Social Security Choice Paper No. 20

“Saving” Social Security Is Not Enough

Executive Summary

It seems that no politician discusses Social Security these days without a call to “save” the program. Certainly, it is possible to see why the program needs saving. It is facing financial insolvency: it is more than $20 trillion in debt and will be running a deficit in just 15 years.

But to focus on “saving” Social Security is to miss the larger point. Merely finding sufficient funding to preserve Social Security fails to address the serious shortcomings of the current system. The question should be, not whether we can save Social Security, but whether we can provide the best possible retirement system for American workers. Social Security fails both as an anti-poverty program and as a retirement program. It contains numerous inequities and leaves future retirement benefits to the whims of politicians. Why should the goal of public policy be to save such a program?

Instead of saving Social Security, we should begin the transition to a new and better retirement system based on individually owned, privately invested accounts. The new system would allow workers to accumulate real wealth that would prevent their retiring to poverty. Because a privatized system would provide a far higher rate of return, it would yield much higher retirement benefits. Because workers would own their accounts, money in them could be passed on to future generations as an inheritance. That would particularly benefit the poor and minorities. Finally, workers would no longer be dependent on politicians for their retirement incomes.

Read the Full Social Security Choice Paper

Michael Tanner is director of the Cato Institute Project on Social Security Privatization and coauthor of A New Deal for Social Security (1998).