An argument against the privatization of social security in the united states

The work of the National Committee is directed toward developing a secure retirement for all Americans.

why privatizing social security is a good idea

Americans tend not to have a good grasp on basic financial concepts, and, just as concerning, many don't understand the benefits of compounding and allowing your investments to do the heavy lifting for you over time.

They say that demographic and revenue projections might turn out to be too pessimistic—and that the current health of the economy exceeds the assumptions used by the Social Security Administration.

An argument against the privatization of social security in the united states

Diverting payroll taxes or other sources of government funds to fund private accounts would drive enormous deficits and borrowing "transition costs". Bush outlined a major initiative to reform Social Security which included partial privatization of the system, personal Social Security accounts, and options to permit Americans to divert a portion of their Social Security tax FICA into secured investments. The thought process being that if you could control your own retirement benefits, you might be able to grow them at a quicker pace over the long-term than the federal government has. While a long-standing myth suggests that lawmakers have raided or stolen from Social Security, that's just not the case. In contrast, retirement-savings plans provide whatever savings have accumulated by the time of retirement. Constitution does not permit the Congress to set up a savings plan for retirees leaving this authority to the states , although the U. It is difficult to imagine how any Social Security privatization plan can avoid significant cuts in those essential protections. Some young workers are intrigued by the idea of diverting their payroll taxes into Wall Street accounts. That could lead to lower government expenditures, as well as gasp! Although America's most important program is in no danger of going bankrupt, and will be making payouts to many generations of retired workers to come, its current payout schedule isn't sustainable. Transfers of other government funds made the program "whole" as if these tax cuts had not occurred. The Social Security system depends on the ability of the government to tax current workers and pay current beneficiaries out of those proceeds. Privatize the back end Social Security it a defined benefit pension plan operated by the government. Just like most current k s, citizens could have a list of mutual funds or ETFs to choose from. Voracious commissions and other administrative costs have swallowed up large shares of those accounts.

President Bush endorsed a version of this approach suggested by financier Robert Pozenwhich would mix price and wage indexing in setting the initial benefit level.

In addition, many lower-income workers have jobs that require standing or manual labor, which becomes increasingly difficult for older workers.

arguments against privatization of social security

In contrast, retirement-savings plans provide whatever savings have accumulated by the time of retirement. Myth 2: Returns from private accounts will make up for the cuts in Social Security benefits.

the truth about social security and privatization

Bush pitched a plan to partially privatize Social Security inbut he was unable to build the necessary political support.

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The Pros and Cons of Privatizing Social Security