PAYING FOR IT
Paying for the transition — honestly.
One generation has to fund two systems at once. That's the hardest honest objection, and it gets named first.
One generation, two systems
Every reform that moves Social Security from pay-as-you-go to funded finance runs into the same wall. The generation that makes the switch has to keep paying benefits to everyone already retired or near retirement, under the old rules, while the new, pre-funded system builds up behind them for generations not yet retired. Two systems, running at once, and someone has to carry both for a while.
This plan does not pretend that problem away. It is the hardest honest objection to any funded alternative to Social Security, and it is named here, first, before any of the mechanisms below.
How this plan gets there
No single mechanism carries the transition. Four of them share the load — and none of them involve inventing new money.
- Phase-in
- Nobody currently retired or near retirement moves. They stay fully in the legacy, pay-as-you-go system, funded the way it's funded today, for as long as they need it.
- Payroll pension deductions
- Workers already working when the plan starts pay into a dedicated pension deduction instead of the retirement portion of FICA. Once a worker's own benefit is fully funded, that deduction doesn't disappear — it becomes a loan to the legacy system, repaid later with interest. That's how workers in the middle of the transition help carry both systems at once.
- KerreyLoans
- A newborn's benefit can start with a small loan from the new trust fund itself, at ordinary Treasury interest, rather than needing new money from anywhere. It's a claim on the newborn's own future benefit, not new government spending.
- Voluntary pre-birth funding
- Families who can afford to can fund a newborn's benefit directly — gifts, loans, or a transfer from an existing IRA or 401(k) — which reduces how much of the transition has to be carried by loans or legacy payroll taxes at all.
The nearest live relative
This isn't the first funded alternative Congress has looked at. The closest proposal currently in play:
Independent modeling is not kind to funds like it, on their own:
We agree. An investment fund alone is not enough — which is exactly why this plan pairs investment returns with the phase-in, the loans, and the payroll mechanics above, instead of asking a pooled fund to close the whole gap by itself.
What's still open
My own full cost tables for financing this transition — start to finish, dollar for dollar — haven't been reconciled and published on this site yet. That's an honest gap, not a hidden one. See how this site handles that kind of number on the 12-step plan’s methodology note.