Benefits of Stopping Financial Social Security - Literature review Example

Benefits of Stopping Social Security

Abstract

Internationally, social security has widely spread well beyond the clique of industrialized countries that dominated the field in the 19th century. This system has been almost accepted by everyone internationally as a mechanism of achieving human needs. Access to social security has become of the fundamental need and a human right. Universal Declaration of Human Rights proclaimed this kind of human right in the year 1948. This right although, is realized differently when it comes to different countries. The variation is due to the difference in political and social philosophies, socioeconomic level of development, history, and traditions of countries. These factors determine the winners and the losers of social security. If these factors are reviewed there might be some benefits of stopping social security. This paper tries to explain the benefits obtained after stopping social security.

Introduction

Social Security is a federal program that entails the provision of in-kind benefits and cash upon the prescribed contingencies occurrences (Baily and Kirkegaard 447). These contingencies include low earnings or lost earnings due to maintenance or income replacement, and to offset the cost of supporting dependents. Lose of income or inadequate learning may result from various situations like cease of individual’s power of earning due to either old age, permanent disability or even death. It can also be interrupted by the short-term injury, loss of employment, maternity leave or prolonged sickness (Baily and Kirkegaard 447). The inadequate earning may never even develop due to intellectual or physical handicap, inability to acquire the first job and emotional disturbances. Individual’s power of earning may be insufficient due to underdeveloped vocational or personal skills or even inadequate work remuneration. Due to all these social securities serves the four domains that include income redistribution, social compensation, poverty alleviation, and poverty prevention (Baily and Kirkegaard 447).

Social security also entails various blurred boundaries. These include Occupational and Personal Plans, Fiscal Welfare, Mandatory Family Support, Social Welfare and Health Services, and Traditional Social Protection (Baily and Kirkegaard 447). Although social security has various strategies, the major one include mandated personal and savings, mandated occupational pensions and savings, employee liability, mandatory public savings, social allowances, social assistance, and social insurance. These strategies have helped the social security system to function efficiently and very effectively in its provision of the services. Although the provision of effective and efficient services of is diverse in social security, some of the disadvantages prevail and these disadvantages become the benefits when you stop social security (Baily and Kirkegaard 447).

Benefits of stopping Social Security

Regardless of the nation and economic status, the analysis of social security schemes in different nations has led to the discovery of plenty disadvantages. If exploited, these disadvantages would pose as benefits for those who do not embrace or those who stop reliance on social security benefits. One of the principal advantages of abandoning social security plans is that individuals are encouraged to increase private spending hence encouraging national saving. Contemporary, most people, have lost track of the future and have a little plan for their retirement. This is because they rely on the impression the government’s social security program will cater for them when retirement time arrives. Most people are spending almost all their earnings with little savings for their future. Few people have little consideration of what they could do if they were laid off before their retirement period reached. Such as an early layoff would leave these individuals desperate with nowhere and no money to sustain them unless they had personal ventures, or get lucky to secure another job (Baily and Kirkegaard 449).

Social Security has resulted in a reduction in national saving by discouraging private saving. This has been proved by situations in the US where the national saving is low since many households tend to save little or nothing for their retirement looking upon social security benefits as their refuge. Moreover, most of the elderly population possesses little financial resources or assets to rely on whenever an unexpected need for spending arises (Baily and Kirkegaard 450). About this argument, it is clear that the stoppage of social security schemes would be important in inspiring saving, hence contributing to national saving. According to (John and Reno 2), the system establishes a great disincentive for individuals to invest in other insurance schemes, work part time during their retirement years, and discourage employers to avail pensions for their personnel. In this manner, any other activity regarding the spending of money seems to reduce an individual’s benefit amount under the security social scheme.

Secondly, abandoning social security schemes would help in encouraging progressiveness and solving problems in the redistribution of resources amongst the youths. This is because social security benefits throughout the world tend to be more generous to the elderly compared to the younger generation (Baily and Kirkegaard 450). This fact can be proved by looking at the impact of Medicaid and Medicare in the US whose major benefits are for the elderly rather than the young and productive generation. Moreover, many analysts acknowledge that the distributional issue presented by social security benefits is that higher-income earning retirees get too many benefits whereas the lower-income earners attain too little benefits from social security programs (Baily and Kirkegaard 450). In this scope, avoiding the reliance on social security benefits would help in motivating progressiveness by inspiring the youths and lower income earners to access more finances and resources to improve their economic status and reduce growing wealth gap between the poor and the rich.

Thirdly, stoppage of the social services benefits schemes would help in increasing the ease of money flow and access to money, which with proper economic policies would be beneficial to individuals and the nation by encouraging investment and spending. Such endeavors would contribute to economic growth (Thompson 69). In an interview with Mark Miller, a retirement planning expert and journalist, Mark revealed that many critics who maintain that the social security scheme exploits employees have attacked the social security system. This is because individuals could reap huge returns by investing the amounts of money they pay taxes in their payrolls into the private sector (Gallardo and Myles). Since individuals have varying abilities in their investment, the absence of social security schemes would promote competition for private investment that would foster economic growth besides creating employment opportunities that would also support individuals in their retirement ages.

Also, the stoppage of the social security benefits would help in eradicating the risk of economic downfalls that would leave taxpayers helpless and with no capital, particularly those depending on social benefits. According to Baily and Kirkegaard (449), there are numerous concerns that the program is not financially sustainable. Research has indicated that as more people enroll in the program, there is a possibility that as the life expectancy increases in newer generations while the baby-boomer generation retires, the social security plan may run out of money. This could be a major problem to the nation and taxpayers. Critics argue that the social security system functions in a condition that each generation of employees in a country is followed by a larger generation of employees. If a large section of an existing generation of employees retires, the subsequent generation of employees may not be in a position to finance the expenses and obligations of the system. This was evident in the past such as with the World War II baby boomers.

Besides these arguments, the stoppage of social security systems would help in resolving negative effects caused by the system including discouraging individuals from working, reducing employment creation, and reducing the country’s international competition while encouraging individuals to withdraw from employment prematurely. However, proponents of the social security system continue to cite the benefits that the system has had on the public. According to graphical presentations ("Benefits in Current-Payment Status"), the number of beneficiaries under the Social Security system has continuously grown since 1970. Most of the people relying on this system are beneficiaries, retired employees, physically challenged persons, and survivors.

Conclusion

There is a huge controversy revolving around the economic and social effects concerning social security benefits. Much of this debate focusses on theoretical negative effects of the system. Though the system has helped numerous retirees retain their financial abilities, it is not advisable to rely entirely on these benefits. Stopping social security would help in increasing the inspiration of private investment, in the effort to save for the future hence reaping much higher returns than with the system. Moreover, considering that the social security system was theoretically formulated to keep up with inflation, practically, it often fails to meet this obligation. Since the costs of living are not guaranteed during inflations or deflations, individuals may find that their expenses continue to escalate while their benefits remain stagnant. The best option for these problems during retirement and protecting one’s earnings would be saving independently while if need be consider social security funds as supplements. As a solution to these issues, rather than opting to zero reliance on social security benefits or the complete change in the systems, various adjustments should be made to adapt the pension program, formulated during the Great Depression, to the 21st century.

Graph

The graph indicates the number of beneficiaries opting for social security schemes since 1970.