2/28/2005

America's retirement, not as bad as other countries

America has one of the most diversified retirement systems. It entails; social security, company pensions, 401 (k) savings plans that are largely invested in stocks, and private insurance policies. The rest of the world is not as diversified as us and is in greater trouble with their retirement systems. The world has the same problem as we do with the baby-boom generation, but they do not have workers coming in from other countries everday. America, because of all the immigration, will genrate more workers to help pay for social security and other retirement systems. We have Mexico which helps in this process. My question is why is so much empasis put on social security when we have more retiremnet systems than the rest of the world? Also, if the social security fall happens, will it lower the standard of living?

5 comments:

rico said...

Americans are poor savers. We spend more than we earn, and buy houses and cars we can't afford. The average American's credit card debt is around $4000. (If I remember correctly, the number may be different.) We need social security because some people just can't manage their own money. Social security will guarantee these people additional income when they retire and they blow the rest of their retirement.

Marie said...

Salty does such a great job at finding articles to write about, and bringing good issues to the Blog. I disagree with rico. I don't think that social security is for the financially irresponsible. Most American's that are using social security now are not the over spenders of our generation, rather probably one of the hardest working most conservative generation this country will ever know. I think social security issues are arising because the system has become a machine. Past generations worked and paid for their parents, now everyone else is paying for their parents or grandparents. It is a cycle that started and is going to be hard to stop without the right considerations. The generations are unbalanced, and the percentage rate the money that is going into the system is not able to grow substantially enough to help the baby boomers.

Dr. Tufte said...

We are paying so much attention to social security right now because it has taken so long to get Congress to get the guts to do anything about it - nobody wants to blow the opportunity.

Our standard of living (on average) can't fall when social security fails or is reformed. All it does is transfer money around, it doesn't create any, so it can't make us better off. The failure of social security would make senior citizens poorer, but they are already the wealthiest demographic group, so I'm not sure we should care. Lastly, I'm not sure that there is any sense in which social security can ever "fail". It may not work the way we want it to, but it can't go broke either.

It is correct that our retirement systems are far more diverse in this country than in others. That is a good thing.

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