Social Security policy and programs

Social Security: The Inclusion of Personal Retirement Accounts

While Social Security has been a standby for American retirees since 1935, the inner workings of the program has come under more scrutiny in recent years. More specifically, the addition of personal retirement accounts has been a subject for debate amongst policy makers and analysts. Proponents of the plan point to an increased opportunity for low and middle income families to create a stable saving plan. Essentially, this could in turn break the generational cycle of poverty that limits a sizable portion of the United States population. While there are certainly drawbacks to such a plan, studies have shown that the inclusion of personal retirement accounts into social security would indeed benefit a large number of Americans and should be considered as a worthy addition to the nation's current welfare program.

Social Security is first and foremost supposed to provide support for individuals after retirement, and any plan to upgrade the current system should take that very fact in mind. A Center for Data Analysis report from 2004 found that personal retirement accounts would provide more savings for retirees. In addition, part of the money would then be transferred to the next generation, thus creating a positive chain reaction of income flow.

While specific data estimates are difficult, there are a number of logical benefits that agree with the aforementioned conclusion. Under this new plan, the system would become more flexible by allowing workers to personally control their retirement. As a result, inheritances would increase at all income levels. While not life-changing for the middle and upper class, those in poverty would see a huge difference under the new plan. In the previous decade, merely 13% of households below the poverty line received inheritances, a figure that would certainly increase if personal retirement accounts were added to social security.

A more basic benefit revolves around the workers themselves. Individuals would have a choice in their retirement plan and would essentially own their own Social Security benefits, as opposed to the current system that finds middle aged families hoping to see their welfare checks upon retirement. This mere fact would certainly lead to an increase in morale throughout the working class community. However, there are drawbacks that must be considered as well. Most importantly, the cost and maintenance of overhauling such a large system is daunting. Both government officials and taxpayers may see an increased burden as the scope of social security benefits is broadened. While workers would have a choice to invest in a personal retirement account, this leads to more responsibility being places on the workers who will receive the payout. That dynamic has its own set of risks and rewards.