Retirement Crisis Faces Government And Corporate Pensions
22nd March 2024
When President Roosevelt first enacted social security in 1935, the intention was to serve as a safety net for older adults. However, at that time, life expectancy was roughly 60 years. Therefore, the expectation was that participants would not be drawing on social security for very long on an actuarial basis. Furthermore, according to the Social Security Administration, roughly 42 workers contributed to the funding pool for each welfare recipient in 1940.
Of course, given that politicians like to use government coffers to buy votes, additional amendments were added to Social Security to expand participation in the program. This included adding domestic labor in 1950 and widows and orphans in 1956. They lowered the retirement age to 62 in 1961 and increased benefits in 1972. Then politicians added more beneficiaries, from disabled people to immigrants, farmers, railroad workers, firefighters, ministers, federal, state, and local government employees, etc.
While politicians and voters continued adding more beneficiaries to the welfare program, workers steadily declined. Today, there are barely 2-workers for each beneficiary.
The chief defect of the Social Security system is that its money is required to be ‘invested’ in bonds of the Federal government–bonds that are notorious for their low rates of return and on which the rate of return has been especially anemic in the past decades of minuscule interest rates. The government takes the money coming in, writes an IOU to itself, and then spends it with gay abandon. The cupboard is bare, and always has been.