Suppose the following Social Security reform became law:

-All current Social Security recipients will continue to receive their benefits, but no increase will be made other than cost-of-living adjustments.

-US citizens, between the age of 40 and retirement, who are not yet on Social Security, can opt to continue with the current system.

*Those who opt out can place what they would have contributed to Socal Security in one or more government-approved mutual funds.

*Those under 40 must place their contributions into one or more government-approved mutual funds.

Now answer the following questions:

1. Who will be in favor of this reform and why?

2. Who will be against this reform and why?

3. What might happen to stock market indexes and why?

4. What additional risk is involved for those who end up in the private system and why?

5. What additional benefits are possible for people in the private system and why?

6. Which firms in the mutual fund industry might not be approved by the federal government and why?