Current Social Security System example essay topic

... Social Security. It help bring Chile social security system out of bankruptcy. In 1981 Chile privatized it social security by requiring their workers to put 10% of their pretax wages in private pension funds. The funds are carefully regulated, and workers can switch among trust fund managers for better returns or lower costs. They also receive periodic statements.

Upon their retirement they receive their money to buy annuity. What ever is left can be passed onto their heirs. If there isn't enough to provide a descent living the government steps in guaranteeing a minimum. Now Chile enjoys a high savings rate well over 20% of their gross domestic product compared to the US's 3.2%. The plan has been pushed here heavily in the states by Senator Robert Kerry of Nebraska (D). The plan would not allow people to drop out of Social Security completely like some other more radical plans, but to divert a percentage of their payroll tax into accounts that work like Individual Retirement Accounts (IRA's).

The Senators plan proposes that 2% of the 12.4%tax would be taken out and placed in private accounts set up by the government. The money would be one's own personal account with compound interest (Congressional Digest 246). The Institute for Research on Economics of Taxation (IRET) adds, 'that they would not be able to touch that money until they retiree or become disabled. The money is theirs the government would not be allowed to touch it. If that person should die the money would be added to their estate' (Congressional Digest 248). The Cato Institute (a nonprofit public policy research foundation founded in 1977 whose publication, conferences, and seminars are designed to illuminate private sector, voluntary solutions to social and economic problems) also adds, 'that those presently in the workforce would have the option of remaining in the current Social Security system or switching to the new private system.

Those entering the workforce after the implementation of the new private system would be required to participate in the new system. Thus the current system would be eventually phased out' (Congressional Digest 244). The plan also has guidelines to problems and questions that people have or arrive. First off people begin to question the safety of the government handling their own personal money. It a viable question considering our national debt and the way they spend tax money, but the there is a viable answer. If you let people drop totally out of Social Security and have their own pension plan there would be know way for the government to keep track and ensure that people are saving.

Then when these people begin to retire and we find out that many of them never saved any money and will have no monthly retirement checks we will have a poverty struck elder class that the government would have to bail out. In conclusion to ensure that everyone has money set aside for retirement the government has to control the money. Another common critique is how much is 2% going to save? It wills save a lot more than the average person thinks.

Currently Social Security takes a dollar from the worker and gives it directly to the retiree with no growth or interest. The IRET states, 'With compounding interest at a 7% real return, a dollar saved at age 20 would be worth $16 at age 60 and $32 at the age of 70'Congressional Digest). That's more then the current system could ever own up to. Many critics also wanted to know what would the new system do about people who earned low wages and wouldn't have a substantial amount of money set aside to pay for retirement. The Cato institute proposes a minimum savings amount, acting as safety net. It would be a number to a similar to the minimum wage where if the individual doesn't meet the amount specified to earn a livable monthly payment the government would supplement the difference to bring the monthly income up to the correct level.

The money would come out of the other 10.4% that people still pay into. They also report considering the rate of return even someone making minimum wage their entire life would still have enough to meet the monthly requirement (Congressional Digest 244). Concluding that the safety net would only support a scarce few. This would also keep our nations poverty level up.

A questions many Americans have is where do we begin? You begin with all age groups including people in their forties and fifties. For these people who are getting close to retirement and wouldn't have a substantial amount saved up the government would take the benefits earned from year to date and put them into a bond. The bound would be put along with the 2% they begin saving. The money would earn interest together so when these people retire they will be shore to receive the money they deserve and then some (Investment Company Institute Congressional Digest 252). The only problem the plan doesn't solve is the problem that can't be solved.

This is how do you support the people already collecting their Social Security. Social Security will have to use their surplus, but as stated the government has already used this money. In order for people to get the money they deserve the government will have to cut their loses and pay back their bonds. It will severely hurt the budget, but what choose is there. No plan would have been able to solve this dilemma it would have happened anyway. What more can you say?

The time to change the Social Security system has come. The program considered by many to the prominent leg of the three legged retirement stool, along with pensions and personal savings, is growing week. '... the result for retirees almost certainly will mean that the one leg of three legged retirement stool is going to get wobblier' (Wechsler 25). The government is going to have to act now to prepare for the future because if they wait any longer the leg mine as well just fall off. The government is there for the people and I'm sure they don't want the suffering of Generation X retirees on their conscious. I don't want this to happen. I would like to work hard in my life looking forward to luxury of retirement at the end, and as a citizen of this country I should be given that right.

If the system goes bankrupt that luxury just maybe taken away. The only way to ensure that Social Security will be around for the young people of this country is to instate the partially privatization plan. Years ago it was considered to radical of an idea, but now it seems that there really no other choice. It's the only plan that shows some hard facts to support it goals unlike many of the other plans by Congress or President. You have read the argument and you now the facts I don't know how anyone could think otherwise. It took Chile out of bankruptcy it will do the same for us to.

What do have to lose.