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Privatizing social security is a controversial topic highlighting the government’s involvement in controlling individuals’ retirement payout stream. Denationalizing social security is a bad idea that should never happen because the process is projected to increase the Gross Domestic Product by 2% (McKinnon 7). The transition from the public system to a mandatory private one can generate more negative impacts on pensioners. A mandatory private system should not replace the current social security systems.
Creating mandatory private systems will not boost the retirement income of senior citizens. Privatizing social security will require more funds; therefore, the government should stick to the public ownership of social security (Heer et al. 10). Giving Americans control over their retirement money may expose the population to risking their savings. The country already has a social system controlled by its citizens. Generating alternatives to the model would be less productive for the country (McKinnon 10). The roles of 401 (k) and an IRA tax advantage accounts will be disadvantaged if the country adopts the private ownership and program of the pay-as-you-go.
Furthermore, there is a better alternative to addressing social security concerns than privatization. According to a study, privatizing social security does not merely transfer funds to an individual’s accounts; instead, the process considers the repayment of liabilities attached to the current system (Heer et al. 9). If the policy of mandatory private ownership of social security is passed, the earnings generated from today’s earner’s payment schemes will end (McKiernan 243). Administrative costs of public social security are low; however, the mandatory exposure of workers to the remote system will increase the market-based investment receipts. Putting the trust of retirees in their own hands will increase the investments linked to private social security plans.
Works Cited
Heer, Burkhard, et al. “Population Aging, Social Security and Fiscal Limits.”Journal of Economic Dynamics and Control, vol. 116, 2020, p. 103913. Web.
McKiernan, Kathleen. “Social Security Reform in the Presence of Informality.”Review of Economic Dynamics, vol. 40, 2021, pp. 228-251. Web.
McKinnon, Roddy. “Introduction: Social Security, Inclusive Growth and Social Cohesion.” International Social Security Review, vol. 73, no. 3, 2020, pp. 5-12. Web.
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