Make economic security in retirement a personal responsibility
Social Security is fundamentally flawed. Modest reforms won't be sufficient to provide financial security for future generations of retirees. The Social Security Trust Fund should be replaced by mandatory personal savings accounts, which make individuals responsible for their own financial security in retirement. Mandatory personal savings accounts would either wholly or partly replace the current system, putting responsibility for retirement security where it should be, on each of us individually.
What Should be Done?
Replace Social Security with mandatory savings accounts for each worker, into which individuals and employers would contribute. Individuals would manage the accounts to get the best yield on their retirement savings. Through Supplemental Security Income and other programs, continue to assist poor retirees who are unable to make ends meet, or pay for the health care they need.
Arguments For This Approach
This approach reflects America's traditional emphasis on personal responsibility and limited government. Individuals would no longer be forced to pay taxes into a program in which they have very little confidence. Under this system, retirees would have real security. They wouldn't have to worry about reduced benefits, higher deductibles, or the uncertainty of a government-run system that may not be able to meet its commitments. The resulting increase in the nation's savings rate would strengthen the economy. Savings would be invested privately, helping to create new businesses and jobs.
Arguments Against This Approach
Providing for the needs of elderly Americans is a public responsibility. Individuals who are no longer in a position to work and earn a living need and deserve public support. Switching to a private system would fray the common bonds that hold the generations together. The transition to a self-financed, individually-managed retirement system would create an unmanageable burden on the first generation participating in such a system. There is no realistic way to make the transition from the current system. There is no guarantee that private savings would cover retirement costs, especially when individuals make foolish or risky investments. Low-income Americans would suffer under a self-financed system. Welfare would need to be expanded to cover this group.
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