Abstract
The purpose of this paper it to help better focus the Social Security privatization debate on pertinent issues. It is shown that retirement systems based either on mandatory private retirement accounts or on traditional publicly administered defined benefits can be designed so as to have similar implications for national saving and the adequacy of overall retirement incomes. The paper then turns to two issues that distinguish the two alternative retirement system types: the distribution of capital income risk across individuals and possible political impediments to prefunding retirement consumption in government accounts. The economic effects of investing all or part of the Social Security trust fund in equities are also analyzed.
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