Saturday, 2 July 2011

Workers per retiree should be irrelevant

Alarms are sounding that there won't be enough working people to pay the retirees.
                  "The number of workers paying into the program was 5.1 per retiree in 1960; 
                    this declined to 3.3 in 2007 and is projected to decline to 2.1 by 2035."   
                    Wikipedia on US Social Security.  It's not just the US.

The alarm is irrelevant for fully-funded pension plans.  What you set aside during your working years will cover your retirement.  There's a problem because Social Security is run as a Ponzi scheme.  Deductions on a young worker's paycheck go more for his parents' retirement than his own.  That is if you're lucky and the deduction isn't swallowed by General Revenue.
Funding for social security won't get worse for ever.
At some point, the percentage of supported seniors who don't earn income will stop growing.
But not in time.

No comments:

Post a Comment