The popular online finance column “The Motley Fool” is weighing in on privatization of Social Security –
“The most important thing that this model leaves out is the fact that Social Security benefits don’t just go to you. In addition to your own retirement benefits, your spouse may receive retirement benefits based on your earnings history. In general, if your spouse’s benefit would be less than half of your benefit based on your spouse’s earnings history, then SSA will pay an additional amount to your spouse to bring it up to the one-half amount. In addition, after your death, your spouse is usually eligible to receive up to the full amount of your retirement benefit for the remainder of your spouse’s life. While it’s extremely difficult to make simple assumptions about spousal retirement and survivor benefits, it’s obvious that they substantially increase the amount of money paid out by Social Security, and therefore any return from private accounts would have to rise accordingly to make up for those additional payments.
In addition, although this model specifically looked solely at OASI-related taxes, other models that look at the full Social Security tax of 6.2% sometimes fail to consider the value of Social Security disability insurance benefits. Private account plans that eliminate Social Security entirely but do not include provisions for obtaining private disability insurance coverage make a fundamental error in their calculations.” Full story here: