It is the human capacity for imagining ourselves living in the future that gives rise to innovations like Social Security. We are moved to prepare for the next stage of life precisely because we can imagine ourselves in old age. Given the difficulties and uncertainties that come with aging it makes sense to spread this risk as widely as possible.
The genius of Social Security lies in its capacity for spreading both risk and reward as widely as possible.
But if Social Security is a yummy social insurance cake, why not put some extra frosting on top?
Tax-deferred 401(k) retirement accounts came into wide use in the 1980s, making baby boomers trying to retire now among the first to rely heavily on them.
The problems are widespread, especially among middle-income earners. About 60% of households nearing retirement age have 401(k)-type accounts, according to government data, and those represent the majority of most people’s savings. The situation is less dire for those in a higher income bracket, who tend to save more outside their 401(k) account…
Saving for a rainy day is always prudent but individual efforts are no substitute for a society-wide plan for managing the risks of old age.
The 401k craze was meant, in part, to wean people off of Social Security but now the failure of the 401k is now, ironically, proving the value of Social Security.
There are powerful forces in our society that would like nothing more than for every person to be on his or her own and
the devil take the hindmost
This is chipmunk economics.* I’ve got my stash of nuts. You’ve got yours. Yours gets lost or stolen or spoiled and its too bad for you.
This is how rodents live, this is how far the debate on social insurance has fallen in the past 30 years.
* Yes, I know it is not a chipmunk in the video. But I’m OK with that.