Compelling Reasons to Privatize Social Security
The Social Security Act became law in 1935, and since that time,Americans have been contributing a portion of their wages to the SocialSecurity Administration to pay benefits to retirees in their golden years.Today, Social Security benefits are paid to adults and children who aredisabled, and spouses of Social Security beneficiaries. The program hasalways been funded by individual payroll contributions. Everyone in thecountry, except government workers, pay into the Social Security fund, andthen the funds are paid out to retirees. The system seems simple enough,but there are many who believe the system is doomed to failure, and becauseof this, the system should be privatized before the government has to spendbillions of dollars to shore up the system and keep it solvent. Many people do not believe privatizing the Social Security system isthe right answer to save the system. Most experts agree that the SocialSecurity system needs reform. One writer states, "According to the socialsecurity system's board of trustees, social security will be insolvent by2029, one year sooner than was stated in last year's report. Thisrepresents the eighth time in the past ten years that the insolvency
Clearly this system has many advantages for thecountry, and for the investor. They would work quite similarly to IRAs currentlyused by numerous private investors. It gives the investor more control over thefunds they contribute, it gives the investor access to the entire amountthey contributed, and it removes the administration and cost from theFederal Government, because the accounts would be administered by privatecompanies. There are many solutions to the SocialSecurity crisis, but privatization seems to make the most sense, and be thefairest alternative for taxpayers and the government. Experts believe thisis only the beginning, and that retirement ages and the amount contributedthrough payroll taxes will have to continue to increase to keep the plansolvent and viable, too. This gives workers moreinput and control over the funds they will receive when they retire, and itremoves some of the cost from the Federal Government, saving the taxpayersexpense and helping balance the national budget, too. In addition, many proponents of privatization believe the system willultimately close the gap between the aged wealthy and the aged poor in thecountry. datehas been brought forward" (Tanner 19), and this report was updated in 1996. Privatization makes sense for a number of reasons. With the coming rush of "baby-boomers" to retire, the system will beseverely strained, and some fear it will go bankrupt attempting to paybenefits to the millions of baby-boomers set to retire beginning in 2007. How does privatization work' Many workers would not even notice adifference in a privatized system, especially at first. In conclusion, it is clear that Social Security as we know it todaycannot continue to viably exist. One expert writes, "Proponents favorpartial or complete privatization, allowing workers to create andcontribute to Individual Social Security Retirement Accounts that woulddivert a percentage of funds from FICA taxes into individual retirementaccounts (IRAs)" (Midgley and Sherraden viii). Many reformers believe tinkering with Social Security can keep it solvent,and some of that tinkering has already begun.
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