As shown in The Problem, Social Security is structurally unsound. It is a pay-as-you-go system, not fully funded, and cannot meet its long-term obligations. It offers a poor return, creates no property, and burdens younger workers with unwanted obligations. Under current law, benefits will be reduced by 2033. No adjustment to taxes, benefit formulas, or retirement ages can correct these flaws. The system must be replaced with one that is both morally and economically sound—grounded in individual ownership and capable of enduring solvency.

The core idea is simple: a worker’s retirement should be based on what the worker earns and owns—not on political discretion or demographic luck. Once ownership is established, retirement becomes the product of personal savings and accumulation rather than a wealth transfer from younger generations. As Victor Hugo observed, “Nothing is more powerful than an idea whose time has come.” A funded, ownership-based retirement system is such an idea, and its time has arrived.

The transition begins with the establishment of Personal Retirement Accounts for all workers under the age of fifty-five. Enrollment for this group is mandatory, ensuring that younger and mid-career workers build their retirement on ownership rather than dependency. Workers fifty-five and older remain entirely within the existing Social Security structure; nothing in their benefit expectations changes. This preserves stability for older Americans while shifting everyone younger than fifty-five into a fully funded future.

During the initial years, Personal Retirement Accounts exist as SSA-maintained bookkeeping accounts, denominated in dollars. They are not yet custodial investment accounts and do not resemble IRAs at this early stage. Balances grow at the Average Wage Index (AWI), mirroring the wage-linked growth originally used in Social Security benefit calculations. This allows workers to see their balances rise immediately, establishes clear ownership, and avoids market impact during the early transition.

Meanwhile, Social Security continues paying full benefits to current retirees and to workers fifty-five and older who remain in the legacy system. FICA taxes continue to flow as they do today. As older cohorts retire and age out, the cost of the traditional system naturally declines. During this period, the system relies solely on ongoing FICA revenue and disciplined federal budgeting—not on new borrowing—to meet remaining obligations until the crossover point is reached.

Once workers complete their bookkeeping phase—on a fixed schedule set by law, typically after several years of AWI-based accrual—their notional PRA balances are converted into cash and transferred to mandatory private custodial accounts. These custodial PRAs function much like IRAs: individually owned, investable, inheritable, and transparent. The migration begins as soon as the first eligible cohorts complete their initial phase and then proceeds on a rolling basis, overlapping with the bookkeeping years still remaining for older PRA cohorts. Because FICA is never diverted, Social Security’s cash flow remains intact, and the transition creates no funding strain on the legacy system.

The process is gradual, orderly, and clear. No current retiree is displaced, and no worker fifty-five or older is required to leave the old system. As the pay-as-you-go model winds down, a funded, ownership-based structure grows in its place. Workers accumulate real savings, families build lasting estates, and unfunded federal obligations steadily diminish as Social Security’s legacy commitments fall away.

A system of Personal Retirement Accounts is not an administrative adjustment; it is the replacement of a failed model with one grounded in property, responsibility, and economic reality. It ends compulsory wealth transfers, restores the connection between work and reward, expands national savings, and places control of retirement futures back where it belongs—in the hands of American workers. It is the only path to a solvent, sustainable, and morally defensible retirement system.

This is the solution to the unsustainable Social Security system.

For a detailed description see also: Personal Retirement Accounts: Transitioning Social Security to Solvency.