Opponents of privatization fear loses by retirees in stock market downturn

Opponents of privatization fear loses by retirees in

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will help restore solvency of the systems. Opponents of privatization fear loses by retirees in stock market downturn since most people lack knowledge to make wise investment decisions and privatization cannot solve insolvency issues facing the program. However, people strongly feel that privatizing the system will provide adjustments to the cost of living by allowing investment of retirement contributions in private assets such as stocks yielding better returns compared to pay as you go system as stated by Burtless & Bosworth (1999).This system can also overcome financial hurdle since the government can borrow on a massive scale to pay for the past social security liabilities. This will allow workers to invest a larger percentage of their pay in high-yielding assets. Also individual buildup of retirement savings is better compared to collective contributions since they can withdraw their funds at any
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MANAGEMENT 5 time, for instance if disabled and their children can inherit these funds if one dies or becomes disabled before retirement age. Challenges Facing the Government When Caring for the Aging Populations As the population ages, the number of elderly people increases and a larger share of money is used to care for the elderly who are dropping out of the American workforce. Aging populations bring up new and formidable challenges. However there are new opportunities such as healthy lives, long life expectancies and extended working years and the government has to devise ways of dealing with the rising challenges. These challenges question future economic growth of the country, the operation of the pension systems and the well-being of the elderly. The size and quality of workforce decreases with age which are very crucial in determining economic prosperity. The country has been experiencing low births rates slowing the flow of young people into the workforce. The number of dependent retirees is increasing and young people are fear that their demands will burden them indefinitely or retire into poverty. According to Bloom et al (2011), several implications occur for the different types of pension systems. There is an increase in the number of beneficiaries and a decrease in the number of contributors for Pay as you go (PAYG) pension system. Fully funded systems will require a long time before delivering substantial pensions and for baby boomers who may not have saved so far, it is too late to accumulate adequate funds. Voluntary funded systems will suffer procrastination while mandatory funded systems will create governance problems. Another key challenge is the health sector that requires a lot of money to care for aging population that is prone to diseases. Members in this group are likely to suffer cardiovascular diseases, cancer,
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