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Greybi Gomez
Professor Tim Kahl
ENGWR 300
September 19, 2018
Social Security Privatization
In 1980, Chile was one of the first countries that decided to privatize their Social
Security system. The privatized system has been in place for over 38 years, and it has
been a huge success for the country’s economy (Piñera). On the other hand, the United
States has one of the oldest Social Security systems. In this old system, people pay 6.2
percent of their paycheck for Social Security and employers match that percentage. The
Social Security is supposed to give individuals some money after they retire (Smith).
However, nowadays, older people are struggling when they retire because they do not
receive enough money to survive. As a result, the Social Security system should be
privatized in the United States because it would give higher return rates, increase
productivity in the economy, and reduce poverty.
One of the great benefits of privatizing Social Security is that it would give higher
rates of return to people who invest in the private system. According to Daniel Mitchell,
a Former McKenna Senior Fellow in Political Economy, in his article “Creating a Better
Social Security System for America,” “rates of return are important in the Social Security
reform debate because workers would receive much higher returns if they had the
freedom to take the money now consumed by Social Security payroll taxes and put it
into private savings.” Individuals would have a higher percentage of return if they
invested their money in the stock market instead of putting their money in a pay-as-you-
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go system that would not give them that much of return when they could have been
putting the money into the trust fund every year. For instance, some people are getting
a rate of return about 1 and 1.5 percent in today’s system (Mitchell). If those people
would put that money into private savings instead, their rate of return would be between
1.5 and 5.5 percent. Mitchell states, “economists at Texas A&M University have
concluded that privatization would enable workers to generate retirement income that is
between 1.5 and 5.5 times greater than the Social Security benefits now promised.” As
a result, if the United States implemented this system, people could invest their money
in the private sector and the stock market. People would have more money when they
retired, and they would have enough money to meet their needs.
In addition to giving a higher return rate, privatizing social security would also
