Equally important, individual accounts may provide an opportunity to address some of the other problems with the current Social Security system, in particular its impact on wealth accumulation, the intergenerational transfer of wealth, and the inequality of wealth in America.
Poor households currently save very little and therefore own almost no financial wealth at retirement. As a result, the distribution of bequeathable wealth among retirees in the United States is highly unequal. There is strong evidence that Social Security may be contributing to that inequality. In contrast, a system of individual accounts would allow workers to accumulate real and bequeathable wealth, leading ultimately to greater overall equality of wealth. Social Security privatization therefore becomes the truly progressive option for reform.