605,038 in Social Security taxes by age 70. However, a “single deposit of just $7,000 to the T.R.U.S.T for America would produce identical retirement benefits.”
The program would cost the federal government $27.5 billion in the first year, he said. After 35 years, it would become permanently self-funding—a total cost of less than $1 trillion.
He compared his plan to the Securing Our Financial Future plan from June 2016 floated by the Bipartisan Policy Center’s Commission on Retirement Security, which he said would “cost a total of $12.5 trillion — $7.1 trillion in additional taxes and $5.4 trillion in benefits cuts.”
Shai Akabas, director of fiscal policy at BPC, told ThinkAdvisor on Wednesday that while he had not reviewed Edelman’s plan, BPC’s proposal is a “permanent” solution to fixing Social Security that has been scored by Steve Goss, chief actuary at the Social Security Administration. Goss “found that our proposal was sustainably solvent, and that if this proposal were enacted, it would be sustainable, not only for 75 years but even beyond that window.”