Privatizing Social Security, Essay Example

The U.S. Social Security System desperately needs reform. The system faces a long-term fiscal crisis roughly twice as bad as what the government is publicly admitting” (Kotlikoff, 2000). It is hard and beyond fixing the current social security system. It is not possible or unwanted to rebuild the type of program to pay-as-you-go concepts. Based on these concepts, change social security program become known as “privatizing social security”. Individuals who support this idea believe that this reform will make America better place. The social security reform will encourage Americans to handle their economic future and reduce the size of government in order to become more responsible and entrepreneurial citizens.

The biggest endorsement regarding privatizing social security has come from President George W. Bush. President Bush, in 2005 state of union address mentioned that existing social security system is going for bankruptcy. He wanted to solve this problem once and for all through the social security reform by providing social protection which focuses on personal retirement accounts for the Americans that are born after 1950. “According to this plan all employees can elect to save 4% of their taxes into their retirement accounts (a transition period would be in place during which the permitted contributions to the account would slowly increase from 1000 dollars to the full 4 %)”( Scholz, 2001) .

For living expenses they can use the money from that account during their retirement, but after the death, if there is any amount left then his or her successor can get it. Employees who have these accounts can pick a private investment fund from the approved list of government in order to manage their accounts. This reform program will provide different sets of investment plans and also put a limit on how the money can be invested to prevent unwise speculation or investment choices.

At the time of retirement, workers would have several options as to how withdraw their money to use during their senior years.

References

Scholz, john karl. “Should The United States Privatize Social Security?.” Journal Of Economic

Literature 39.4 (2001): 1249-1251.EconLit with Full Text. Web. 10 Apr. 2012.

Kotlikoff, Laurence J. “Privatizing Social Security The Right Way.” Independent Review 5.1

(2000): 55-63. EconLit with Full Text. Web. 10 Apr. 2012.