H. Cosgrove, of the Dallas-based newsletter, The Econoclastsays, "People need to take the responsibility of investing their own fundsfor their retirement. The Social Security system assumes people can't makethat decision and government can do it better. The result is a bankruptSocial Security System." These economists believe that by investing in the private market,someone currently entering the labor force and retiring at age 65 canexpect to receive an inflation adjusted retirement benefit from 1.5 to 5.5times the current social security benefit. Increasing life expectancy and decreasing birth rates have combined tocreate the crisis the system is now facing. For example, in 1950 therewere 16 workers for every social security retiree, while presently thereare only 3.3 workers for every retired worker drawing benefits. Estimatesare that by 2030 there will be fewer than two workers for every retiree. Privatizing social security sounds extreme, but it has been donesuccessfully in other countries like Chile. Jose Pinera, who was Chile'sminister of labor, privatized the state pension system in 1981. It is nowgiving retirees generous pensions while fueling investment, growth andimproving living standards in that country. The heart of the Chilean system is a mandatory savings plan. Allworkers under age 45 contribute 10 percent of their monthly earnings inspecial accounts, known as AFPs (Administradoras de Fondos de Pensiones).Workers between ages 45 and 65 could shift to the new system at theiroption. The funds in AFPs are professionally managed and invested instocks and bonds. The money may not be touched until retirement, at whichtime the worker may begin phased withdrawals or purchase an annuity. Atthe end of 1995 more than $25 billion was invested in AFP accounts. Theold Social Security system is being phased out. By 2030 Chile's Socialsecurity will entirely be privatized. This system ensures the money a taxpayer pays for reti...
