Should social security be privatized why

Gary Burtless, Personal communication. Treasury bonds and are used to fulfill government obligations. They have comfort knowing that they can work for years, and that the work they are doing will be rewarded to help provide for them when they are older and unable to work.

If private investment management companies are used, who will make the choice of managers or monitor their results?

What do you think? In the early years, revenues greatly exceeded payments, so substantial fund balances were created and invested in special U.

Even assuming a worst case scenario where the trust funds evaporate and benefits are cut substantially, cohorts from the s to s would see reductions with private accounts between 1 percent and 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.

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. Challenges to Privatization The basic goal of Social Security is to provide a financial safety net for Americans as they reach advanced age as well as for those with disabilities that hinder their ability to work.

Those costs are far higher than originally projected, in part because the government is obligated to provide subsidies for workers failing to accumulate enough money in their accounts to earn a minimum pension. The national government was left with substantial new administrative expenses, lost tax revenues, and responsibilities to bail out some failed private pension plans.

Diamond and Orszag point out that evaluating the overall effect on national savings requires taking Should social security be privatized why account the likely responses of government, employers, and households.

But because African-Americans and Latinos on average have substantially less wealth upon retirement than whites, they are far more dependent on Social Security.

Small wonder, since they stand to gain enormous fees if billions of dollars are shifted each year from Social Security payments into accounts under Wall Street management. It is not worth the risk of such an important program ending or being downsized. Social Security is funded by a flat tax of Based on analysis in Peter A.

Due to the investment by the Social Security trust funds, the monies to the Federal Government would need to be replaced by new buyers in the open market if the trustees were directed to invest in equities.

The advantage, advocates say, is that individually directed investments have the ability to vastly outperform the centrally managed trust fund, which by law can only invest in Treasury bonds. Investments include shares in foreign companies, as well as private equity, real estate, and infrastructure.

Instead of the current trust fund accounts, the government would need to establish and track many small accounts, perhaps as many accounts as there are taxpaying workers million in Privatization would eliminate the pay-as-you-go process.

Privatized Social Security means the contributions would be paid to, and the funds managed by, one or more private investment firms, rather than managed by and backed by the federal government. But the sobering experiences in those countries actually provide strong arguments against privatization.

Latinos also have relatively low incomes on average, but a longer life expectancy and fewer average years in the workforce. Economists believe that increased national savings, especially in a country with savings levels as low as they are in the United States, can increase growth by keeping interest rates low and financing investments in productive activities.

Gary Burtless, Personal communication. Private accounts would jeopardize income that wives, widows, and divorcees now receive under Social Security. The brokerage firm CB Capitales calculated see english language discussion by Stephen Kay here that when commission charges are taken into consideration in Chile, the total average return on worker contributions between and was 5.

But households that consider the new accounts to constitute meaningful increases in their retirement wealth might well reduce their other saving. Above age 85, this ratio reaches twenty-four women per ten men.

An Argument for Privatizing Social Security

Its rules and regulations affect the policies, practices, and profits of large and small companies in every industry and location. On the expense side of the ledger, one commonly floated idea is to rein in liabilities by increasing the retirement age.

Is the Fear Justified? In spite of the improvement in employment opportunities for women, the role of homemaker and primary parent still falls unequally on wives and mothers.

In part, this is because funds now being set aside to build up the trust funds to provide for retiring baby boomers would be used instead to pay for the privatization accounts. Even when accounting for risk-adjusted return, the privatized system in Chile offers hope that privatized retirement savings could help retirees and reduce the national debt at the same time.

Unlike private profit-sharing plans in which benefits are limited by contributions and investment earnings, Social Security, with its insurance element and cost-of-living adjustment COLArequires ever-increasing revenues to maintain promised benefits.

Most security businesses are on a contractbasis, so in securing the contract the security company would haveto demonstrate their proven ability to provide safety. The national debt levels would be increased by an amount equal to Any funds not withdrawn or used for an annuity could be handed down to their heirs.Social Security should be expanded, not cut and certainly not privatized." Mar.

27, - Nancy J. 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 Should Social Security Be Privatized?

Gus Sauter and Nancy Altman debate the idea of replacing the current Social Security system with private retirement-savings accounts. Should Social Security be privatized?

While investing in equities may present a great ROI, it presents plenty of disadvantages as well. Learn more here. Take a deeper look at how a privatized Social Security system would work, including looking at a real example that's existed for more than 30 years.

What would privatized Social Security mean. 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. Jun 23,  · Should social security be privatized? More questions. Should social security be privatized? Should social security be privatized? Answer Questions.

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Should social security be privatized why
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