Greenspan: Social Security in trouble

According to this article, http://money.cnn.com/2005/02/17/news/economy/greenspan_socialsecurity.reut/index.htm Greenspan won't use the word "crisis" in reference to Social Security as President Bush has because he feels that "crisis" is imminent and that the problems with S.S. are not imminent. Even though it is not going to happen in the next few years, wouldn't it still be considered imminent when considering how long government takes to implement any new law or system?

As the babyboomers retire, social security will be faced with tremendous problems, and action should be taken now to prevent it. However, the cure for the problem will not occur because politicians make decisions based on whether or not it'll get them re-elected, and S.S. remedies won't procure votes.

Then again, perhaps finding ways to fix S.S. is not the answer, but better equipping individuals with the skills to invest and plan to take care of themselves in their retirement years would be better. Less government always appeals to me ... and S.S. was never intended to be the sole source of income for people in retirement.


sandy said...

I am concerned about Social Security. However, to learn, I find it important to learn about other views of a topic. Check out http://money.cnn.com/2004/12/15/retirement/what_crisis/index.htm
But like Jane said, maybe equipping individuals with the skills to invest and plan would be a good idea. Has Social Security created an crutch for society to rely on, making us weak?

Dr. Tufte said...

-1 for a poorly formatted link in Jane's post (Sandy's link is OK because comments don't always permit links).

I tend to agree that using the word "crisis" is blowing this out of proportion.

The real problem is much more insidious, and no one is really addressing it. The problem with social security is the declining number of payers relative to receivers. Fix this ratio at a constant and there will never be a problem ever again.

This is not done because it would require passing a law that does something like this. There would be a certain number of slots for receivers and a multiple of that for payers (say 3 times as many). The kicker is that you couldn't join the group of receivers unless you could show that there were enough payers to cover for adding you to the receivers. Population growth will take care of that problem generally, but you might not be able to start collecting on a set date.

Frankly, no matter how well intentioned, anything that doesn't do this is just a band-aid solution.