The fundamental purpose of social security program is to cater for the needs of the elderly American population. The initial program applied to those who retired at an average age. Historically, it was suggested that social security would constantly be financed. However, today’s American population lives much longer, so that the state debt exceeds all imaginable limits because of this program. So what are the pros and cons of social security policy and should it be privatized? This question remains a controversial topic for discussion. Below will be discussed the basic benefits and shortcomings of social security privatization.
It is suggested by the supporters of social security privatization that it is likely to enhance the life-span of the social security program. In fact, it is predicted that in future only two employees will be bringing benefit to a single retiring person, unlike the initial estimations. If to privatize the policy, there will be more investment into the program, so that it will last for many years to come. Furthermore, it is claimed by some people that privatization of social security is likely to prevent excessive costs associated with the program.
It is suggested that the only way to make the system continue to function is to encourage more people to enroll in the program. One more option is to increase the amount of investment. By privatizing the social security program, the government might prevent negative consequences. Furthermore, the program is likely to give employees an opportunity to use their money in a right way. The current system does not ensure the compensation given to workers. It is quite possible that the employees will work for over 40 years simultaneously contributing to the social security program. It will be done for the benefit of workers themselves, so that upon retirement they would get some compensation. If to privatize the social security program, the compensation would be guaranteed to the retired workers.
On the other hand, there are some shortcomings of social security privatization as well. First, it is a very expensive procedure. Under the Reagan administration, the government tried to privatize the social security program, but it failed to do so being left with no other option than to increase the taxes as it did not work the way it was expected. If to take the current government, the social security system continues to be beneficial for retired individuals, but the estimated costs for its privatization are nearly two trillion dollars, which is too expensive for the current administration. Furthermore, the system fails to cover the retirement funds of the elderly. Although it is planned to privatize social security program, this is associated with some kind of investment, which is always risky. When individuals think of their retirement opportunities, they might want to have some guarantees, which are not given by the social security program.
What is more, the privatization of social security is likely to contribute to the spread of bureaucracy. In fact, if social security is privatized, there would be needed a totally new administrative body required for distributing benefits that the retired individuals have rights to receive. A new system of accountability will also be needed for managing the retirement costs. In such a way, privatization of social security has a number of strengths and weaknesses, but the truth is that this problem has not been investigated to full extent yet. It still needs an urgent solution, and the pros and cons of such actions should be thoroughly weighed in order to ensure positive outcomes. This is a highly debatable issue that continues to be argued about by both the governmental authorities and common people who are on the verge of retirement.