Individual Accounts - Cons
Public support for Social Security might be undermined
The plan would reduce the living standard of low wage earners
The plan puts workers at increased risk
- Assumption that wage-earners setting aside funds for retirement would prefer to bear part of the risk individually rather than share risk in a system for which all of the participants are collectively responsible.
The plan promises more than it can deliver
- The IA plan would reduce Social Security's defined benefit in the long run, replacing the diminished benefit with the hope that the average return on savings in individual accounts would make up for the loss
Sources: Ball, Robert M., “Partial Privatization of Social Security”, Straight Talk about Social Security, The Century Foundation, Washington, DC 1998.