Private accounts are key to resolving financial crisis of the social security program
Saving and Rettenmaier 05 - (Andrew J. Rettenmaier is from Texas A&M University and part of Private Enterprise Research Center and Thomas R. Saving from Texas A&M University and studies Department of Economics, Ph.D. University of Chicag) PhD January 2005, "(PDF) Private Accounts as a Solution to Social Security Debt," ResearchGate, https://www.researchgate.net/publication/268055439_Private_Accounts_as_a_Solution_to_Social_Security_Debt //mish
The financial crisis of the Social Security program can be resolved by transforming this program into a retirement system based on privately owned savings accounts. A fundamental issue of the transition from the existing pay-as-you-go system to a pre-paid system is the distribution of the transition costs between current and future generations. In any pay-as-you-go retirement system the current generation, consisting of those currently working and retired, is owed a debt in the form of accrued retirement benefits. Any move to a prepaid system based on private accounts must find ways to pay off the debt implicit in the old intergenerational transfer financed retirement system. Social Security systems throughout the world have a greater debt to the current generation than that implied by the pure movement through life of each generation. This greater debt is due to a combination of two events that are occurring worldwide: a population bulge known as “baby boomers,” and increased longevity. These two events have allowed the taxes required to fund the retirement of past retirees to be woefully inadequate to fund the much larger retirement population soon to be in place.