what are the problems with personal retirement accounts?

Question

the president has proposed this alternative but what are the major problems with this.

Answer 1

There are those who are concerned that "people" (meaning people who are not employed by the federal government) would not be able to control their own money, and would blow it all in the stock market.
The way the proposed plan worked, the funds would be put in one of 4 or 5 plans, chosen by the individual, that are a lot like mutual funds. No one could have all their money in one stock (like the Enron folks). There is some risk in this still, so you would have the option to put your money in something with less risk, like bonds or simple savings. In short, it would indeed be possible for people to 'lose' money, but if you look into the plan, it calls for those nearing retirement age to shift their funds into something that is based much less in single stocks. The plan is quite similar to those plans already being used by major financial advisors to keep retirement money growing when you're young and safe just before you retire.
As far as I can tell, the major problems are with having to give away my money to Social Security. I don't want it, and would much rather handle my own retirement account and have some control over MY money. We do seem to forget that it is OUR money, but the government decides what we get to keep. If that's the way it's going to be, shouldn't we have some say in how it's used for OUR retirement?

Answer 2

One big problem is people can blow all their money away.