Should social security be privatized why

A 2 percent discount rate is used, which tends to reduce the benefits per dollar of taxes. Proponents of privatization claim that the current system generates insufficient returns, acts like a Ponzi scheme and that a private system would result in higher standards of living for participants.

Munnell, and Peter R. Diamond and Orszag point out that evaluating the overall effect on national savings requires taking into account the likely responses of government, employers, and households.

Assumed contribution rate is 7 percent of wages. Wall Street would reap windfalls from your taxes.

An Argument for Privatizing Social Security

How at 72 would the combination of army disability retirement pay with federal retirement pay with social security pay and with a TSP or private annuity work in aggregate and from the tax standpoints. Accordingly, a fund invested in any form of equity including common stocks, real estate, or commodities experiences significant variation in market value, thereby affecting the amount of funds available to be withdrawn.

Twelve Reasons Why Privatizing Social Security is a Bad Idea

The idea of privatizing this system is not a good one, and will only serve to help the private companies profit. The average remaining life expectancy for those who reach age 65 is nearly 20 years. And because both of those groups on average earn lower lifetime earnings than whites, those minorities would be at greater risk of facing poverty in their retirement under privatization.

Since the current benefit level cannot be maintained without new revenues, political leaders are in a vise. But because African-Americans and Latinos on average have substantially less wealth upon retirement than whites, they are far more dependent on Social Security.

When Social Security was implemented in the s, the average life expectancy in the U. Among those currently receiving Social Security payments are 5 million spouses and children of retired and disabled workers, 7 million spouses and dependent children of deceased workers, and 5 million disabled workers.

A gradual transition, which some Republicans have called for, softens the blow somewhat. Privatizing Social Security will escalate federal deficits and debt significantly while increasing the likelihood that national savings will decline-all of which could reduce long-term economic growth and the size of the economic pie available to pay for the retirement of the baby boom generation.

After that, funding would be sufficient to provide about 70 percent of currently promised benefits. Figuring out just how much money is quite the battle. Second, under the commission proposals, disabled beneficiaries like all other beneficiaries would not be allowed access to their individual accounts until they reached retirement age.

To date, the pay-as-you-go model has worked pretty well because there have been more than enough Americans in the workforce to pay retirees. It will be a detriment to the Americans who depend on that income, when they become older or disabled.

Advocates of privatization often cite other countries such as Chile and the United Kingdom, where the governments pushed workers into personal investment accounts to reduce the long-term obligations of their Social Security systems, as models for the United States to emulate.

Workers would have the option to increase their contributions to retire earlier or to increase their payouts in retirement.

But, we don't live in a theoretical world and Social Security does help prevent the grasshoppers from crashing society when they get old penniless. Security in virtual private network.

Investment Management No one knows what form of equities might be proposed for fund investment or how the decision to select one investment over another would be made. It should remain a public program that is backed by the United States government, not at the whim of the profit and losses of private companies.

Among those currently receiving Social Security payments are 5 million spouses and children of retired and disabled workers, 7 million spouses and dependent children of deceased workers, and 5 million disabled workers.

I don't understand why more people can't see that all citizens would stand to gain with a privatized Social Security system.

Should Social Security Be Privatized? – Pros & Cons

Would you like to make it the primary and merge this question into it. MERGE exists and is an alternate of. Social Security privatization is often sold to young adults as a much better deal for them than the current system. It shows the wide variation in the retirement income workers would have received.

Cavanaugh, who has supervised the thrift savings program for federal employees, a program that privatization advocates often point to as a model, has argued that the costs of administering so many small accounts would overwhelm any benefits to be gained from the stock market.

Should U.S. Social Security be privatized?

Craig, July 21, updated September 30, Inthe contribution rate from employer and employee was raised to 9. Social security is one of the best social programs that the United States has ever developed. Privatization advocates often claim that converting Social Security to a system of private accounts would disproportionately help African Americans and Latin Americans because those groups are purportedly shortchanged by the current system.

Fresh off his re-election, then-President George W. More than 47 million Americans today receive checks from the Social Security system. That insurance has been essential in even the best of times, and will be all the more important in an increasingly global economy with large and growing federal budget and trade deficits.

Women stand to lose the most. But households that consider the new accounts to constitute meaningful increases in their retirement wealth might well reduce their other saving.

Social Security should be expanded, not cut and certainly not privatized." Mar. 27, - Nancy J.

What would privatized Social Security mean for Americans?

Altman, JD The AARP (American Association of Retired Persons) wrote in an Apr. 28, email from John Rother, AARP Executive Vice President of Policy and Strategy, to Privatizing Social Security would do nothing to solve its impending insolvency, and would actually make it worse.

The trust funds are destined for insolvency because the. Jun 23,  · Should social security be privatized? More questions.

Should Social Security Be Privatized? An Unbiased Review

Should social security be privatized? Should social security be privatized? Answer Questions. YECS how long ago was the nearby star Alpha Centauri A created?

Do you believe in karma? What the hell is going on? Has somebody targeted me?Status: Resolved. Twelve Reasons Why Privatizing Social Security is a Bad Idea. Commentary Social Insurance. Twelve Reasons Why Privatizing Social Security is a Bad Idea December 14, Greg Anrig Senior Fellow; The transition costs of shifting to a privatized system in Chile averaged percent of GDP in the s, percent in the s, and are.

An Argument for Privatizing Social Security. But before we can talk about why Social Security is going broke and what we can do about it, we need to understand how it’s currently working. The benefits of privatizing Social Security are: Your money stays your money.

You are putting money aside for your use. Social security should be privatized. Our social security is something important which should be taken care of carefully.

Privatizing it can protect it. It should also be privatized because the money we have, The money we earn, Is for us and not for any random person. It is up to us to make our decisions about money.

Should social security be privatized why
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What would privatized Social Security mean for Americans? | Investopedia