Dec 18, 2004

Lost in the Social Security Shuffle

As the political wind of Social Security reform is beginning to blow everyone should rush out and find some non-political opinions on the current situation and its future sustainability. Paul McCulley's description is certainly worth a look. Here is a taste.
Social security is a welfare program, not a retirement program. Always has been and always will be. It is a social contract between generations, with the young funding on a pay-as-you-go basis an honorable duty to protect the old from a destitute journey into life's sunset. As a matter of financial architecture, Social Security is not anything like the ERISA-grounded retirement plans for which PIMCO manages huge portfolios.
A more detailed description can be found in Prof. Robert Shiller's book. Altering the Social Security system will have a lasting impact on our country no matter what happens and I find it unnerving just how far the public dialogue seems from reality.

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