Suppose we let you draw down on your social security benefit to make house payments? Trading some part of your long-term "annuity" for making payments on a long-term investment. No transfer of any interest in the house to the US Gov't.
The idea would be that you could direct the Social Security Administration to make some house payments for you and to pay for those payments by reducing your projected benefit, up to a limit based on not reducing your current projected benefit below a minim - so if you've had reasonable income and paid your FICA taxes, but now you have a problem because of your housing costs, then you can reduce that long term SS payment but use that cash to stay in the house through a rough patch.
How much help could you get? I don't know - it would depend on whether the government wanted to keep the plan present-value neutral, or would carry the money from the future back to the present at no interest, or even wanted to supply matching funds of some extra kind. I'm going to play with some alternatives there.
One thing I like about the alignment with SS is that it automatically helps mainly the people we instinctively want to help - lower/middle class taxpaying folks. High rollers don't get notable help (the available payment amounts being limited by SS integration levels so won't make a difference in the McMansion they can't pay for now), and off-the-books people don't get help (no 'excess' benefit projected).
Yes, it diverts the current cash flow used to pay for monthly benefits. But, that gap can be filled by whatever the government debt, which is repaid by the reduction in future obligation.
I think it's worth pondering.
Friday, April 11, 2008
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