Macro cost/benefit analysis

The Social Security system is a pay as you go retirement plan. Money taken from workers' checks is transferred to retirees. At one time there were 42 workers per retiree; today the ratio is now under 3 to 1. By 2030, the ratio is expected to fall to 2 to 1. The only way to keep the current system solvent is to raise taxes on those currently working or cut benefits to those already retired. Neither of these options is particularly pleasant. Another option has been debated for years, privatization. Under this plan, the government would still deduct money from our checks, but it would be put into personal retirement accounts under our own individual (but limited) control.

Carefully read the information below, and then do 1 thing with the data. (1) Make two columns (one for costs and the other for benefits) and place each piece of information in the correct column.

Would these be a cost or a benefit :

1. The stock market has averaged a 7% return on peoples' investments over the last 50 years, which is significantly higher than the 1-2% or less most will receive under the current Social Security plan.

2. Many people close to retirement could be harmed by a sudden drop in the market, reducing the value of their retirement accounts just when they need it the most.

3. Any privatization plan would have much higher administrative costs than our current transfer program, reducing the potential returns.

4. Disabled workers and widows of workers who die young would see a reduction in benefits.

5. Under privatization, people would be more in control of their own retirement.