PR Web Press Release Newswire

            President Bush’s proposal to privatize social security relies on the stock market to make it viable. As the proposal is currently understood, investing solely in a mix of government bonds and investment-grade corporate bonds will not produce the level of returns necessary to make this concept practical, and the results over the super long-term of 30-to-40 years will not match the level of benefits available in the current social security (SS) system. Even a mix of 50% stocks and 50% bonds may not be enough because SS recipients currently receive cost of living adjustments throughout their retirement years.

The compounding of the higher returns from the stock market, both from capital appreciation and dividends paid, would have to be almost exclusively relied upon to better the current SS system. Due to long-term swings in the stock market however, when a worker retires – through no fault of their own – will now determine their retirement benefits under Bush’s proposal. This random occurrence will create both winners and losers, compared to the current SS system, and lead to fierce interest group infighting because the proposed SS system would no longer be considered fair for all.