In the discussions about the US Social Security funds and benefits, there are
several things that are easily overlooked.
First, there's the idea that the Social Security benefits are main funds for
retirement. But there's the concept that the Soc.Sec benefits are one leg of
a three-legged platform. The other two legs are employer-provided pensions
and individual savings. This concept holds that that Soc.Sec benefits are a
"safety net". The bad thing for many people in the USA is that the other two
legs don't exist at all or are crushed into splinters and all that exist is
that "safety net".
The days of long-long employment with a company that gave good pensions (took
a lot to get to that point) are gone. Few employers give good pensions and
most people don't work long enough for the same employer to get a pension.
(Also, some employers have developed a knack for the sack of employees before
they get close to getting pensions.) Then there's the post-retirement
fiddling with retirees' pension that can whittle away at the benefits. Sure,
many employers now use 401K's and similar plans but these are far cry from
the traditional pensions.
Things I read about private savings don't look good. Many people are not able
to make ends meet with enough slack to put aside money. (Some will argue that
most people are living beyond there means and, while there's some truth in
some case for that, there are far too many cases where there isn't any fat to
cut practically. But such wranglings are for another thread.) If the savings
get hit by a bust or by fraud, etc. there goes another leg.
A less mentioned leg to support retirees, more common in other palces and
times, is the family. The type of extended family support found in some other
cultures is not so common in the USA.
Now an major expense of Social Security benefits --which, by the way, are for
retirees alone-- is Medicare. This is hard hit by the rising medical care
costs. The same rising health care costs are a factor in pre-retirement
ability to save or even earn money. Nowadays, many jobs don't offer health
benefits or require a high employee contribution.)
Then the nature of retirement has changed in a century. For much of human
history, people worked and then, pretty much, they died not long after. (One
amazing statistic --but unverified-- is that half of all humans who ever
reached the age of 50 are alive today.) The ideas of what one would be doing
after retiring seem to be more modest then they are today. It was not as much
as a beginning a new stage of life as it was getting some well deserved rest
after years of hard work. (This is a gigantic oversimplification, yes, I real
that.)
Greenspan suggested push the retirement age back to match life expectancy
changes. Besides the challenge of where the people will find work if the
overall jobs situation is not improving, there is the prospect that without
major changes, that age push will become eventually to the current life
expectancy minus two or so years.
I am not providing any suggestions with this posting but just expending the
view of some other things involved with the Social Security and retiremetn.
By the way, Social Security payments are also made to many non-retirees and
this is a part of the picture.
J.D. Abolins
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