During World War II, Franklin D. Roosevelt came up with a plan to secure the retirees. Social security was invented, and still is a pay-as-you-go program. The workers pay taxes and the beneficiary receives the money, with a promise to the young worker that the same benefits would be there when he retires. This system was very beneficial when it started, but because of the baby boomers coming to the age of retirement the system is imploding on itself. The current social security system should be replaced by a mandatory private pension system. The privatizing pension would be a permanent fix, so that there would not be a fear of running out of money.
The impending implosion of social security was a very popular topic during President Bush’s campaign …show more content…
The contribution from employers will have to lessen, therefore leaving the workers to retire later. In 2005, President Bush addressed some of these issues in a speech he made to a crowd in Galveston, Texas. “Social Security is a system where we take your payroll taxes; we pay out the benefits to the current retirees, and with the leftover, we pay-pay for other programs, and there is nothing left but file cabinets with IOU’s, and that’s how it works” (Bush) His quote is straight forward about a main issue within the system. The people do not have control over the money that comes in and there is no say as to where it is being distributed. Since Bush’s presidency the issue has continued to rise. The generation of baby boomers are about to retire or are already retired. There is expected to be an increase from 40 million to 75 million retirees after the baby boomer generation decides to collect social security. In 1950, the ratio of workers to beneficiaries was 16:1, today the ratio is down to 3:1. This drastic change has caused a chasm between the tax revenue coming in and the amount being paid out. Penelope Wang, …show more content…
They had a plan that hoped to switch the burdens of retirement from the governments shoulders to the people. This reform would also stimulate the economy and actually encourage employment. The basic premise of their reformed system is that every worker has to pay a mandatory ten percent of total earnings each month. This ten percent is tax deferred and anything extra is subject to income tax. Health insurance and disability is an extra ten percent of earnings. This plan is still in transition mode and will be until the other system is completely wiped out. The only major issue the Chilean government has come in contact with has been the transition cost. Kritzer states, “A significant issue concerning the switch from a pay-as-you-go public system to a fully funded privatized system is the transition costs, which can be enormous. To help defray these costs, the Chilean government accumulated a budgetary surplus of about 5.5 percent of GDP. This was accomplished, in part, through the sale of state-owned enterprises to the private sector (Kritzer). Although they have come across this issue, they have come up with a way to defer the cost to the people. It is too early to say how successful this system is but it seems to be laid out very well and seems to be pretty successful so far. The idea that each worker has a say in where his hard earned money is going and that he can be secure that it will
The impending implosion of social security was a very popular topic during President Bush’s campaign …show more content…
The contribution from employers will have to lessen, therefore leaving the workers to retire later. In 2005, President Bush addressed some of these issues in a speech he made to a crowd in Galveston, Texas. “Social Security is a system where we take your payroll taxes; we pay out the benefits to the current retirees, and with the leftover, we pay-pay for other programs, and there is nothing left but file cabinets with IOU’s, and that’s how it works” (Bush) His quote is straight forward about a main issue within the system. The people do not have control over the money that comes in and there is no say as to where it is being distributed. Since Bush’s presidency the issue has continued to rise. The generation of baby boomers are about to retire or are already retired. There is expected to be an increase from 40 million to 75 million retirees after the baby boomer generation decides to collect social security. In 1950, the ratio of workers to beneficiaries was 16:1, today the ratio is down to 3:1. This drastic change has caused a chasm between the tax revenue coming in and the amount being paid out. Penelope Wang, …show more content…
They had a plan that hoped to switch the burdens of retirement from the governments shoulders to the people. This reform would also stimulate the economy and actually encourage employment. The basic premise of their reformed system is that every worker has to pay a mandatory ten percent of total earnings each month. This ten percent is tax deferred and anything extra is subject to income tax. Health insurance and disability is an extra ten percent of earnings. This plan is still in transition mode and will be until the other system is completely wiped out. The only major issue the Chilean government has come in contact with has been the transition cost. Kritzer states, “A significant issue concerning the switch from a pay-as-you-go public system to a fully funded privatized system is the transition costs, which can be enormous. To help defray these costs, the Chilean government accumulated a budgetary surplus of about 5.5 percent of GDP. This was accomplished, in part, through the sale of state-owned enterprises to the private sector (Kritzer). Although they have come across this issue, they have come up with a way to defer the cost to the people. It is too early to say how successful this system is but it seems to be laid out very well and seems to be pretty successful so far. The idea that each worker has a say in where his hard earned money is going and that he can be secure that it will