For years policy experts have debated the merits of privatizing Social Security. In the wake of President BushÆs support for privatizing the system, there is a unique opportunity for politicians to translate this theory into a real working system of individually owned, privately invested accounts. Such a system would be of particular benefit to AmericaÆs elderly poor. With more than half of Americans in favor of privatization, the Bush Administration is in an excellent position to push for this policy.
More than one million centenarians will be living in the U.S. by the middle of the 21st century. At the outset of the 21st century, men aged 65 and older are expected to live another 16 years and women of that age another 20 years. Improved standards of living and public and private health care services have made long lives more common. Research shows that the average elderly person is expected to have about $1,000 per month from Social Security and other sources. However, according to one analyst, ôWhile covered by Medicare, many of these people still spend out-of-pocket as much for drugs, eyeglasses, etc., as they did when Medicare was first started in 1965. The trade-off is in food, shelter, and the fun things in lifeö (Smith, 2001, 3-4).
As the number of elderly drawing social security increase and as the numbers of people doing so continue to live longer lives, experts have predicted the bankruptcy of the Social Security system under present policy. Under the current policy, in order to evaluate the relationship between individual earnings and Social Security benefits and to product the distribution impact of Social Security reform, analysts have traditionally relied on policy simulations covering a handful of representative workers. A key shortcoming to traditional analysis is that it accurately characterizes just one dimension of a workerÆs career earning. It primarily explains the career average level of e...