Wednesday, May 09, 2007
Saving Social Security and the Private Pension System
"...As you know, President Bush expended what political capital he had on trying to fix Social Security. I give him credit for being right about two things. First, there is a demographic problem that needs to be addressed. Second, the longer we wait to fix it, the more difficult it will be to fix. I would add that the longer we wait, the less we'll be able to preserve the good features of the current system.
The place where he and many others start going seriously wrong — and I'm sure many of you will disagree — is the idea that the best solution is to transition Social Security to individual accounts. This approach would get us away from the defined-benefit nature of Social Security, which is its strongest feature. Defined benefits help people weather through tough investment times, since, over enough time, investments always come back. Also, except in the most disastrous situations, troughs in the market do not affect the system's ability to make benefit payments. Defined-benefit arrangements also protect participants from outliving their money..."
Retirement Industry Conference: Presentation on Saving Social Security and the Private Pension System
The place where he and many others start going seriously wrong — and I'm sure many of you will disagree — is the idea that the best solution is to transition Social Security to individual accounts. This approach would get us away from the defined-benefit nature of Social Security, which is its strongest feature. Defined benefits help people weather through tough investment times, since, over enough time, investments always come back. Also, except in the most disastrous situations, troughs in the market do not affect the system's ability to make benefit payments. Defined-benefit arrangements also protect participants from outliving their money..."
Retirement Industry Conference: Presentation on Saving Social Security and the Private Pension System
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