Social Security cannot afford to pay all of the benefits it has promised. Beginning in 2017, it will run cash deficits that get bigger every year.

Personal accounts within Social Security have many virtues. Younger workers can build a nest egg for their future. Poor Americans can, for the first time, start to build up savings. Those who pass on before retirement can leave a legacy of saving for their children and grandchildren. One often-overlooked aspect of personal accounts in Social Security, though, would be the paycheck-to-paycheck discipline of investing in a mix of bond and stock mutual funds. Dividends from stock funds would be automatically reinvested in personal account stock fund shares. Over time, history has shown that a career’s worth of disciplined dividend reinvestment leads to a rate of return 2-3 times higher than the simple rate of return of the stock market. Because personal accounts do this automatically, all younger workers can benefit from this sound investment strategy.

The system has a problem, and we need to fix it. Personal accounts are the solution.

Stock Market Returns Far Improved When Disciplined Dividend Reinvestment of Personal Accounts Is Allowed to Work for Younger Americans
Source: Standard and Poors & American Shareholders Association