Sunday, March 20, 2011

Benefits of Social Security Privatization to the Poor

It lifts poor out of poverty:
The higher returns and benefits of a privately invested system would be most important to low-income families, as they most need the extra funds. The funds saved in the individual retirement accounts, which could be left to the children of the poor, would also greatly help families break out of the cycle of poverty
Similarly, the improved economic growth, higher wages, and increased jobs that would result from an investment based Social Security system would be most important to the poor. Moreover, without reform, low-income workers will be hurt the most by the higher taxes or reduced benefits that will be necessary if we continue on our current course. Averting a financial crisis and its inevitable results would consequently be most important to low-income workers.
Excerpted from Chapter 17, Cato Handbook for Policymakers, 7th Edition (2009).

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