There has been a lot of talk about the need to reform the Social Security system with personal retirement accounts.

So you might be wondering, what’s wrong with the system and how would these PRAs work?

What’s wrong with the system today can be summed up in one word: demographics. An aging generation, the baby boomers, are putting a never before seen burden on Social Security. In 1935, when Social Security was first created, there were 42 workers per retiree. In 1950 the ratio was 15:1. Now it’s 3:1 and soon the ratio will be 2:1.

In fact, in 15 years the Social Security fund will be operating at a deficit that will grow each year, quickly going to hundreds of billions of dollars. If Congress raised payroll taxes to cover the shortfall, taxes would go from 12.4 percent to more than 18 percent.

This is where the idea for voluntary personal retirement accounts comes in. There are two schools of thought on how they would work.

One school would keep it simple, as in the Federal Employees Thrift Savings Plan. In this plan, workers have five large mutual funds from which to choose. They range from a totally safe government bond fund to a fund of all stocks.

Some Americans are not comfortable with making their own investment choices or any investment decisions at all. There should be a “default option” for workers where their PRA money would be invested in a mix of the funds. The other school of thought would allow for more choices and options along the lines of a restricted individual retirement account. Workers would not be allowed to buy individual stock in their accounts. They would be able to choose from a number of diversified equity and bond funds. Investment managers’ mutual funds would have to meet a set of standards to qualify for the PRAs.

Some people have expressed the concern that the PRA fund managers would take too much for their costs. On the contrary, the American capital markets are the most efficient in the world, and competition in the U.S. financial markets has driven investment fees to very reasonable levels.

There is no valid reason that should keep workers from being offered the choice to invest part of their payroll taxes in PRAs. With a strong safety net from Social Security still in place, this would allow all American workers — not just half of them — to build wealth and retire with much higher retirement income or pass the money on to their children or grandchildren.