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Social Security is the bedrock of the Americanretirementsystem.
But while the concept is fairly straightforward, the ramifications can be huge.
What Is Social Security Privatization?
Social Security works by collecting taxes from workers and using that money to pay the promised benefits to retirees.
Any excess amounts collected go into the Social Security Trust Fund, where they are invested in Treasury securities.
Under privatization, the entire process would change.
Another suggested benefit of privatization is that worker savings rates may actually increase.
Rather, they are used to pay the benefits of those who are already retired.
Drawbacks
Transitioning from the current system to privatization would be messy at best.
Another potential issue is that workers arent necessarily adept at investing their own portfolios.
Clearly, theres a long way to go before such a system is implemented.
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