Privatization The Better Choice Essay Research Paper

Privatization: The Better Choice Essay, Research Paper

Privatization: The Better Choice

Every working American citizen contributes to Social Security. Anyone who has ever

held a job has felt the frustration of seeing how much money the government takes out of their

paycheck. Being told that we will all be able to collect social security when we can no longer

work does not ease the frustration of having 6.2% of our hard earned money taken from us each

payday. If individuals could have control of their retirement funds, this frustration could be

eased. Being able to control our own retirement funds is an option that is being supported more

and more by American workers.

Currently, nearly 44 million Americans receive Social Security benefits. Of these 44

million, 61% are retired workers, 17% are survivors of deceased workers, 12% are spouses and

children of retired workers, and 10% are disabled workers. Obviously, the major group of Social

Security Beneficiaries is retired workers. Since the number of working Americans has not

grown along with the number who are retiring, Social Security has become a black hole to the

current generation of workers. We will pay into it most of our lives, but will not be able to

collect unless a drastic change is made.

Everyone has heard the ongoing debate over the past few years about what should be

done to reform Social Security. The Social Security Board of Trustees estimates that by the year

2032, Social Security funds will be fully spent. There are several reasons for this, including the

retirement of the ?baby boom? generation and the assumption that the U.S. economy will grow

at a slower rate than it has been. While republicans and democrats fight over whose plan is

better, there is a simple alternative to Social Security: privatization. By making social security a

private matter for individuals, everyone can benefit. One of the plans the government is

considering includes partial privatization, but it is still centered around a flat tax deducted from

the paychecks of American workers.

The idea of Social Security is a good one. There are many retired workers who would

not make it without Social Security. I have seen it myself. My mother has been in banking for

more than 20 years, and during that time I have seen all kinds of people coming in to deposit

their Social Security checks. The majority of them are middle class, retired workers, and

although their Social Security checks are not their only source of income, the little bit of extra

money does help them. Others, however, would not be able to put a roof over their heads

without their Social Security. Even though it may not seem like much to most of us, that little

bit of money is all they have, and they depend on it. A private system, however, would give

retired workers a greater chance at having more money upon retirement. By investing into

mutual funds or other low-risk investment programs, people could get a greater return on their

money.

Even with a private system, Social Security should still be mandatory. If people were

concerned enough to plan for their retirement, they would already be investing or saving money

for that purpose. Since many people have trouble saving money or do not feel they can afford to

set money aside, a privatized savings system should still be mandatory, perhaps even with a set

amount to be withheld from each paycheck. The difference between this idea and the existing

Social Security program is that individuals would be in control of where and how their money is

invested. Workers who do not care to make investment choices for themselves would still

accumulate funds for their retirement, while those who choose to do so are choosing how they

want their money to be invested, and possibly yielding greater returns.

Many Americans would agree that helping our fellow citizens in their time of need is part

of the American way; however, with the current Social Security program falling apart, the best

way to secure the future of young workers is a system in which they can invest for themselves.

A mandatory private savings account system would benefit everyone. The current SSI paycheck

deductions are not only a frustration, but they distort the compensation sought by employees and

reduce national savings and investment. Privatization would allow individuals to invest in the

economy through the Stock Exchange and bonds. Not only would privatization allow

individuals to secure their future well-being, but it would also boost our economy. Imagine if on

every payday everyone was investing, pouring money into the economy. This would be a huge

boost in economic growth.

In May of 1981, Chile?s government-run-pay-as-you-go retirement system was replaced

with an investment based private system. This new system has been extremely successful, and

has been the perfect intervention to the problem the old system faced, which was fewer workers

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