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Fincancing Baby Boomer Retirement Rumor has it that Social Security is bound to go bust under the strain of baby boomers' retirement. But how sound are the arguments for radical reform?One of the hottest topics in U.S. politics over recent months has been the future of Social Security, and how demographic trends are going to jeopardize it. Specifically, it's said the aging of the 78-million strong baby boomer generation will break the back of a Treasury set to go bust as soon as they retire. Advocates of radical reform have convinced a significant portion of voters that privatization is the only way Social Security can go forward. But how reliable are the arguments in favor of overhauling the system?Advocates of reform say that Social Security privatization means creating an "ownership society" that gives workers greater control over their savings, investments and future. But another school of thought says that private investments will stymie the fund and defeat its chief purpose: to serve as a safety net for mature citizens. Americans generally see themselves as lovers of personal freedom, and privatization is quite easily sold as a means by which "the people" can achieve greater control over their retirement investments. However, opponents of privatization, such as he American Association of Retired Persons, challenge this.Already there are private pension funds, IRAs and 401(k) plans, through which the government allows workers to put away a sizeable portion of annual before-tax earnings. With these options available, some insist that pushing Social Security into the private realm simply amounts to reinventing the wheel. Moreover, it undermines the unique value of Social Security as foundation of a system providing basic retirement benefits to all. Another cause for concern: American's don't always choose winning investments. Studies have shown that U.S. investors typically overestimate their gains and perceive losses to be smaller than they actually are. Average household credit card debt stands at several thousand dollars. Since individuals often have problems staying afloat financially, government would seem to be doing them a favor by witholding a certain amount. Some workers can surely beat the returns their money is getting under the Fed's investment scheme, but if Social Security goes private, provision must be made for the millions bound to sustain losses. Workers will shoulder the burden of making up for others' poor investment decisions. We often associate privatization with profit; the driving idea behind capitalism is the theory that people controlling their own destinies make greater use of available resources. But the Social Security problem is more complex, and whatever the arguments for or against privatization, the fund is itself a resource we would do well to preserve carefully for as many years as possible. Back To Mature Market News → Go To The GenerationTarget.com Mature Market Bookstore → |
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