Matthew's Social Security Plan

I'm not very good at math and stuff, but I thought this made a lot of sense. This is what Matthew would do if he could build Social Security from the ground up. He's really smart.

Some of the things he suggested are:

What you almost certainly wouldn't do is create a huge
intergenerational wealth transfer scheme funded by a very high and
regressive tax that pays out money according to a formula whose mild
progressivity is undermined by the way it favors the (predominantly
wealthy) long lived over the (predominantly poor) short lived.

...instead of the benefit level being calculated based on how much
you used to pay in taxes when you were working, it would be based
around how poor you are. The poorest people would get the most
generous checks, and it would phase down so that well-off people
weren't getting any public assistance.

All workers would be made to contribute a fixed portion of their
payroll income to a tax-free retirement account. Since the idea here
would be to try and minimize the extent to which your "welfare for old
people" scheme needs to be utilized, you would want to prevent people
from making extremely high-risk investments unless their forced nest egg
was very large. Thus, the first X number of dollars per year in forced
savings would have to be invested through a limited menu of schemes. The
Thrift Savings Plan for federal employees is, or so I understand, a good
model for such a plan.

You could make the forced savings plan progressive by incorporating
some fully refundable tax credits into the income tax system so that, de
facto, lower-income people would be having their savings subsidized by
higher-income people. You would make it so that people couldn't ordinarily
draw down their savings account until they reached a certain age, and you
would limit the amount of money that could be withdrawn in any given year
up until then. You might also want to make it possible to borrow against
your retirement account for the purpose of other equity-building activities
such as purchasing a moderately-priced first home.

Now, if we could just get some of our congressmen and women to read Matthew Yglesias, maybe the world would be a better place.