Hopes and Fears of a Social Security Makeover

Peck, Maureen
December 2004
Journal of Financial Planning;Dec2004, Vol. 17 Issue 12, p8
Academic Journal
This article deals with the impact of Social Security on the financial planning practice in the U.S. U.S. President George W. Bush declared, upon being re-elected to the U.S. presidency, that Social Security reform was a top priority for his second term. Under the proposed overhaul, workers would be allowed to divert one-third or more of Social Security taxes to personal investment accounts, which means that revenue could not be used for benefit payouts. Consequently, the government would have to find another source of cash to pay the benefits either through additional government borrowing or spending cuts. The proposal is causing concern for some. Within the president's administration a messy legislative battle is expected among those who would rather leave the system alone, those who are all right with borrowing the money, and fiscally conservative members. There are those who welcome the proposed Social Security overhaul, among them the residents of Wall Street, for whom it is a potential goldmine. The prospect of privatization of Social Security could be a boon for the securities industry. Economists point to additional commissions for brokers, and fees for financial planners and portfolio managers, as well as a rise in stock prices dues to increased demand for stocks.


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