Proposal Definitions

These are explanations for various references within the Proposal intended to provide greater clarity and understanding for the reader.

actuarial balance–  frequently used with a specific number of years regarding Social Security to indicate how long the system will be in balance with assets and liabilities

actuaries–  individuals who calculate insurance and annuity premiums, reserves, and dividends (Webster’s New Collegiate Dictionary, 1975 edition)

compound interest–  interest computed on the sum of an original principal and accrued interest (Webster’s New Collegiate Dictionary, 1975 edition)

Congressional Budget Office (CBO)-  considered a non-partisan federal agency in the legislative branch of the U.S. Government that provides budget and economic information to Congress regarding financial circumstances confronting the U.S. Government, specifically including proposals put forth by members of Congress

exhaustion–  reference to this within the Proposal is when Social Security would not have enough funding to cover full benefits to all recipients

“GAME-CHANGER”–  Voluntary funding idea (#8) Social Security U.S. Treasury Bonds, referred to in this manner within the Proposal because if administered properly it “could single-handedly solve the current system’s funding problems” (in pages 52 thru 54)

law of large numbers– a theorem in mathematical statistics that basically says the larger a random sample drawn from a population the greater the accuracy this sample will have in predicting outcomes for that population (Reference in the Proposal is to the millions of Social Security participants, essentially encompassing the entire U.S. population.)

LEGACY account–  the master account in the proposed new Social Security System within the Proposal into which all revenue eventually flows due to mortality of all participants (Because of mortality, this account would ultimately grow large enough so that the Social Security system would become a self-funded program without need for FICA taxation.)

“rule of 72”–  a mathematical principle that allows one to easily calculate the number of years it takes for money to double at any specific interest rate (example- for a 9% interest rate, by dividing 9 into 72 with the resultant outcome of 8, it takes money 8 years to double at a 9% interest rate)

Social Security Trustees–  the governing board of the Social Security system responsible for overseeing the program and through which (along with Social Security actuaries) feedback on circumstances affecting Social Security is made, including an annual report on the financial status of the Social Security system

sustainable solvency–  used with a specific number of years regarding Social Security to indicate how long the system will be able to make all payments, including full benefits to all recipients

 

March 2nd, 2018