Thursday, January 27, 2005

Pro-Social Security Personal Account Blogs

Hugh Hewitt asks in today's blog why there are not more Pro-Social Security Personal Account blogs (click header above). So here's mine. As frequent readers know, my idea is to allow individuals to invest their personal account money in pre-paying their mortgage. To this end, I've have run a simplified series of calculations to get an order of magnitude estimate of the consequences (This is known in the trade as a Scientific Wild Assed Guess - SWAG).
Assume a $150,000 principal amount, 4% APR, one yearly payment of $8674 (about $700 / month). After 30 years you own the house plus $28.88 cash!
Now add to your $8674 annual payment a $1200 pre-payment ($100 /month). At the end of 23 years you own the house and have $1,406.01. After 30 years you'd own the house and have $67,273.05. Either way, you are much better off.
And, you live in your Social Security Personal Account, getting to watch it carefully every, single day!
See, the Democrats are right - Early Money Is Like Yeast (EMILY).


Blogger Timothy Birdnow said...

You have an interesting idea here! Of course, the Democrats would howl like the collectivist pack of wolves they are if someone were to seriously offer this up.

David Hogberg, contributor to the American Spectator, has been writing in-depth (on debt :)) about the seriousness of the situation with soc sec. You should check it out at

We need more creative thinking on the subject. Ideas like yours may seem radical now, but so did supply side economics when Reagen proposed it (remember Geo. Bush sr. called it ``voodoo economics``.) The radical can become the mainstream!

Great blog!

10:43 AM  

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