Data Bases • Custom Term Papers • Free Term Papers • Free Research Papers • Free Essays • Free Book Reports • Plagiarism? Links • Top 100 Term Paper Sites • Top 25 Essay Sites • Top 50 Essay Sites • Search 97,000 Papers @ DirectEssays.com • Search 101,000 Papers @ ExampleEssays.com • Search 90,000 Papers @ MegaEssays.com Free Essays • Term Paper Sites • Chuck III's Free Essays • Free College Essays • TermPaperSites.com • My Term Papers • Get Free Essays • Essay World • Planet Papers	Search Lots of Essays Back to Subjects - Economics Social Security1 Social Security1 Social Security is a federal redistribution program that collects payroll taxes from current workers to provide pensions for current retirees. Since the government is expecting a large amount of retirees within the next twenty year, they have proposed four plans to save Social Security. The four proposals are reducing benefits, increasing the retirement age, raising payroll taxes, and privatizing part of the system. Today's Social Security taxes crowd out other savings. Fixing the trust fund by raising taxes or cutting benefits would be fairly simple, but both approaches would only make Social Security an even worse deal than it is now. Approximately 75 percent of American workers pay more in Social Security taxes than they do in income taxes. Based on the Social Security Administration's own assumptions, payroll tax rates would have to increase from 12.4 to 19.5 percent for promised benefits to be paid. Although such tax increases might be sufficient to pay promised future benefits, the economy would suffer severe consequences. Raising Social Security taxes enough to keep the government's entitlements promises to future retirees would require doubling or tripling these taxes. That means taking 30 to 40 percent of every worker's wages just to pay retirement benefits. Such tax hikes are not economically or politically feasible. Social Security reform must not reduce the benefits of current retirees. In addition, it must allow Americans of all income levels to build a nest egg for the future. Real reform will also guarantee that all workers receive an adequate minimum retirement income. The benefits of current retirees must not be reduced. Washington has a moral contract with those who currently receive Social Security retirement benefits, as well as those who are so close to retirement that they have no other options for building a retirement nest egg. Any real reform plan must guarantee in law that seniors receive every cent that they have been promised, including an accurate annual cost of living increase. As a first step to saving Social Security for future generations, Congress should pass a law giving every already retired American a contract that provides a legal guarantee of his or her Social Security retirement benefits. Finally, current workers should have the choice of either joining a Social Security system that includes personal retirement accounts or remaining in the existing system and taking whatever benefit is available at the time that they retire. Some of our elected officials propose raising the eligibility age to get full Social Security benefits as a way of keeping money in the system. The retirement age is already slated to rise from 65 to 67 in the coming years, but they want to force us to work even longer. The rationale for this change is that, since life expectancy has increased, so should the length of the work life. As was noted earlier, since Social Security was enacted in 1935, life expectancy at age 65 has increased by 3 years for men and 6 years for women. Moreover, these life expectancies are projected to rise by a further 3 years for both men and women by 2070. Proponents of a more rapid rise and indexation of the normal retirement age argue that a portion of these increases in longevity should be matched by additional years in the workforce. Increasing the retirement age would ease the pressure on Social Security financing by offsetting some of the increase in the elderly dependency ratio caused by the aging of the population. Opponents of raising the retirement age offer two main arguments. First, greater longevity has not so far been accompanied by an increase in years worked; indeed, people are retiring earlier and earlier. Therefore, we should wait to see how people accept the currently scheduled increase to age 67. Second, opponents are concerned that accelerating the change in the retirement age would hurt those who are forced by poor health or lack of employment opportunities to retire before 65. The law already provides for an actuarial reduction in benefits of 20 percent for those who retire at age 62; this reduction will rise gradually to 30 percent with the scheduled increase in the normal retirement age to 67. Increasing the retirement age beyond 67 would reduce the age 62 benefits further still. Fixing the system now will cost less than waiting. Principles for privatizing part of the system are the following: the progress of the existing Social Security system should be preserved, reform should offer long-run solvency for the system, reform should improve equity between participants, should try to increase economic efficiency by increasing the link between contributions and benefits, and administrative costs should be minimized. As Alan Greenspan has pointed out, the economic benefits of privatization of Social Security are potentially enormous. Privatizing part of the system, however, could hurt the current retirees. In privatizing part of the system, no one should be forced into a system of personal retirement accounts. I am in favor of privatizing part of the system. People who do not work to pay for the current retirees should not be able to receive Social Security benefits when they retire. Privatizing the part of the system would only work if the reforms are determined and announced as soon as possible. Bibliography: Word Count: 878
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