In an effort to reform America's flawed Social Security system--which is destined for insolvency as the ranks of the baby boomers reach retirement age and even today produces only minimal (if not negative) returns--proposals have been offered to give workers an option to invest a portion of their Social Security taxes in personal retirement accounts (PRAs). Such proposals have met with a flurry of opposition, based on arguments that are incorrect and misleading. For example, some of these arguments include the claim that personal retirement accounts will entail a high risk of loss; the assumptions that the current system is risk-free and can remain solvent; or a failure to acknowledge that low-income, minority workers receive unacceptably low returns for their payments in today's system.

As the debate continues to heat up, these misconceptions have spread and often have taken on a life of their own, regardless of the absence of any basis in fact. These myths make it hard for workers to make informed decisions on their retirement finances that will affect not only their own well-being, but also that of their children and grandchildren.

These misconceptions and myths appear to have validity because they sound logical or contain phrases that mean one thing in the context of Social Security and something very different outside of it. Many of them began because workers lacked sufficient information about the way Social Security actually operates and about the nature of the personal retirement accounts that have been proposed to reform the system. Some of the myths were purposefully initiated more to promote a political agenda than to advance debate in pursuit of workable reform.

America's workers deserve a more informative, less partisan debate on Social Security reform than they are getting. While the current system may be able to pay for all the benefits that it has promised today's older workers and those who have already retired, it cannot do so for younger workers.

There are only three ways to avoid an impending crisis of Social Security: (1) raise taxes, (2) reduce benefits promised to younger workers, or (3) make payroll taxes work harder and bring greater returns by allowing workers to invest all or a part of them in stocks or bonds through personal retirement accounts. While the first two options would make Social Security returns even lower than they are today, the third has the potential not only to address the impending insolvency of the system, but also to improve retirement incomes and help to close the gap between the payments promised by the system and the amounts that it is able to pay. Put simply, investments in stocks and bonds through personal retirement accounts can give workers a much higher rate of return than the current form of Social Security can offer.

The debate regarding Social Security reform is not an academic exercise, nor should it be used as a political ploy. The results of this debate will determine whether or not younger workers and their children will be able to receive retirement benefits that are comparable to those enjoyed by their parents.

The various myths and scare tactics that have emerged in the course of the debate do not alter the unpleasant realities that will confront American workers if substantial reform in the system is not implemented. It is time to debunk and put aside the myths that have buttressed the arguments against reform and created stumbling blocks in a quest for authentic, effective, and critically needed changes in the Social Security system.

--David C. John is a Research Fellow at The Heritage Foundation.