Privatization of Social Security Is a Bad Idea

Privatization of social security is a bad idea

Social Security is a social insurance program that was signed into law by President Franklin D. Roosevelt on August 14, 1935 as part of his New Deal. It is a social insurance system based on the idea that, if workers pool a portion of their wages, they would be able to protect each other and their families against catastrophic wage loss due to death, disability or retirement. Social Security is funded through dedicated payroll taxes called Federal Insurance Contributions Act (FICA), which workers pay into and use these benefits at a later time when they become eligible.

Currently the Social Security system has come under fire because of continued budget shortfalls, rising taxation, and numerous cuts and decreases in benefits; all in an effort to balance our federal government's budget. Somewhere down the line, the idea of Privatization of Social Security was introduced, which would allow workers to take control of their retirement money through personal investment accounts. The basic idea behind privatization of Social Security is to allow younger workers to invest some or all of the tax money that currently goes into a protected Social Security fund into the stock market; similar to that of a 401(k) or IRA plan.

Privatization of Social Security is a bad idea because it will continue to widen the class gap between the rich and the poor. Nearly half of all Americans are already struggling to make their mortgage payments, put their kids through school and just afford the basic necessities of life; sometimes working two or more jobs to make ends meet. How can the government expect or even require people to make an intelligent investment into what is nothing but a gamble? The only ones that will benefit from this will be the stock brokerages, which will take their money in up-front fees to advise others of where to invest. This system will turn into another "mortgage lender" crisis and like in the housing industry instead of foreclosures, we will see people lose all their hard earned money and savings to be left with nothing in their old age and they will fall into poverty. Having employer-backed programs will not work either as too many companies have dumped their pension/retirement obligations and left workers in the cold (i.e. Enron, Qwest).

Creating private accounts would also mean cutting benefits to seniors during the "transition" period, by as much as 40%. The outcome would mean that seniors in their retirement age would have to return to work in order to survive and stay out of poverty. Income from Social Security keeps more than 13 million seniors from living in poverty. The end result would lead the government to propose or enact to raise the retirement age. The biggest issue with raising the retirement age is that it falls heaviest on those who are in physically demanding jobs (blue collar