October 31, 2008
We are about to elect a new president. As he gets the wheels turning on his first administration, will he do any more to address a looming financial disaster that goes far beyond the current Wall Street meltdown than his predecessors have done?
The future disaster I'm talking about is Social Security. If you've heard either McCain or Obama address Social Security in this election cycle, you're one of the few.
Politicians have avoided what is called 'the third rail of politics' for the last few decades. That's because something will have to give in a big way to fund the payouts expected by the baby boom generation when they retire. That day is coming soon, and the numbers in this equation are mind-numbing.
Half a century ago, there were a dozen workers paying in to Social Security to fund the retirement of one retiree. As birth rates declined, and life expectancy increased, we're down to about three workers to the retiree now.
How much money are we prepared to take away from future workers to fund the retirement of older citizens-- who have already paid for the previous generation?
The timing could hardly be worse to talk about private retirement funds, like 401-K's, as we watched about half our nest eggs evaporate over the last few months. But we'd better make this investment in our individual futures.
Where will Social Security get the money to pay future retirees? Many young people have accepted the notion that there will be no Social Security for them. If that's true, who's going to take the blame when their retirement comes?
The politicians who put on this awful course won't be around, but someone will have to pick up the pieces. We may have to pick up our own.