It’s common knowledge that Social Security is in trouble. Although the program is in no danger of going bankrupt, and will be making payouts to many generations of retired workers to come, its current payout schedule isn’t sustainable.
Politicians have been coming up with ways to improve Social Security for decades. And among dozens of proposed solutions, one keeps coming up: privatization. What does that mean, exactly? The idea is that instead of the federal government being responsible for your entire retirement payout once you decide to claim your benefit, a portion, or all, of your benefits would be set aside in a separate account that you would control. The thought process being that if you could control your own retirement benefits, you might be able to grow them at a quicker pace over the long-term than the federal government has. It would also, in theory, give retirees more reason to pay attention to their retirement benefits.
This Motley Fool article takes a fairly nonpartisan look at the pros and cons of Social Security privatization. It’s interesting to contemplate, although ultimately the proposal wouldn’t really do anything to improve the program in the long run.