Money For the Rest of Us
What If Social Security Had Been Privatized? The Value of Federal Government Pension Plans
Jul 26, 2023
Explore the proposed plan to privatize Social Security in the US and its potential drawbacks. Discover the importance of real resources in driving economic growth. Compare the benefits of personal savings accounts to the current Social Security system. Discuss the shift from defined benefit to defined contribution plans for US workers. Delve into the privatization of social security pension plans and their participation rates. Examine the value of federal government pension plans and the need for a combination of public and private savings for a secure retirement.
28:30
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Quick takeaways
- The podcast emphasizes the importance of a dynamic private economy in supporting a public pension system like Social Security, highlighting the need for workers and businesses to produce goods and services that create real resources for retirees.
- The analysis of a hypothetical scenario shows that the privatized system proposed in 2005 would have resulted in lower benefits compared to the traditional Social Security system, highlighting the reliability and importance of Social Security in reducing poverty and providing a steady income for retirees.
Deep dives
Overview of the Social Security Personal Savings Guarantee and Prosperity Act
The podcast episode discusses the Social Security Personal Savings Guarantee and Prosperity Act proposed by Paul Ryan and John Sununu in 2005. The act aimed to establish voluntary individual accounts for workers under the age of 55, allowing them to allocate a portion of Social Security taxes to an investment account. The investments would be controlled by a central administrative authority, with default options being a broad US equity index fund and a broad corporate bond index fund. The act provided a floor guaranteeing that total benefits for Social Security would be as good as the existing system, with the potential for higher returns.
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