July - August 2001

Social Security Reform — Could This Be the Goose That Lays Our "Golden Years Eggs"?

The idea of being able to direct at least some of our Social Security dollars to personal investment accounts is an interesting one, to be sure. For many Americans who have spent entire careers investing aggressively — sometimes winning and sometimes losing — this move would not only likely be appealing, it would be too good an opportunity to pass up.

The gap between the haves and the havenots continues to grow. We read and hear reports regularly about millionaires and billionaires who "struck it rich" very early on in their careers. For this group and for those who have won at the investment game, privatization would likely be an affordable gamble. Many Americans, though, have lived hand-to-mouth or began saving for retirement late in their careers. These folks have more at stake and cannot afford to lose the gamble. And unfortunately, some of the very people who are least able to take investment risks could mistake privatization for a long-awaited opportunity to "make up for lost time."

All of this aside, what will happen if the privatization program fails? Who will make up for the shortfall? Who will provide for the elderly who took a chance — and lost? We can't possibly just shrug and tell them "tough luck," after all…can we? Will those who chose not to participate, instead relying on the traditional fixed income expected from Social Security forego benefits because the dollars left will be used to make up shortfalls? Will their hard-earned Social Security dollars be safe in personal investment accounts?