How would shifting from Social Security to private accounts (“privatization”) affect Social Security and my retirement?
A. Diverting payroll taxes from the Social Security Trust Fund into private accounts would make Social Security’s financial situation worse, not better. Social Security would have less money to pay benefits to current and future retirees and other families that depend on Social Security. And private accounts—which depend on how much an individual has to contribute and how well her investments perform—cannot duplicate the special protections offered by Social Security. The nonpartisan Congressional Budget Office (CBO) recently analyzed a privatization plan developed by the commission appointed by President Bush. CBO projected that under this plan, future retirees would have less income from the combination of their private account and reduced Social Security benefit than they would have from the current Social Security system.
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