The Social Security Supplemental Retirement Plan (SRP) would provide an opportunity for all Americans to contribute toward to their future economic security by putting aside money into a complementary, incentivized retirement account established in conjunction with their SS account. It would function much like the federal employees' Thrift Savings Plan and offer lifecycle plans as well as Treasury securities. Borrowing would not be allowed, but hardship withdrawals would be allowed.
An incentive to begin saving early for retirement would allow individuals under age 40 to begin receiving a government match up to $100 per year on the basis of dollar for dollar (or 1:2, 1:3, etc) invested each calendar year for 5-7 consecutive years. The match would build a savings habit that will hopefully carry over beyond the program's match period. In addition, it increases financial awareness and puts real savings in the hands of many who are least able to save. The plan would have limits to appeal primarily to low to moderate income individuals. It would allow direct contributions online and permit MO/EBCs for the unbanked. SRPs would not adversely affect eligibility toward certain government programs such as SSI.
For shorter term savings goals, the public will be encouraged to purchase tax-deferred electronic savings bonds through TreasuryDirect.
Why have SSA to administer the plan? First, it is intuitive to think of Social Security when people think about retirement. Second, SSA is an effective organization and everyone trusts the organization that gave them their SS number in the first place. Third, people trust SSA to accurately track each year's contributions to their future retirement benefits. Fourth, Americans have an SS account and there is no need to create a new one.
The economic value of having a large financially secure, self-sufficient population far outweighs the cost of having a large population that failed to save enough for retirement.