America’s declining Social Security program will be a contentious topic of debate for presidential candidates this year. Former president Donald Trump advocates leaving the program alone and has criticized Nikki Haley’s proposal to save the program by raising the retirement age. Similarly, President Biden has vehemently opposed any solutions that involve tampering with the program’s current structure.

Despite all this political posturing, Social Security is going broke fast as Americans are saving less for retirement than ever before. Half of all Baby Boomers in the U.S. have no personal retirement savings. Endless promises from both Republican and Democratic administrations over the last twenty years have been unable to reverse the system’s decline. Most objective estimates now suggest the program will likely be insolvent by the 2030s.

This is a raw deal for my generation. Studies from 2020 show only 38% of Zoomers believe they will benefit from Social Security. It seems to me that older generations want to borrow against ours and our children’s futures, while offering us no guarantee of ever seeing a penny from the system our money sustains. There’s a better way to ensure the long-term maintenance of the social security system, and it starts with privatization.

Though American policymakers balk at the word, especially within the context of Social Security, other nations that have successfully privatized retirement savings accounts could provide a model for how we might avert the imminent bankruptcy of our current system. For a clear picture of how such a scheme could operate, policymakers should look to Australia. 

The Australian retirement system, better known as the “Superannuation Guarantee,” relies primarily on personal retirement accounts and employer contributions for funding. Whereas in the U.S. automatic retirement withdrawals from employee paychecks go directly into a government-managed Social Security account, in Australia those funds are managed by a number of private providers. 

The way it works is simple: Rather than the government taking a percentage of each check to be contributed to the Trust Fund, employers are required to make these deductions, and the employee then chooses from one of hundreds of providers to manage the funds. 

This structure eliminates the problem of government mismanagement that has plagued the U.S. system. While the federal government claims allegations of raiding the Social Security Trust Fund are a myth, evidence suggests it has “borrowed” as much as $1.7 trillion from the fund in order to pay the tab for other efforts, everything from deficits to foreign adventurism. These “borrowings” have occurred over several presidential administrations and exceed the total value of the program. This disturbing habit is not present under a system managed by private actors.

Not only do private retirement funds limit the government’s access to personal retirement accounts, they also encourage citizens to take a more active role in planning for their retirement. Rather than collecting savings for retirees, the system provides incentives for people to take responsibility for their own savings. 

Australia has seen such an explosion in retirement savings as a result that the pension stash under this model dwarfs the Australian GDP. Australia’s retirement savings sum of $3.5 trillion is one of the largest in the world -- surpassed only by European countries such as Sweden and Norway -- and no other non-European country has a pension vitality level that rivals it.
By replacing the current Social Security system with retirement savings accounts, the U.S. federal government could encourage personal responsibility and financial independence while simultaneously shedding a significant financial burden of its own. Not only has the federal government repeatedly mismanaged the Trust Fund, but annual Social Security expenditures are the largest single item in the budget, accounting for 23% of all federal spending in 2023. For reference, that figure amounts to more than the U.S. spends on defense. This kind of government spending is not sustainable. 

Adopting an Australian retirement model would not only benefit my generation, but seniors too, as they would be able to save more themselves once they are given back partial control over their own retirement. This approach would even benefit the government as it would avoid the swiftly approaching Social Security crisis by shifting the responsibility for retirement savings from the state to individual Americans and their employers. 

This approach works in Australia. It can work here. If Washington lacks the courage to make tough choices, Social Security will become insolvent, and when that happens, they will have only their own cowardice to thank for the inevitable crisis that will ensue. 

Ezra Wyrick is a writer and consultant from Rockwood, TN who is the Youth Outreach Administrator for The Liberty Whip and a contributor for Young Voices.

Image: Social Security Administration