Mr. Yang

Topics: Social Security, Retirement, Tax Pages: 7 (2645 words) Published: April 7, 2013
Should Social Security Be Privatized?

As a 74-year-old retired teacher in San Pablo of California, Roberta Tim Quan said that during their working years, she and her husband saved money and paid tax, but their retirement planning of travel and family visits cannot come true. As Quan recounted to a congressional hearing last fall, her husband needed expensive medical care for Alzheimer's disease. Utility and food bills were on the rise, as well. She cannot afford their retirement plans anymore (Billitteri 2008). In the U.S., for retirees their situations after retirement are not as good as thirty years ago. During a long period of working, workers paid their responsibility into social security account; however, after retirement, they cannot afford to live. That is not fair. Social security has supported retirees, widows and disabled individuals with a trust income for almost seventy years. However, the social security system's pay-as-you-go funding will be overwhelmed by the retirement of millions of baby-boom workers in the next fifteen years. Recently, a lot of people argue that social security should be privatized, and people can get money from that account after retirement.

In his second inaugural address in 2005, Former President George W. Bush claimed that workers under 55 be allowed to divert 4 percentage points of their 12.4 percentage annual social security payroll tax into personal investment accounts (Cooper 2004).This approach would bring some advantages of the superior growth prospects offered by the stock market to participants. Some proponents argue that social security should be invested into private accounts and give retirees more benefits. Unless changes are made to the taxpayer-funded system, social security will begin paying more in benefits than it collects in payroll taxes in about 15 years (Mullins 2009). Nowadays, there is an argument about social security reform: should social security be privatized? As the largest retirement and disability program in the United States, social security should be reformed, but not privatized because the social security, like a bank account for government saving bond, represent a promise from government. If it turns into private account, how could the government help the homeless and disabled people? Social security system should reform; however, privatized accounts are not a good way to deal with the problem of the retirement of millions of baby-boom workers.

Social security was created in 1935 as a means of providing income security upon retirement to people who would not otherwise have that form of security (Pechman 34). In 2009, more than 50 million retired and disabled workers, as well as their dependents and survivors, received cash benefits from the social security system. Social security is a pay-as-you-go system that is financed by payroll taxes. Contrary to popular belief, the social security funds, which are simply accounts that are located at the US Treasury, do not themselves hold money to pay benefits. The federal government uses these funds as a part of its operating cash which is used to pay for many functions of government, such as national defense and unemployment compensation benefits. Social security is currently the largest social insurance program in the U.S., occupying 37% of government expenditure and 7% of the gross domestic product and is currently estimated to keep roughly 40% of all Americans age 65 or older out of poverty (Smith 69). There is an concern about social security, which is the number of workers paying into social security taxes has declined caused by increasing life expectancies, decreasing birth rate, and economic depression. In 1945, there were 46 workers paying payroll taxes; by 1996, there were only 3 workers paying it. By 2050, statistics show that there will be only 2.4 workers paying it for every beneficiary. Many recipients cannot get benefits as much as what they paid like before ("Social Security...
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