Time to revisit privatizing Social Security
The stock market has plunged over the last two years. Recent corporate accounting scandals have shaken the public’s trust in big companies and their management. Is now the time to revisit privatizing Social Security? You bet it is. In fact, if you’re going to start investing in the market, wouldn’t you prefer to start when the Dow is 8,700, rather than 10,000?
Over long periods of time, market rates of return have vastly surpassed the low return from Social Security. A stock market crash at the time of retirement poses a risk. But that risk can be greatly reduced by slowly diversifying retirement investments away from stocks and into more conservative income investments as investors near retirement. Such asset allocation strategies are well known in 401(k) and IRA markets already.
The recent turmoil in the markets hasn’t dampened enthusiasm for privatizing Social Security. During the week beginning July 7, when the Dow dropped almost 700 points, 68 percent of “likely voters” in a Cato Institute sponsored Zogby poll supported allowing workers to invest a portion of their Social Security taxes in personal accounts.
Eighty-three percent of younger people supported private accounts. Even 55 percent of those age 65 and older agreed younger workers should have the private investment options that older Americans never had.
When respondents were asked why they favor individual accounts, high returns was not the top answer. It wasn’t even the ability to leave assets to their families. Many voters simply want more control over their retirement accounts, and more choices over how their money is invested. It’s time they got what they wanted. It’s time to privatize Social Security.
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