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This has always seemed so simple, which means they don't want to fix it. The two most obvious starting places would be easy political sells:
- Means testing
- Indexing eligibility to life expectancy
The reason Social Security sort of worked early on was that most people died before they could withdraw more than they had paid in.
There's a third element that I'd add to take a ton of pressure off the system:
- Means testing for the family
Similar to child care, elder care should be a family obligation before it's a societal one.
I always wonder about corruption when there's lots of money sloshing around and no one is interested in looking into where it's going.
There's also a lot of inertia against cutting senior benefits and usually the side of the argument that fits on a bumper sticker wins.
Yeah, family is a massive component — one high-income earner, another low or average — and instantly shove you into social policy territory: incentivize marriage, make spouses economically dependent on one another etc etc. do the contributions follow the earner or the family unit in case or splitup?
Basically every single European system operate like this — with various quirks and tweaks and nation-specific patchwork/hangover. Iceland and Netherlands (Denmark? Perhaps some more), as far as I know, are the only ones that keep substantial "real" assets in their systems — and by real, I mean stocks and bonds and PE/property nvestments — rather than like SS, a pure redistribution grab.
Tho, Iceland forces me to shove 15.5% or my pre-tax income into them (and heavily tax-advantages me another 6%), so compared to that perhaps your single-digit payroll contributions are acceptable??
At least in my experience of the US, there's a sensation that SS money is "your money." While this is obviously absurd, I think it's a legacy from how they passed social security: ie, it's not a tax, it's the government helping you save. They call it "insurance" and the money they take is a "contribution." I haven't read up on the history in a while, but I'm pretty sure FDR took this angle because a tax for this purpose never would have been accepted.
The result though is that people like my parents, who do collect SS and for whom it is not a meaningful contribution to their bottom line, feel like they are just getting some of their money back...finally.
It's a stupid system. As the article points out, they soon aren't going to be able to meet their obligations, so they'll either do new tricks to make it look like they aren't just magically producing the funds or they'll increase the "contribution."
It really is insane though, that I, with my three children who I'm trying to keep alive, and running my own business, am required to contribute heavily to this system, while my retired parents are pulling money out of it.
Is there anything like this in the EU?