Introduction not perfect and there are certainly


There is a program
in place that helps people receive the help that they need and provide a plan for retirement. Social Security
is that program and it is the foundation of long-term financial support for
practically every American. It is the means of financial support for many
people. According to the Social Security
Bulletin, Social Security
is defined a social insurance program that provides an inflation-indexed
lifetime annuity or payment to aged beneficiaries (Dushi, 2017). Furthermore, Social Security has provided financial protection
and aid for our nation’s people for over 80 years.

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Social Security
functions in such a way that when someone works, they pay a certain percent of
their taxes to Social Security. Then, the government uses that tax money to pay
out benefits for workers who have become disabled, families where a spouse or parent
dies, and dependents of beneficiaries. According to the Social Security
Administration “Social Security reaches almost every family, and at some point,
touches the lives of nearly all Americans. Social Security helps older
Americans, workers who become disabled, and families in which a spouse or
parent dies. Today, about 167 million people work and pay Social Security taxes
and about 59 million people receive monthly Social Security benefits” (SSA,
2017). As hard workers and citizens of the United States, we contribute to
Social Security and we can also benefit from Social Security.

It is important to
understand the basics of how the current Social Security system functions in
order to see how privatization of Social Security can be detrimental for our nation.
Social Security is not perfect and there are certainly changes that could be
made, however, privatization is not the answer. With privatized Social
Security, the younger generation will suffer the most, in addition, it will
cause a major increase in the national debt. Furthermore, many groups of people
will lose out on the benefits and support that they need; lastly, there is too
much risk with a person’s retirement fund with a privatized social security

The Younger
Generation Takes the Blow

When people think
of America, one might think of freedom, success and equality. But what does it mean if an entire cohort
of people are suffering due to changes that could be prevented? To the younger
generation, Social Security privatization is oftentimes advertised as a much better
deal than the current. However, there is ample amounts of data and research
that show if Social Security were to be changed to a system of private
accounts, young adults will be the ones who bear the costs of transforming the
program. The added costs come about due to the huge increases in federal
borrowing needed to finance the new accounts while continuing to direct payroll
taxes toward existing benefits for current retirees. According to an
article published in the Generations journal, the ramifications of switching to
privatized Social security are severe. Some consequences are that younger
workers will receive a lower rate of return under privatization than they would
under Social Security. And as a result, younger workers will have to pay twice—once to pay for the benefits of
current retirees under Social Security’s pay-as-you-go system and a second time to fund their own individual
accounts (Kennelly, 2005, p. 98-99).
It is clear to see that the cost of transitioning to a privatized, pre-funded
system would reduce the rate of return for today’s young people, the
transitional generation, to a level lower than the rate of return on the
current Social Security system. It is not a wise decision for the federal
government to make a change to the Social Security system where only some
people will benefit, but many people will have to suffer the consequences.

Furthermore, the plan of privatized
Social Security is to put money into private accounts as opposed to the Social
Security fund and in order to compensate for the loss of Social Security
revenue sent into private accounts, the federal government would have to borrow
significant amounts of money and younger workers will have to suffer and take
the responsibility of paying this debt (AARP). One can see at this stage in the
paper that privatization is not a plan based on American values of unity and
freedom; therefore, manifesting the argument against privatized Social

The National Debt Worsens

Moreover, privatized Social Security
can hinder economic growth, which will further weaken Social Security’s
future finances. Many people believe that the Social Security system
itself is the problem, so they think just changing it all together will work.
However, the privatization of Social Security will cost substantially
more than just solving Social Security’s issues. Over the next seventy-five
years—which is the period traditionally used by the Social Security actuaries
to measure solvency—privatization of Social Security will cost several
trillions of dollars (Kennelly, 2005, p. 98). The United States of America is
currently having a real debt problem. Introducing a new Social Security plan that is privatized will
lead to an economic crisis.

In addition, privatization is more
likely to reduce, rather than increase, national savings. With an increase in
borrowing, the United States may need to start reaching into their savings in
order to combat costs of functioning. In the article, “Why We Can Afford Social
Security,” the data show that evaluating the overall effect on national savings requires
taking into account the likely responses of government, employers, and
households. Therefore, the authors argue that “diverting a portion of the
current Social Security surplus into individual accounts could reduce national
saving” (Diamond & Orszag, 2005).
 As a result, the privatization of Social
Security can further weaken economic growth and the nation’s capacity to pay
for the retirement of the baby boomers.

No More Help to Those in Need

The current Social Security System
helps more than just retired individuals; it also helps those who are disabled
and those who have had deaths in their family. With privatized Social Security,
benefits are only available to retirees, therefore causing many people to go
without the help they need.  In
the Journal of Public Health
Policy, it mentions that “seniors are not the only ones who benefit
from Social Security. Three million children and their sole care taker parents
depend on Social Security’s death and disability benefits to survive. Indeed,
Social Security’s safety net is wide; without it, vulnerable people of all ages
will suffer” (Ireland, 2000, p. 258). One
can certainly see that Social Security is helping many people; not just the
older generation. Changing to a privatized plan means that many people will be
without the care and financial support they need.

through privatized Social Security, there will be a reduction in benefits and
no revenue increase. In Diamond and Orszag’s article, one can come to learn
that privatized Social Security will not provide a sufficient base of
inflation-protected income in time of need and to cushion family incomes
against the possibility of disability and death of a family wage earner (49). A
large percentage of Americans are counting on the financial support that Social Security provides; if the
federal government privatizes this program, many people will suffer, while
still having the inability to work.

No Guarantees; Just Risks

Privatization advocates like to stress the appeal of “individual choice” and “personal control,” while assuming in
their forecasts that everyone’s accounts will match the overall performance of
the stock market. With privatization, some
might do well, many might lose—risk must be
taken into account, because stock market returns are never guaranteed. In an
article published in the journal of Review of Policy Research, it
talks about that with Social Security privatization, workers will be
able to redirect some of the money that currently goes to Social Security into
private accounts. “This would expose them to market risk, that is, the risk of
a substantial drop in equity prices or of a prolonged market. This could result
in generations of workers with less money than they thought they would have for
retirement” (Weller, 531). It is true that when people plan for their financial
future, they want a guarantee, not a gamble. Using the stock market as the
primary source for retirement funds is a big gamble and it provides no
guarantees on financial security.  


Social Security
has its imperfections and some reform ideas could certainly be used, however,
privatization is not the solution to a perfect Social Security system. With
privatized Social Security, the younger generation will have to pay the hefty
price for the transition. In addition, it will lead to a massive increase in
the national debt. Furthermore, financial benefits that have been helping many
groups of people, in need, will come to an end. Lastly, the stock market has
too much risk associated with it for it to be the main source of financial aid
for retirees. The current Social Security program has provided insurance
protections that have served the country well for decades. Diluting those
protections in exchange for new accounts poses all kinds of new risks while
making the relatively manageable long-term challenges confronting Social
Security far more immediate and severe. Much is at stake in this popular debate
and my hope is that through this research paper, one may come to see the
disastrous effects privatized Social Security can have on our nation. Let us
not drastically change something that has been helping people and functioning
well many years.