KATHERINE SVITAVSKY

Slashing the Safety Net: Privatization plans inappropriate for Social Security Retirement Benefits

Perhaps no other federal program is as misunderstood as Social Security. Characterized as “going broke,” a large contributor to the national debt, and even a Ponzi scheme, it is no wonder that 51% of non-retirees polled by Gallup in 2015 reported that they do not think the Social Security system will be able to pay benefits when respondents reached the age of retirement.1 While the program is expected to remain solvent through 2033, to keep this major program functioning as the Baby Boomer generation retires, Congress needs to act.

Championed for its emphasis on personal responsibility, one solution favored by Republicans is privatizing Social Security. Under privatization proposals, individuals would retain more control of their benefits as each would have a personal investment account. However, privatization encourages investment in riskier savings plans and undermines the guaranteed benefits a public option offers to low and middle income households, and thus should not be a replacement for Social Security. This memo outlines features of the Social Security Retirement program, identifies some of the challenges the program faces, critiques plans for privatization, and discusses other options for reform.

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