Social Security 666
Should Social Security be Privatized?Many people don't understand how the Social Security system really works. There are no separate Social Security "accounts" set up for each taxpayer to which he contributes his Social Security "tax" each year. Many people believe these accounts exist, that the money they pay into their accounts grows each year until retirement, and when they retire they get back what they paid in with interest. This is not true. Most people are unaware of the fact that our current Social Security system is a "pay-as-you-go" program, which means that the revenue the federal government raises each tax year for Social Security benefits is paid out that same year to beneficiaries. Many economists believe that our Social Security system is in need of a major overhaul if today's workers are to receive future benefits. Thomas R. Saving, Director of the Private Enterprise Research Center at Texas A&M University says, "What is wrong is that the Social Security system was never set up to be a sound investment-based retirement system."Karl Borden, professor of financial economics at the University of Nebraska recently wrote, "Social Security is an unfunded pay-as-you-go system, fundamentally flawed and analogous in
Also there is the question of whether to privatize the whole system, or whether to add a second tier. Over the last 50 years, such investments have returned 5. While the American Association of Retired Persons will no doubt fight to the death to stop privatization, in the long run its position is untenable. A Wall Street Journal/NBC News poll showed that 29 percent of all Americans now expect to receive nothing from Social Security when they retire. Many simply do not believe there will be anything in Social Security when they retire. The basic tier would be redistributive and pay-as-you-go. Your income would not change because you already pay the tax. The money paid into these individual retirement accounts is invested, meaning more capital is available to the business sector for investment. In a 1994 report, "Averting the Old Age Crisis," the bank noted the positive impact of private pensions on saving, capital formation, investment and economic growth. 8 percent a year, while the Standard & Poor's 500 has provided 11. The old Social Security system is being phased out. This system ensures the money a taxpayer pays for retirement goes to helping that taxpayer retire (not others). When Forbes suggested that a part of younger workers' payroll taxes go into private retirement accounts, Dole ran television advertisements denouncing the idea as "a radical untested plan that would end Social Security as we know it. All workers under age 45 contribute 10 percent of their monthly earnings in special accounts, known as AFPs (Administradoras de Fondos de Pensiones).
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