The USA Plan
Frequently Asked Questions (FAQ)
What is the reasoning behind the USA Plan?
To date advanced civilizations have generally solved their economic and social problems by taxing their people. America, the richest country of them all, has over 100 million people currently receiving benefits from over 80 government programs. Those benefits come from taxes imposed on the people.
The USA Plan has been designed to make all Americans rich. Rich enough to pay their own way and eliminate the need for government programs. Almost all will become millionaires under the Plan.
Poor people don’t have money. How are you going to make them millionaires?
One of the reasons poor people don’t have money is that the Federal government taxes 15.3% of their gross income and calls them payroll taxes. Were those taxes used to fund a 40-working-life retirement program for the taxpayer everyone could retire a millionaire at 65.
How does that work.
The average median salary of American workers is presently $50,000 a year. That means he pays $7,500 in payroll taxes every year. Assuming the worker averaged earning $50,000 a year during his 40-year working life, that $7,500 yearly amount contributed weekly to his retirement program would accumulate and compound into over $7 million at 65. See computation here.
$7500 paid yearly over 40 years only amounts to $300,000 not $7.4 million.
Under the USA Plan the money is invested in indexed stock funds that in 40-year cycles have averaged nearly a 12% compounded annual return including reinvested dividends. Go no further than Albert Einstein for proof. When asked for the most powerful force on Earth, he replied “compound interest”. Prove it to yourself – see a complete 40-year chart here. Then recognize that $300,000 in payroll taxes turned into a $7.4 Million nest egg because compounding added $7.1 Million of stock value. Now that is really power and the USA Plan uses that power to create your million-dollar nest egg.
But what if they only earn $20,000 a year for 40 years.
At 65, the $20,000 dollars a year taxpayer would have a nest egg of $3,123,000. See chart here. At a 12% rate of return he or she could draw down a $26,025 monthly check in the 41st year without invading the $3,123,000 balance. And if they never took more than that, they could will the entire balance to their kids (or to charity).
How can you guarantee the stock funds will yield 12% per year for 40 years?
No one can guarantee such results. Yet know this; every investment counselor in the world uses compounding to sell you a retirement plan. That is because since S&P500 index began in 1871 the average yearly return for 40-year cycles has been close to 12% when dividends are reinvested. See the chart here.
I’m 55 years old, I can’t take advantage of 40-year cycles. What do I get?
We assume you will receive a pension from an employer, fund a 401K or IRA account and will receive Social Security. The balance in your USA account at 65 can be used to supplement your monthly retirement checks or under certain circumstances can be withdrawn in its entirety at your option. See below.
What if I only have Social Security checks to rely on in retirement.
If you only have Social Security, then it depends on whether the income from your USA nest egg will generate more or less of a monthly retirement check than Social Security would.
Assume at 65 you had accumulated $400,000 in your USA account. You would be entitled to a monthly check of $4,000 per month. You would generate a $48,000 a year income in your 66th year ($400,000 X 12%). That would entitle you to a $4,000 monthly retirement check ($48,000/12). As $ 4,000 a month is greater than the $2,800 Social Security pays then you would not be entitled to the Social Security check.
AT THIS POINT IS WHERE 0VER $100 TRILLION DOLLARS OF UNFUNDED DEBT IS ELIMINATED FROM THE GOVERNMENT’S BALANCE SHEET. SEE HERE.
Now, assuming you only had $100,000 accumulated in your USA Account at 65, then your monthly earnings from that account would be $1,200 a month. Inasmuch as that is less than the $2,800 Social Security pays then you would be entitled to the entire $2,800 per month. You then would have complete control over how the $100,000 is drawn down.
It is important to note that the computation by Social Security of your benefits includes amounts sent to your USA. In other words, Social Security payments aren’t reduced by amounts diverted to a taxpayer’s USA account. They are counted just as if the payments were made directly to Social Security in determining your benefits at 65.
Is the USA Plan just some scheme to “Privatize Social Security”?
Absolutely NOT. Privatizing Social Security to let everyone have the 15.3% to save or spend as they want is foolish. A recent study found that 40% of Americans don’t have even $400 dollars set aside for an emergency. You can understand why the USA Plan is not a voluntary system. A voluntary plan has always been rejected by all politicians as totally impractical.
But remember this money is presently being taken from the young to pay to older citizens. You can say the USA Plan is a redo of that political miscalculation.
Will we lose Social Security, Medicare or the 80 plus government programs?
The USA Plan does not call for the elimination of any of these programs. We believe they are the fail-safe benefits those unable or unwilling to work need to survive. The USA Plan will actively promote the continuation of those plans.
Who will finance the trillion-dollar shortfall in the annual Social Security funding?
Upon enactment of the USA Plan, the nation’s funded and unfunded debt of $144 to possibly $250 trillion will immediately drop by at least $70 to $130 trillion See here. This will provide the cushion to cover the existing shortfall until the USA Plan is fully operational and everyone is headed for millionaire status. This should occur in the 20th year of the Plan and the shortfall should not exceed $30 trillion.
NOTE TO READERS
The FAQ’s above were questions we thought you might ask if you went to the FAQ rather than reading the site first. We suggest you now read our mission statement to understand the full scope of what the USA Plan can accomplish. We hope you then will be encouraged to read and understand our entire Plan.
Of course, if you still have questions, we will try to answer them below.