Funding of the socialized citizen-welfare component of our hybrid American system is overwhelmingly focused on late-life entitlements--Social Security, Medicare, tax benefits for retirement accounts, etc.

I propose that this is exactly the reverse of a sustainable, rational citizen-welfare system.  The primary reason is that early money has far more leverage to benefit individuals over time, than late money.

Consider a society that endows every citizen around the age of majority with a large cash benefit, complemented by a selection of optional benefits to purchase, and linked to mandatory counseling about the strategies and options available to them with this money.  Proper deployment of early cash has the potential to cover every need of later life for all citizens.

For example, consider the social-change impact of a lump-sum $100,000 government cash benefit which vests at high school graduation, after the completion of a week-long, intensive, mandatory financial/life counseling class.  First, no one would drop out.  The incentive to stay in school and get that money would be overwhelming.  Second, the young person could immediately get "on track",  for example by purchasing a car (which is often required to find and hold a job) and by funding at least part of their own higher education.

The young citizens would be strongly encouraged to put away at least $5-10K of their money immediately into a retirement account.  Both public and private options would be available.  The time leverage of such an early deposit (over 45 years from 18-63 for example) would virtually guarantee late-life security, especially if augmented over time by modest personal contributions.

Similar early deployment of funds into a home-down-payment plan could accelerate entry into the housing market earlier in life, bolstering one of the cornerstones of our economy, and provide the unmatched personal financial advantage of real estate ownership over a longer span of citizens' lifetimes.  As a result, net worth would likely be higher for many in late life, providing additional security for the elderly and a greater legacy to their heirs, advancing the fortunes of generations over time.

Young entrepreneurs might well use part of their endowments to fund new startups that otherwise might remain inaccessible dreams.

By leveraging early citizen access to education, transportation, employment, housing, and even business formation, such a "front end" entitlement system would produce secure, productive, prosperous citizens earlier and more consistently than our current "start from zero" system (which only "takes care" of us after 60, and rarely produces any meaningful financial security much before 35).  In turn, this would strengthen our economy, reduce the ranks of the disenfranchised, reduce crime, boost social equality, provide equal opportunity, and increase national prosperity.

As always, prudence would be rewarded and irresponsibility would bring misfortune. Young citizens who chose to squander their social endowment, despite the earnest counseling and financial education associated with its delivery, would often find themselves challenged in later life.  But at least they would not be able to blame "the system"--and the overall economy would benefit from their spending even if their choices were unwise.

How would this system be funded? With the money that's now being plowed into Social Security and other late-life government benefits, most of which would be eliminated or greatly reduced in scope.  There would still need to be a payroll tax to fund part of the endowment system, but it would be a tax paid by those who had already received the benefits thereof--and whose children would receive the same benefit, just at the time when children can be the greatest financial burden on parents.

According to BLS.gov, it seems there were about 3.1 million high school grads from Jan.-Oct. 2011.  So the cash cost of this $100K front-end endowment for the class of 2011 would be somewhere in the ballpark of $310 billion, vs. $736 billion total expenditures from the OASDI trust funds in 2011 (see Social Security Administration Press Release, April 23, 2012).  Obviously we'd have to add some overhead for the administration of the program and its associated mandatory training sessions.  But there's room in these numbers for a revolution!


Front-end citizen endowment - social solution or wishful thinking?

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