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.

When opponents of personal accounts can even bring themselves to admit that Americans do save for their retirement from time to time, a secondary argument is made that Americans trust traditional bank interest over “risky” stocks. The trillions of dollars in stocks and stock mutual funds that Americans hold in IRAs and 401(k) plans are powerful testimony against this. Another indicator is that Americans are abandoning bank interest savings products in droves. From 1989 to 2004, the percentage of American households’ earnings derived from interest declined from 16% to less than 10%–nearly a 40% drop. During that same time period, dividend earnings from taxable stocks in brokerage accounts increased by 35%.

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

Americans More and More Likely to Invest in Stocks Rather Than Save in Banks
Source: U.S. Department of Commerce