The Current Social Security System Should Not Be Replaced by a Mandatory Private Pension System
It is too soon to tell whether curiosity will lead to popular acceptance, but it is already plain that many Americans are thinking about private alternatives to Social Security for the first time.
Inthe years since the Social Security system was established, there hasbeen a substantial expansion in private insurance, particularly in the availability of group insurance and private pension. The Commission recognizes the importance of such private arrangements and regards them and other forms of private savings asessential supplements to Social Security. It is not persuaded,however, that they could be used as an acceptable substitute.The primary difficulty with reliance on voluntary savings isthat too many people not only will not-save, but also do nothave an institutional basis for saving. It is not surprising thatfamilies hard pressed for funds to cover current needs--and seeinglittle prospect that monies put aside now will retain their value manyyears hence--choose to spend their money now. The growth inprivate insurance has come through employee benefit plans developedby employers or unions.
"Privatizing Social Security: The Troubling Trade-Offs, 2020). Moreover, wage growth has been sluggish for decades, and slow wage growth will result in a lower rate of return on Social Security contributions for future generations of retirees.
National Committee to Preserve Social Security & Medicare. "Social Security Is Not a Ponzi Scheme."
Brookings Institute. "Privatizing Social Security: The Troubling Trade-Offs."
Social Security Administration. "A SUMMARY OF THE 2019 ANNUAL REPORTS."