Privatization: The Better Choice
work does not ease the frustration of having 6.2% of our hard earned money taken from us each
eased. Being able to control our own retirement funds is an option that is being supported more
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
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.
done to reform Social Security. The Social Security Board of Trustees estimates that by the year
private matter for individuals, everyone can benefit. One of the plans the government is
the paychecks of American workers.
The idea of Social Security is a good one. There are many retired workers who would
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
mutual funds or other low-risk investment programs, people could get a greater return on their
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
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
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
having to pay the retirement benefits for more retirees. Chile has created a system which gives
Economic Liberty at the Cato institute, more than 95% of Chilean workers have their own
personal savings accounts, assets have grown to more than $34 billion, and the average real rate
of return has been approximately 11.3% per year, which has allowed workers to retire with
better and more secure pensions.
having control of their own retirement funds, and they are right. A private system would give an
average compound return of at least 7% annually, leaving sizeable retirement nest eggs much
larger than the pea sized amounts that Social Security pays.
employees, with a very conservative, low-risk investment program, have great retirement
benefits. The San Diego employees have greater freedom to invest. They can choose between
annual rate of return of more than 14%.
There are some who would argue that too many people might make poor investment
choices, and end up going to the government for assistance upon retirement. There is no sure
guarantee that this would never happen; however, this has not happened in Chile, Galveston, or
San Diego. The purposes of mutual funds is to make a profit with very little risk. By investing
into these and other low-risk programs, there is very little chance of people making poor choices
that leave them with nothing.
The simple fact is that privately owned retirement accounts would produce an income
much greater than Social Security provides, and we wouldn?t have to face the problem of
how successful Social Security privatization can and would be if only the government would
give us the freedom to choose how to protect our future. The current system has failed. It?s just
a matter of time until Social Security is bankrupt. It is time for the government to let the people
decide how to provide for their own futures.