The Social Security Act was signed August 1935. Under the Act, Social Security provided for three main programs.

1. A retirement annuity. It works like an annuity in that the beneficiary receives a fixed monthly payment and the total received depends on how long the beneficiary lives.

2. A spousal and survivors benefit. Benefits are available for dependents and survivors of an insured worker.

3. Disability insurance. Social Security provides earnings-related pension benefits to workers who are disabled below the normal retirement age, and to their dependents.

A cursory look at Social Security would lead one to believe that America is a better place with these three main programs in place. In the nearly 65 years since President Roosevelt signed the Social Security Act, America has considerably cha

· The Social Security payroll tax rate has climbed from 2 percent to 12.4 percent over the past 50 years.

Other privatization success stories have been documented in Britain and Singapore with numerous other countries moving in the same direction. With these success stories in place, it would seem obvious that privatization would be an obvious answer shared by all. Not the case; one source say's "...private accounts shift risk onto individual and create a system where the highest income people will have less and less support for the system. In the short run it may be in their best interest but not society's...privatization undermines the idea of the social system and the retirement system and ultimately you lose the idea of protection."8

Under Chile's private system, new workers are required to deposit 10 percent of their income in pension funds of their choice; currently, they have more than 20 options. "More than 90 percent of Chile's older workers who could have chosen to participate in the government-run Social Security scheme chose the private options instead. Those who participate over their working years will be able to retire with an average annual income worth 70 percent of their pre-retirement income--more than three times the amount promised under the old system."6

The Social Security taxes are too high and, without reform, could rise much higher. The payroll taxes used to fund Social Security have exploded in recent decades. Both the tax rate and the amount of income subject to the tax have increased dramatically. "One result is that payroll taxes are now a heavier burden than income taxes for about 75 percent of taxpayers. Specifically:

Research has proven there is no simple answer on how to reform Social Security but it does appear to be divided among liberal and conservative philosophies of either leaving the "Social" in Social Security or full/partial privatization of the system.

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Approximate Pages = 6 (250 words per page double spaced)