Privatizing Social Security

You can only raise taxes or increase the retirement age by so much. The
problem of too few workers supporting too many retirees will continue to
lurk as long as infant mortality rates continue to decrease and life
expectancy continues to increase.

The only way to actually solve the problem is to transfer our Social
Security taxes into privately managed universal savings accounts. Under
such a system, each individual would be responsible for managing his or
her retirement savings. Rather than have money bogged down in a
low-yield Treasury bill (as currently is the case), an individual could
benefit from much higher rates of return in the stock market.

Under a privatized system, a worker can simply enter into a computer his desired benefits and retirement age. The computer then specifies how much he must withdraw from his salary each month in order to meet those goals. In such a manner, the worker can sculpt his retirement savings to meet his individual needs.

Giving people more of a choice in their retirement planning will better connect them to the economy. Each American will understand that his retirement savings rest in the well-being of the economy. Consequently, the populace will be less likely to make a run on their banks at the first signs of financial tremors.

The free-market economy will strengthen as citizens exert control over their financial well-being, rather than relying upon the government to administer aid like some subtle narcotic.

The alternative is to continue ignoring the problem. Most of our politicians are comfortable with that. Social Security is one of those issues that can only get a politician in trouble — mostly because citizens rely on it, but they generally don’t know how it works. That’s the real reason that a Social Security overhaul currently lacks enough votes to pass through the Senate — politicians are scared to touch it.

Unfortunately, if they don’t find the courage to overhaul the system, it is either going to collapse or its maintenance is going to result in crushing tax rates for our children.