Once again, reasoning why the system is bound to collapse and why it was invented in the first place.
In 1950, there were 17 workers per retiree. It is now three to one, and the boomers begin retiring around 2008. By 2030, if not before, there will only be two workers per retiree, and they will not be willing to be taxed for social security at the enormous rates necessary to provide the boomers with real benefit levels anything like those being enjoyed by the current generation of retirees. As early as 2015, the system will begin paying out more than it takes in, forcing it to sell bonds from the trust fund for money to cover the difference, and in a decade or two after that, the trust fund itself will be empty.
When Otto von Bismarck enacted the first compulsory social security system in the 1880s in Germany, he could have simply required people to save, and let private investment firms manage the money. But that would not have done his government any good. It was far better, as Bismarck himself made clear, to have them receiving checks from, and being dependent on, the government, to cement their loyalty to the state. The same ideologically statist reasoning, conscious or subconscious, motivated the administration of Franklin Roosevelt half a century later, and continues to motivate the defenders of government social security to this day.
And to sum it all up with a free market solution that has been tried and proved it is working, elderly people are not dying on the streets despite to what the left is telling you.
More than 40 different nations, including Great Britain, Chile, Italy, and Singapore have already privatized their social security systems to varying degrees. Chile began the trend, privatizing almost totally, and, consequently, has had the most spectacular success. Chile’s system was very similar to ours, but it reached its crisis sooner, as demographic changes caused the system’s outlays to exceed its revenues. In 1981, the Chilean government began allowing private companies to compete to manage the retirement savings of dependent workers, and allowing those workers to decide within wide limits how much to contribute. Also, a minimum pension guarantee was included to reduce risk from bad investments.21 Chilean workers had the option of staying in the old system, but 90 percent chose not to do so.
The Chileans scrapped trade barriers, privatized government-owned enterprises, and reduced the entire government sector by more than 50 percent. In combination with private management and investment of retirement funds, this increased their saving rate to 25 percent, and raised real economic growth to seven percent per year. As a result, pensions under the new system have been enormously higher in real terms—between 51 and 57 percent higher—than they were under the old system. This was accomplished with lower retirement tax rates.
In free market system, everyone, including pensioners is better off. Who woulda thought?
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