A 2009 report by the Social Security Administration Trustees warns of a coming crisis. The report states that in 2016, Social Security will be paying more than it takes in, and by 2037 the Social Security trust fund will be exhausted. While many downplay the issue, there are only three ways to address the problem: Raise taxes, cut benefits, or make current payments go further.

In lieu of raising taxes or cutting benefits, the CATO Institute has proposed allowing workers to redirect their payroll taxes to private retirement accounts. The Heritage Foundation has outlined a similar framework for a personal retirement account program.

For young people, the biggest issue is the below market return rates on their payroll taxes. As noted in the previous CATO study, a single male born in 2000, earning an average wage, will receive a return of only 0.86%. Worse, someone born in 1965 must reach the age of 92 to be fully repaid. Those who point to stock market fluctuations as evidence that privatized social security is unreliable ignore that an FDIC insured CD will offer a far greater return than the government can provide.

The Heritage Foundation has a Social Security Calculator that allows people to calculate exactly how much better off they would be under a privatized system. It is worth taking a look.