This is why a majority of every bipartisan commission in recent years has recommended the establishment of personal accounts within the Social Security system. Wage earners would be allowed, if they so chose, to invest a small portion of their payroll taxes in a controlled manner in the stock or bond markets. The return from these accounts would offset the inevitable reductions in Social Security benefits. At the same time, the traditional benefit program would be made more progressive, offering additional protection for low-income workers, regardless of how well their accounts perform. The truth is that the current system inevitably will lead to benefit cuts, and personal accounts are needed to shield against their effects.
Personal accounts have other advantages as well.
At a time when the nation must add to the pool of national savings to finance future retirement benefits, personal accounts would provide a vehicle and an incentive for that saving. On a personal level, individuals would have a greater stake in the progress of our economy and a greater say in their own retirement income prospects. Indeed, they would accumulate wealth, which they could use for their own retirement or pass on to their heirs. On a national level, we would put our near-term surplus resources to work and thereby eliminate a portion of the tax burden we would otherwise place on our children and grandchildren. Though the conventional wisdom is that such changes are a political impossibility, the evidence is otherwise.