Is it worth paying a bit more to achieve these superior results? The reform has two advantages: Some have argued that reform plans would result in deep benefit cuts when compared to the current system in a hypothetically solvent condition.
Simply funding personal accounts with further borrowing, and not with new contributions or contemporaneous benefit cuts, raises many concerns: A fundamental goal of reform should be to improve national savings.
When productivity goes up, average wages go up, and this adds to long-term tax revenues. No one yet knows whether the surge in productivity that began in the mids will persist. This is really possible with a projected increase from the current GDP of 4. But higher wages would also result in higher benefits, and this would largely cancel out the gain.
Giving workers property rights to a pay-as-you-go entitlement is folly. With our large budget deficit and low domestic savings rate we are borrowing record amounts from abroad. Even if the enthusiasts are right about the new economy, higher growth is not a long-term fix for Social Security.
In practice, most personal account carve outs rely on borrowing to substitute for the lost FICA revenue and mitigate benefit cuts. Note that this reform effects only initial benefit awards; current benefits are already price indexed.
It is the hard choice: But among younger Americans, virtually all categories--including low-earners--will earn a lower return on their Social Security contributions than they could if their contributions were invested in risk-free Treasury debt.
The problems with debt-financing of a personal accounts were recently addressed by The Concord Coalition in a statement published in the New York Times. At the micro level, it means higher returns and hence higher benefits at any given contribution rate. With available statistics showing that if the current situation continues, the funds will be exhausted by the yearthis should worrying news to the working generation who expect to retire in the near future as with these statistics the scheme is not viable unless the right changes be made of course which are hard to come by from our politicians as the scheme is now complex and most Americans have lost hope in it.
Social Security retirement benefits are paid in the form of a defined benefit annuity. With a booming economy generating windfalls for Treasury, keeping the lockbox promise was initially painless.
This later approach would work particularly well with a system of personal accounts, which in the absence of some other mechanism such as savings matches paid out of general revenues, would make the overall system less progressive than it is now.
Social security will cover retirees. What legal, political and fiscal incentives best ensure that resources are actually reallocated from the present to the future? This is the amount that Congress would have to raise taxes or cut spending in order to save the Social Security surplus.
In the future, the trustees may have to raise their assumption. The big question that we will ask ourselves is; what if no remedies are taken reverse the current trend and even if remedies are taken what if they are not the best option, what will happen to the retirees?
This has eroded their confidence in the scheme and it seems that with the current state, the social security scheme is no viable. But in fact, a personal accounts system is consistent with any degree of government regulation. This was especially because of the high unemployment and a record of companies that have closed business making most Americans lose faith in the fundamental part of their finances Page S.
Although the system is meant to help the people in need after retiring, with a growing number of those claiming that they are in need outweighing those who are paying taxes for the scheme, then the future of social security does not look like the place retirees should peg their hopes at.
This will be easier in a prosperous growing economy. Over time, the yield on bonds would rise and the yield on stocks would fall, narrowing and possibly even erasing the favorable spread on which the plan depends.
The government plans to promote the conversion of k savings and individuals and the retirement account to annuities. Despite widespread recognition that hard choices are unavoidable, this difficult work is forced to compete for attention with an assortment of arguments for inaction and reform ideas that purport to fix the problem without asking anyone to give up anything.
This dynamic, of course, means that the living standards of retirees will diverge from those of the working population.
The challenge is that, until the transition is complete, workers will have to pay more, retirees will have to receive less, or both.
For retirees, they start receiving their when they attain the age of 62 or above. It therefore cannot be assumed that a trust fund surplus will result in higher savings.Therefore, the thesis statement of this essay is social security will not cover for the retirees benefits.
Background information. Social security is a federal government program that was established in that mandated supplemental retirement system in the US.
Jan 10, · Social Security has been the "nest egg" of millions of people who had no retirement benefits or any source of income when they got older. It was intended to insure that when you became too old to find decent paying employment (age discrimination) one at least had mint-body.com: Resolved.
I. Social Security and the larger retirement security challenge For over 65 years Social Security has provided a vital floor of protection. Its broad range of retirement, disability, and survivors' benefits for millions of Americans makes it an important issue for people of all ages.
Thesis Statement For Social Security And Retirement Lee s Divorce Family Law Blog Social Security Reform nbsp; You may want to take a look at this piece from my partner Laury Adams on Social Security. Thesis statement: A successful retirement consist of establishing goals and estimating income needed, manage debt and then start saving/ investing, because social security alone is not enough to cover needs when retired.
Thesis: Continuing changes in the Social Security System makes it almost impossible to plan intelligently for one's retirement. A thesis statement is narrow, rather than broad. If the thesis statement is sufficiently narrow, it can be fully supported.Download