Social SecuritySocial Security indeed should be invested to the stock market, by the willing tax payer of course. The idea of privatizing a public pension system is not new. When properly implemented, it is fairly successful. As far as the problem with social security, it is one where one’s retirement benefits are up to the willingness of future workers to be taxed for the purpose of social security.
Benefits of social security are low, and in the future the benefits received could be even lower. Social security is fundamentally flawed. It is pay as you go system, simple economics. The funds invested for social security are not invested for present or future retiree’s. When the time comes for Social Security to cash in its IOUs to pay benefits, the federal government, which holds no earmarked assets for that contingency, pays the bill by issuing additional debt or raising taxes. Social security is a liability, not an asset.
Much of the discussion on Social Security reform has been predicated on the stock market’s assumed ability to deliver superior returns. Investing in privatized system allows retirees to build wealth that they own and can pass along to their children. Private retirement accounts take pressure off the Social Security system in future years and provide a long-term solution to future liabilities the system cannot meet.
The U.S. Social Security system is not as vulnerable today as some others were when they were privatized. That gives us a window of opportunity within which to move forward with a reasoned solution without being subject to imminent crisis during the planning. Allowing individuals to invest their money directly in the capital markets, rather than in Social Security, will provide them with far higher returns and thereby greater financial security. Thus, privatization of Social Security can restore financial dignity to Americans’ retirement years.