Social Security reduction factor: Fully or partially privatize the program

The fifth Social Security reduction factor the government can apply is to reduce Social Security benefits by fully or partially privatizing the program.

This is a solution that former President George W. Bush drove for in the mid-2000s and that former President Trump once supported.

The idea behind privatization is this: A portion of a person’s retirement benefits would be set into a retirement account they could invest in as they saw fit.

This account might have limited investment opportunities comparable to a 401(k) that offers mutual funds, or it could have some other options with few restrictions.

In this system, workers would have the chance to grow their benefits faster than the 2.9% yield the Social Security program receives on its nearly $2.9 trillion in asset reserves currently.

Although privatization would allow us to do more with our retirement benefits, it has two critical implications.

First, we, unfortunately, score poorly regarding financial literacy, so there’s a real possibility some could wind up losing money, putting themselves in bad shape come retirement.

And second, it’s a way of lowering the federal government’s responsibility to provide benefits to retired workers in their golden years.

If you’re having trouble keeping all this information in mind, we recommend picking up a budget planner and going over your finances to see which course of action you should take next. Here’s one of our favorites on Amazon!

What are your thoughts on these Social Security reduction factors? Be sure to let us know in the comments below. And if you found this information useful, don’t forget to hit the share button to let your friends know about it.

But don’t go away just yet! Easy Seniors Club has much more to offer. For instance, did you know about the 8 Best Retirement Health Insurance Options for Seniors?