Some people who have objected to my proposal for increasing Social Security retirement benefits have done so on the basis that this is something people should be personally responsible for. Essentially, life’s a big test, and one element of that test is a lifelong commitment to amassing significant personal wealth that can be drawn down in your twilight years. If you fail, well, better luck next time. Except …
But there’s no need for retirement income to be in this special category of things we must be personally responsible for. We are not personally responsible for many things in our lives. I didn’t build the roads I drive on, or purchase the buses that stop regularly on my corner. I have little to do with the hiring and management of police and fire personnel or air traffic controllers.
Our hopefully somewhat democratically accountable governments provide many things for us. There are economic arguments about the areas where government should be more or less involved generally and ideological disagreements about the appropriate role for government. There will probably always be disagreement about just who should pay, and how. But there also practical arguments. If there’s broad political agreement on a particular outcome, such as that most people should expect to have a reasonably comfortable retirement, then the question is how best to achieve that. I don’t think 75-year-olds should face economic ruin and homelessness for any reason. I am not alone in that opinion. How do we ensure that?
Social Security was envisioned as one leg of a three-legged stool of retirement, along with employer pensions and private savings or insurance (though the metaphor itself was devised after its creation). The problem is that two of those legs have shrunk significantly. This is not a stool one can comfortably sit on. This is not a stool most people will be able to sit on at all. The system, as envisioned, is failing.
We can goad and cajole people into saving. We can provide incentives for people to save for their retirement, and penalize them for raiding those funds before they retire. We can subsidize employer contributions to retirement funds.
But we have been doing all of these things for decades, and they haven’t worked. The majority of people nearing retirement will not have sufficient funds to retire with anything resembling economic security and comfort.
The three-legged stool
