Social Security Reform: Another Look at the Facts

Abstract

Facing an unfunded liability of approximately $9 trillion dollars within the next 75 years, "our beloved Social Security system is an unfunded Ponzi scheme in which the government has promised future benefits that it cannot pay with the current structure," says the author. While the system has been financially good for those who have already retired, the author says it is quickly becoming a very bad deal for today's young workers. She maintains that raising taxes and cutting benefits are not viable options by themselves for resolving Social Security's future problems. The author cites Personal Retirement Accounts (PRA) as one of the strongest proposals for workers to create economic wealth because it will allow workers to: 1) own the funds in their accounts; 2) invest in capital markets; and 3) use these assets for their retirement, or pass some of them on to their children. The author acknowledges however, that switching to PRAs involves the obstacles of managing the transition and the ensuing issues inherent in setting up and administering the accounts. "The largest issue surrounding the debate of investing Social Security funds in the marketplace is: who should do the investing, individuals or the federal government?"