As America’s retirement program approaches insolvency, two Wagner business professors propose a ‘simple plan’ to reverse course, writes Lee Manchester in the new issue of Wagner Magazine. It would closely resemble the current system, but ‘your account would be your money,’ they say.

Two Wagner College business professors, Donald Crooks and Cathyann Tully, are worried about our future.

“If you ask people — particularly our students — if they think Social Security will be around for them as a benefit, they are assuming that it’s not going to be there,” says Professor Tully.

And they may be right.

In 20 years, when the Social Security trust fund reserve is exhausted, ongoing contributions will cover only 75 percent of the system’s costs (see the Summary of the 2012 Annual Reports issued by the Social Security and Medicare Boards of Trustees) — and even the benefits of a fully funded Social Security system aren’t that great.

“Today, the average annual payout for Social Security is $18,756,” Professor Tully estimates — not a generous retirement income in most peoples’ books.

So, what about 401(k)s, the privately owned and managed pension funds everyone is supposed to be building to bridge the gap between Social Security (if it still exists) and their actual living expenses after retirement?

“The last number I read, just last week, is that the average person has just $30,000 in their 401(k) at the time they retire,” Tully says, “and $30,000 doesn’t get you very far today.”

“And that’s pre-tax money,” Professor Crooks adds.

“If the 401(k)s aren’t doing well, and we let Social Security go by the wayside, then what’s going to happen to people in their retirement years?” Tully asks. “We’ll be back to the way things were in 1935 when FDR created Social Security. Old people were starving in the streets, and that was unacceptable.

“I think that to make some changes, to reinvent the whole program in some simple, no-tax-increase, low-cost ways, will allow people to eliminate some of the uncertainty that comes with planning for retirement.”

Tully and Crooks sat down with Wagner Magazine to explain their program in more detail — and you can read the whole story here.