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Social Security Research Paper

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Social Security and Private Retirement Accounts
Kivi Poteat
Econ 2302
Central Texas College
October 31, 2015

Abstract
With dwindling Social Security funds provided by the Federal Government, they are sure to run out in the future. Younger generations need to consider alternative methods. One of these methods that should be looked into is personal retirement accounts. This would not benefit older people much due to their reliance on Social Security, but when young workers reach retirement age, it would be greatly beneficial. Investments are something that requires much knowledge and experience, but the returns on private accounts are much higher than Social Security could offer. Private accounts also do not hold the risk of government …show more content…
There are different estimates as to when social security will not have the funds to cover the program anymore. These dates range from 2033-2047. One thing we do know is that under the current Social Security plan, we will run out of funds. Is switching to personal retirement accounts the answer to help stretch Social Security? Social Security plays an enormous role in the United State’s economy. It funds many social programs and gives retirees an income. Relying on private retirement accounts possesses a big problem. Many older people that belong to the working class now have been discouraged to invest in their retirement. Most have planned on Social Security being the main source of their income as they go into retirement. This could lead to shortfalls of income among the older generation if we incorporate private retirement accounts with Social Security. If a person lives to an abnormally old age like in their 100 or above, Social Security will continue to pay the benefit. Whereas, private retirement accounts have a limit based on how much you saved. According to a study done by the Society of Actuaries, men underestimate the length of their life by 42%. (Anderson, 2014) This would leave a large portion of retirees with no income or very little income to survive …show more content…
Workers would have way more control over their retirement income. If one wanted a larger retirement check they could invest more money into a personal retirement account. Social Security gives a return between 2.67%-3.91% while a private account can return 5.5% (Privatizing Social Security, 2015). This would put much more money into the pocket of retirees. Relying on the government to provide retirement benefits comes at a cost. The Social Security Administration currently has around 60,000 employees and 1,400 offices. Their operating budget is estimated to be 12.5 billion dollars in 2016 (Privatizing Social Security, 2015). In 2014, the government spent 906 billion dollars (Privatizing Social Security, 2015). If Social Security was privatized with private retirement accounts, this would take an enormous burden off of government spending. Having private accounts would allow the remaining balance of uncollected funds inherited. Under the current Social Security plan, people that live shorter lives and collect less money don’t get to leave the uncollected funds to an

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