08-11-2015, 11:19 AM
Privatizing Social Security is something that's been kicked around for many years. It's an interesting prospect, to me.
Here are some of the most commonly argued points for and against privatization.
PROS OF PRIVATIZATION:
YES, Social Security should be privatized (changing the system to one of private investment retirement accounts).
1. When Social Security began in 1935, the contributions of 17 workers paid for the benefits of one retiree. In 2035 the estimated ratio will be 2.1 workers per retiree. Allowing individuals to contribute to their own private accounts may reduce future loss of money from fewer worker contributions.
2. Using the existing system to avert the pending collapse of Social Security will require deep cuts in benefits, heavy borrowing, or substantial tax hikes. A better solution is to switch to private investment accounts that will be funded with the existing Social Security tax thereby avoiding any benefit cuts or tax hikes.
3. Putting Social Security into private accounts does not expose retirement money to risk. These federally regulated personal accounts would allow individuals to invest only in approved mutual funds and not in single stocks or highly volatile [unstable] stocks. [Note: When you invest in a mutual fund, you are paying an investor to invest in a group of stocks that he/she thinks will perform well. This can be less risky than putting all of your money into one stock.]
4. In the past, budget surpluses in Social Security were used by the federal government to fund other government spending. Keeping retirement money in private accounts will prevent it from being diverted for non-Social Security purposes—thereby reducing the likelihood of the U.S. govt. spending more than it takes in.
5. Privatizing Social Security into individual investment accounts would boost economic growth by injecting money back into America's failing financial system.
6. The maximum Social Security tax in 1935 was $60; as of 2009 it is $11,000. Privatizing Social Security will alleviate [lessen] this excessive taxation since private accounts will be taxed through the normal process of income taxation.
7. Given the pending crisis, many young workers assume they will never see the money they are putting into the current Social Security program. Private accounts will be a transparent system that is more accurate an account of the relationship between today's earnings and future benefits.
8. Privatizing Social Security would empower individuals to have control over their own retirement investment decisions, taking the US government out of citizens' financial retirement decisions.
9. Social Security was established at a time when people had a shorter life expectancy. The only viable option for a population that is living longer is to put Social Security into personal investment accounts.
Here are some of the most commonly argued points for and against privatization.
PROS OF PRIVATIZATION:
YES, Social Security should be privatized (changing the system to one of private investment retirement accounts).
1. When Social Security began in 1935, the contributions of 17 workers paid for the benefits of one retiree. In 2035 the estimated ratio will be 2.1 workers per retiree. Allowing individuals to contribute to their own private accounts may reduce future loss of money from fewer worker contributions.
2. Using the existing system to avert the pending collapse of Social Security will require deep cuts in benefits, heavy borrowing, or substantial tax hikes. A better solution is to switch to private investment accounts that will be funded with the existing Social Security tax thereby avoiding any benefit cuts or tax hikes.
3. Putting Social Security into private accounts does not expose retirement money to risk. These federally regulated personal accounts would allow individuals to invest only in approved mutual funds and not in single stocks or highly volatile [unstable] stocks. [Note: When you invest in a mutual fund, you are paying an investor to invest in a group of stocks that he/she thinks will perform well. This can be less risky than putting all of your money into one stock.]
4. In the past, budget surpluses in Social Security were used by the federal government to fund other government spending. Keeping retirement money in private accounts will prevent it from being diverted for non-Social Security purposes—thereby reducing the likelihood of the U.S. govt. spending more than it takes in.
5. Privatizing Social Security into individual investment accounts would boost economic growth by injecting money back into America's failing financial system.
6. The maximum Social Security tax in 1935 was $60; as of 2009 it is $11,000. Privatizing Social Security will alleviate [lessen] this excessive taxation since private accounts will be taxed through the normal process of income taxation.
7. Given the pending crisis, many young workers assume they will never see the money they are putting into the current Social Security program. Private accounts will be a transparent system that is more accurate an account of the relationship between today's earnings and future benefits.
8. Privatizing Social Security would empower individuals to have control over their own retirement investment decisions, taking the US government out of citizens' financial retirement decisions.
9. Social Security was established at a time when people had a shorter life expectancy. The only viable option for a population that is living longer is to put Social Security into personal investment accounts.