Another concern with the PSA option relates to the sustainability of this very different view of Social Security because of the following questions. Under the current Social Security system, the more money you put in, the more money you get out. Experience from other countries shows that tax avoidance occurs when one gets nothing for the additional taxes. Finally, it is important to look outside the Social Security system and determine the effects of the various proposals on an individual's total retirement income. This would include employer pensions, personal savings, and possibly part-time work, sometimes referred to as the other legs of a retirement stool.
Diversification can be helpful here.
For example, when the stock market is down, traditional employer pension plans can be more valuable than mandatory Individual Accounts. When low-income individuals have small savings and pensions, Social Security's adequacy element is more helpful. Thus, Congress should be aware of the consequences if one leg is saved by harming the other legs, and thus end up with a one-legged stool. For example, some fixes like means testing Social Security benefits and additional contribution mandates would reduce other legs of the stool, namely, personal savings and employer pensions. Congress should be careful not to eliminate the employer leg.