Public pension systems were established to guarantee retirement income for the elderly. These systems have been highly successful at reducing poverty rates among the elderly and allowing many to enjoy a comfortable retir ement.
Unfortunately, increases in the generosity of pension benefits, slowing economic growth and changes in demographics worldwide have made these systems increasingly costly to maintain, causing concern among workers about t he ability of their system to finance their approaching retirement. To address these concerns, policymakers are formulating reform proposals in each of the seven major industrialized nations.
Three approaches to reforming the U.S. Social Security system are currently being debated. The particular reform solution one favors depends on the goals one wants the system to achieve. But if we make realistic assumpti ons about upcoming trends in the economy and demographics, it is clear that the current balance between costs and benefits is unsustainable.
If we lull ourselves into complacency and fail to act because our system is currently healthier than most, we will only cause future reform to be more costly. The amount by which taxes must rise or benefits must be cut i ncreases the longer we wait. Furthermore, delaying reform will reduce the time workers have to adjust their financial planning to any changes.
The clock is ticking.
[ How It Works ] [ Keeping It Going ] [ What We Can Do ] [ Conclusion ]
[ The U.S. Advisory Council on Social Security: A Group Divided ] [ More Information ]