I think the best plan overall would be a combination of choice in either something like the above two plans OR SS taxes being paid through the Fairtax plan. The FairTax takes care of your issue of lower wage earners, since they would not pay any SS tax at all, which would enable them to invest the same amount, but still receive a separate SS benefit.
These are exactly the kinds of alternatives to our present social security system that i hope will be given very serious consideration in the next administration. My hope is that Obama will appoint a truly expert panel to work out the details of various plans and then make a recommendation. It does appear that the make-up of the new Congress will be such that we will have an excellent chance of making meaningful progress towards resolving the present issues with social security. It sounds as though your wife's plan is an excellent one.