Personal Accounts Will Strengthen Social Security

November 22, 2002

Writing in The Detroit News, Julie M. Szydlowski contends that "Slumping stocks and accounting scandals have exacerbated fears of the risks associated with much-needed Social Security reform… But the recent election proved that savvy voters are not so easily spooked. They voted for candidates who supported private accounts. If Congress is serious about saving Social Security, they should consider the merits of private retirement accounts."

A personal account system would be "…similar to setting up an individual retirement account or 401(k)… Workers would be able to invest in various stocks and bonds, which traditionally provide a far greater return than federal treasury notes generate and strengthen the system." And, "While market fluctuations mean investors may not do well from one week to the next, long-term investments do better than the rate of return on Social Security ever will." Indeed, "As former Social Security commissioner Dorcas Hardy notes, even the worst 20-year period from 1929 through 1948, which includes the stock market crash of '29 and the Great Depression, had an inflation-adjusted return of 3.36 percent. Compare that with Social Security's anemic 1 percent to 2 percent return even in good economic times."

"Before last week's election, opponents failed to acknowledge the vast public support for Social Security reform. A July 2002 Zogby poll sponsored by the Cato Institute found that 68 percent of respondents support investing a portion of their Social Security taxes in individual accounts. That number jumps to 83 percent among 18 to 29-year-olds, the group most threatened not to receive Social Security benefits by the time they retire."

"While opponents to Social Security reform claim private accounts would destroy Social Security and hurt low-income workers, they fail to spell out an alternative… As David John of the Heritage Foundation says, 'Doing nothing is not an option. In fact, doing nothing is the most short-sighted thing we can possibly do.'"

2005 Index | 2004 Index
2003 Index | 2002 Index | 2001 Index
2000 Index | 1999 Index | 1998 Index