For all it’s bad raps, I think pretty highly of Social Security. While a lot of people like to focus on its future insolvency and occasionally refer to it as a Ponzi scheme, I think the original idea behind it and the structure, were pretty solid. Furthermore, I think a few small fixes is all it would take for it to remain solvent.
But even if one is a member of the small-government, libertarian, or conservative camps, my experience observing finance and human nature, is that many people do not set aside money for retirement.(period!) Thus if you do not force people to save and put it into a locked box, they will come back and ask for a do-over 30 years hence. And if enough do so (i.e. vote), they will get it. At which point those that have been profligate will squeeze the most out of the system, by taking it from those who were not.
Here are a few facts buttressing my viewpoints regarding the need for maintaining Social Security from an excellent 2005 article by Roger Lowenstein in The New York Times:
The average stipend for a 65-year-old retiring today is $1,184 a month, or about $14,000 a year …for two-thirds of the elderly, Social Security supplies the majority of day-to-day income. For the poorest 20 percent, about seven million, Social Security is all they have. Even those figures understate the program’s importance. According to an agency publication, ”Income of the Population 55 or Older: 2000,” 8 percent of elderly beneficiaries were poor, but a startling 48 percent would have been below the poverty line had they not been receiving Social Security.
Yet whether I like it or not, Social Security is yet another shiv to the upper-middle class. It may be the one we have to take for the team, but if so [Read more…] about SOCIAL SECURITY & PENSIONS