How should we tackle impending social security crisis?
The big question. The demographic crisis is making it so there will be far more old people than young people. If things continue the way they are, younger people today can expect 20-30% smaller payments when they eventually receive social security. Basically, if you want to avoid this, you have a few choices:
- Raise payroll taxes.
- Raise the retirement age so benefits pay out later.
- Eliminate/raise the tax cap so rich people pay in more.
- Phase out benefits for high earners.
- Adjust cost of living adjustments to be less generous.
- Eliminate it entirely and replace it with a more personal kind of "forced savings" plan.
Of course, politically, doing almost any of these is hardly feasible. You'd be pissing off the largest voting bloc.
It's a difficult issue to tackle. Economically, social security has little value. It's just a wealth transfer from young to old, and old people don't work or start businesses much and had longer to accumulate their own wealth. A conservative take in my mind should be something like: why should I be responsible for someone else's retirement fund? Yet, since it's universal, everyone happily pays in with the expectation of receiving it back in retirement. This is now breaking down.