I'm not sure how you replace a forced tax on the masses paying to subsidize the welfare of a smaller subset population of the citizenry, with something private. I mean, it's just straight up welfare. There's no way to privatize welfare, there's no return on investment for a private individual or group, just giving money away.
It's called a "retirement benefit" but it's not really, it's just money being taken from all, and given to one specific group.
What I'm thinking is, some sort of incentive structure for any sort of private, non-government entity, to contribute and effectively make up some % of what SS payees currently receive. At first it would have to be a small %, both because if it's even doable, the $ generation would be brand new and the retirees would still largely rely on SS $ redistributed to them. But I'm thinking about the possibility of scaling into that more and more over time.
As CD noted, we already have 401k's (and other versions of the same idea under different names for different employer classes) and IRA's. However, I'm just focusing on what people receive from SS. My understanding is SS is largely dependent on what you paid into it. i.e., if you never worked and weren't married to someone who did, you aren't going to get much out of it. I could be wrong about that. But if correct, we're already in a system where not everyone is receiving benefits, or at least not much benefit. So I'm thinking of something which is not to provide a "welfare" situation, i.e., everybody gets something, but rather, a system where people who have paid into SS over their working life can get roughly the same amount they would've gotten from SS, but just not from the government. But only those who are already entitled to SS (i.e., only people who worked), and only the amount they would be entitled to under SS. I distinguish that from a blanket welfare state. People who don't work wouldn't be eligible for anything I'm thinking of here.
How do you incentivize businesses, individuals, foundations, whatever, to create something like that? Well....I don't know if you can, and that's exactly what I'm aiming for here. One common way to incentivize anything is to offer tax breaks, but the problem that occurs to me there is tax breaks would just reduce the government's revenue and then how much has the budget deficit even been helped?
I'm not sure what all avenues could be pursued, but I'm thinking of things like creating better conditions, write-offs, tax breaks, whatever, to help businesses which don't currently offer 401k's, to start. Not sure how far that would go.
What you and Medina are talking about, how SS is not so much a fund as a direct transfer, is helpful, because it's exactly the type of thing I haven't thought far enough into. Say you get everyone contributing to a 401k or IRA, well, that only helps people with, I dunno, 30 years of working left, because retirees and people with, say, 10 years left to work don't have enough time for compound interest to do what those funds really rely on. So I'm still left wondering if the math works any kind of way for slowly scaling in. At first, working people pay almost as much to SS as they currently do, just not quite as much. Where does the difference come from for the recipients in the short term? I don't know. That's one of the things I'm wondering if other minds have a bright idea. As more people build up their retirement from their own employers/investments, they continue to progressively pay less and less to SS. Recipients continue to receive less and less from SS, but hypothetically have more and more retirement built up from private sources.
It could still be a pipe dream, and here I'll reiterate that I'm not talking about will politicians or people ever do it. I'm only talking about if there is any way the math works out and can creative solutions be found to the inevitable obstacles and places where the math just doesn't work out, such that a theoretical transition could be made.
