Reasons for Private Accounts

There is much opposition to President Bush's idea for privitization of the Social Security system, but here are some of the reasons and numbers to why. Many people say that it is too risky for individuals to be diverting payroll taxes into investments in the stock market. With a steadily growing economy the stock market can provide greater returns than the present social security system does. For retirement purposes, year-to-year market fluctuations are irrelevant compared with the long-term trends over the 40 or more years of a person's working lifetime. And there is no 40-year period in history in which an investor would have come close to losing money in the stock market. In fact, the worst 20-year period in U.S. history, encompassing the 1929 crash and the Great Depression, produced a return of more than 3 percent after inflation. The average 20-year real return has been around 7 percent. The program will begin running deficits in 15 years and will be more than $22 trillion in debt over the next 75 years. Unless payroll taxes are raised, benefits will have to be slashed by a third.