Privatization of social security in usa

Privatization of Social Security- -

Is it the best choice to save America’s retirement system?

“Social Security is one of the most successful government programs in the United States, and

certainly the one most highly valued by the American public. It is also among the most threatened.

Today most Americans understand that Social Security cannot continue indefinitely to pay benefitsat current levels and according to current rules unless payroll taxes rise sharply. And most

Americans strongly oppose significant increases in payroll taxes” (Friedman, 1). “According to

recent projections by the Social security program’s board of trustees, in 2016 the system will begin

spending more money than it collects, and by 2038 the trust fund will be entirely depleted”(Devroye, 316). As a result of such projections, there have been several proposals introduced for the

reform or salvation of Social Security. Each proposal introduced involves some belt tightening by

taxpayers, but as attractive as privatization may sound, it is not the most beneficial proposal to save

Social Security. Privatization is costly, risky, it affects everyone in society by notbeing able to

guarantee the taxpayer a minimum level of retirement, and it will greatly impact the low income

members of society specially senior citizens and single women.

For almost seventy years Social Security has provided retirees, widows and disabled

individuals, with a secured income, but America’s most treasured system may come to an end. In

15 years, Social security willbe paying more in benefits than it’ll be collecting in payroll taxes, by

2052 as millions of baby boomers are in full retirement; the pay-as-you-go funding system may

completely dry up. Social Security was created in 1930's to battle against the nation wide spread of poverty during the Great Depression. In August 14, 1935, president D. Roosevelt signed the Social

security Act. It wasthe country’s first major anti-poverty insurance program that provided benefits

to elder American citizens. In addition, in 1939 Social Security expanded its benefits by providing

a check to workers’ survivors and disabled individual (www.thecqresearcher.com). “Social Security

works like a defined-benefit pension plan: Individuals can compute the retirement benefits they will

receivebased on the payments they make when they are working. In practice, however, Social

Security is a pay-as-you-go plan: The payroll taxes paid by today’s workers and their employers are

used mostly to fund benefit payments for today’s retirees” (Devroye, 317). The main problem that

has affected Social Security is demographics. “Life expectancy at age 65 has risen to 83 years, andpresumably it will continue to rise. Between 2000 and 2030, the number of retired persons is

expected to double. As a result, the number of workers for each Social Security beneficiary will

drop from 3.4 to 2.1" (Devroye, 317). These changes in numbers will cause a great distress on the

system causing it to collapse, reason why our government wants to introduce a system based onprivate accounts.

Privatization is the voluntary investment of Social Security funds (payroll taxes), which

allows workers to invest part of their retirement money in stocks, bonds or a mixture of the two, in

privately held, government-administered accounts (www.cqresearcher.com). Although this sounds

enticing there are significant factors / arguments that need to be taken intoconsideration when

reforming and changing such a successful system like Social Security is for the American society. A

significant argument is how Social Security is pay for. Social Securities contributions are not put

away and invested. Most of the contribution collected is given to current beneficiaries, current

retirees and the remaining balance the government uses for other needs. If...