The World Bank,p. That report found that the average worker would have done better simply by placing their pension fund contributions in a passbook savings account. For example, a Securities and Exchange Commission report synthesizing surveys of investors found that only 14 percent knew the difference between a growth stock and an income stock, and just 38 percent understood that when interest rates rise, bond prices go down.
The Century Foundation regrets the error. Shiller and others have demonstrated that individual investors are far more likely to do worse than the market generally, even excluding the cost of commissions and administrative expenses.
Private accounts would jeopardize income that wives, widows, and divorcees now receive under Social Security. The national debt levels would be increased by an amount equal to Here are twelve reasons why less costly, less risky, and less painful changes should be considered instead: The numbers are for those born between and It looked at two scenarios for the traditional Social Security system, one with payments continuing in full indefinitely and the other with the trust funds becoming depleted in a few decades and payments shrinking to three-fourths their current level.
The volatility of investment markets means that it matters a great deal whether you retire during an upswing or downturn.
Among those currently receiving Social Security payments are 5 million spouses and children of retired and disabled workers, 7 million spouses and dependent children of deceased workers, and 5 million disabled workers. In the principal proposals put forward by the Commission, the reduction in disability benefits was draconian, with cuts ranging from 19 percent to Privatization advocates often claim that converting Social Security to a system of private accounts would disproportionately help African Americans and Latin Americans because those groups are purportedly shortchanged by the current system.
African Americans on average have two characteristics that are disadvantageous under Social Security: Young people would be worse off. For example, he estimates that the government would need to hire 10, highly trained workers just to oversee the accounts and answer questions from workers.
Various cultural and biological differences add up to the fact that Social Security is much more essential, and a much better deal, for women than for men.
By way of perspective, in the oldest surviving baby boomers will be years old and the youngest will be Cavanaugh, who has supervised the thrift savings program for federal employees, a program that privatization advocates often point to as a model, has argued that the costs of administering so many small accounts would overwhelm any benefits to be gained from the stock market.
Much is at stake in this debate. There are fourteen women for every ten men aged 62 or older. Latinos also have relatively low incomes on average, but a longer life expectancy and fewer average years in the workforce. A 2 percent discount rate is used, which tends to reduce the benefits per dollar of taxes.
The result is that women get more net benefits over their lifetimes than do men. Voracious commissions and other administrative costs have swallowed up large shares of those accounts. Orszag Brookings have noted that the disabled would have limited ability to mitigate the effects of these benefit reductions by securing income from individual accounts.
The market for annuities, which are financial contracts sold by insurance companies, is very thin now, with relatively few bought and sold.
Among the one hundred best stock mutual funds, management fees range from 0. About four out of five of those tax dollars go immediately to current beneficiaries, and the remaining dollar is used to purchase U.
Advocates of privatization often cite other countries such as Chile and the United Kingdom, where the governments pushed workers into personal investment accounts to reduce the long-term obligations of their Social Security systems, as models for the United States to emulate.Essay about Privatization of Social Security Words | 6 Pages.
retirement. I believe that Social Security is a doomed Government Program and that Privatization of Social Security would allow for a more secure retirement plan for all Americans.
Privatization of Social Security Essay - Privatization of Social Security When people lease a car, they pay, knowing that they get something in return. When people pay taxes, they pay, knowing it's the law, and many get some money back. What do people think when they pay social security. Working Papers.
IDEAS Economic Literature. Economists.
Publications. Seminars and Conferences. FROM THE The Benefits and Hazards of Privatizing Social Security. there has been increasing talk about privatizing the U.S.
retirement system—Social Security. Privatization would entail the elimination of Social Security taxes; instead. Privatization Of Social Security Essays: OverPrivatization Of Social Security Essays, Privatization Of Social Security Term Papers, Privatization Of Social Security Research Paper, Book Reports.
ESSAYS, term and research papers available for UNLIMITED access. Aug 31, · News about Social Security (US), including commentary and archival articles published in The New York Times. More News about Social Security, including commentary and archival articles published. Most privatization plans, like the one just described, involve four basic elements: a promise to retirees and older workers to pay all or most of the Social Security benefits they have earned; a cut in benefits to younger workers; a diversion of Social Security payroll taxes for younger workers into private investment accounts; and increased .Download