Currently, no one gets rich on their Social Security benefits, but most everyone gets by. Under the Bush proposal, some people would do very well but others would fare poorly. People with more experience with investments, those who are willing to devote significant time and effort to monitor the performance of their portfolio, and those able to hire financial advisors will probably make better investment decisions than others. People with less time, talent, money or inclination to manage their personal accounts will likely fare worse. And even in this stock market that is, on average , rising, some investors are still losing money.
Fund managers charge administrative fees for handling an account and managing the investments.
Moreover, at least half of all workers would have even lower annual earnings and make even smaller contributions. But income from these personal accounts or any investment is not guaranteed to last that long. Since no one knows how long they are going to live, upon retirement workers will need to convert their personal accounts into an annuity that will guarantee them a monthly benefit throughout their remaining years. Moreover, unlike Social Security, annuity disbursements generally are not adjusted for inflation and decline in value as prices rise. In sum, a system of personal accounts will provide worse benefits at a higher cost to workers.