The possibility of privatizing Social Security or reforming it to act more like an investment plan has sparked debate. Former Vice President and potential 2024 presidential candidate Mike Pence advocates for privatization and proposes private savings accounts for Social Security recipients. However, most Democrats oppose changing the basic structure of Social Security, while some Republicans advocate for reforms that give beneficiaries more control over their retirement funds.
Law professor M. Todd Henderson suggests letting workers invest in U.S. companies through individual retirement accounts funded by a small seed investment from the government. According to GOBankingRates’ report on March 16, 2023, current wage taxes would fund the accounts to ensure everyone saves for retirement. Investments would be limited to a small set of broad market indexes to insulate against risk. Henderson also supports the establishment of a small government insurance scheme to balance out market volatility for low-income workers.
Social Security advocates say private plans carry too much risk and have rallied most lawmakers to their side. Privatization could be devastating for low-income people who have fewer financial resources to contribute to retirement accounts. It would result in huge cuts in Social Security benefits with no guarantee that private investment can replace lost benefits, as reported by Yahoo on March 16, 2023. The National Committee to Preserve Social Security & Medicare believes that Social Security will still provide millions of retirees with a sound, stable retirement and may require modest adjustments over time but does not face an insurmountable crisis requiring major structural changes.