Are Millennials Ready for Social Security Reform?

social security reform (2)Government is very good at crowding out private sector activities.  When government borrows, it can cause interest rates to rise and crowd out more productive private sector borrowing.  When government expands welfare programs to help the hungry and homeless, the effect is the crowding out of individual giving to more efficient private-sector programs.  And decades ago, economist Martin Feldstein argued that the anticipation of Social Security benefits crowds out private saving.

Thus, it is no  surprise then that millennials are getting an early start on retirement saving, according to USA Today.  The reasons?  First, they have watched their baby boomer parents struggle to prepare for retirement.  Indeed, many of the boomer parents who are heavily mortgaged are finding themselves working longer than they originally planned.  Second, this age group is not relying heavily on the solvency of Social Security.  In fact, less than half of those surveyed plan on relying on public programs for retirement income.

For the majority of lawmakers in Congress who are politically  indebted to the AARP, they should listen to this younger generation.  If ever there is a time for Social Security reform, it is now.  Why not start the transition of allowing young workers to invest some of their payroll taxes into personal accounts? It is no longer a “fringe” idea, and it gives me hope that the younger generation realistically understand the limits of government entitlements.

Comments (13)

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  1. Gabriel Odom says:

    I know that I’ll never see the money I’m putting in to social security. Then again, I never plan to retire – I’ll just work until I’m dead. That way, I’ll never be a burden on my family, and any money I save up can be for my kids and grandkids.

  2. H. James Prince says:

    I’ll never forgive those old people who squandered Social Security. This Time Magazine cover is right on the money:

  3. Jack says:

    I’m opting out of social security. And AARP is an evil group of lobbyists.

  4. Tom says:

    Gabriel: That is a nice plan, but you have no idea whether you’ll be able to mentally and/or physically be able to continue working after a certain age. Not everything always goes according to plan in life and in that case, what do you think you would do? Use up your saved retirement money? What if it’s not enough? What if you can’t afford a nursing home, will you get separate insurance for all that? Just wondering because there are instances when individuals have to rely on some sort of collective good.

  5. Sam says:

    Social security won’t be around for whenever I retire. I also don’t think I’ll be able to rely on private retirement savings. So, I think it’ll be interesting to see what happens whenever this generation of young professionals begin to retire.

  6. Jordan says:

    I’m afraid that the younger generation are getting more and more liberal. The fiscal conservatives are ones who have actually had to deal with these problems. If you look at a political/economic scale.. the poor and the very rich are liberal.

  7. Yo Yo Ma says:

    This is such an interesting post, actually I have already started saving, in part, you never know what the future economy will look like. And think about this, I am just 22!

  8. Gabriel Odom says:

    If you keep working, you stay physically and mentally active. Even if I’m disabled in an accident, I will find some way to stay productive. This is an attitude to never succomb. My great-grandmother is now 97 years old, and she cares for herself entirely. She is still productive, and has her mind. She isn’t a burden on anyone. My grandfather is 76, and recently ran a marathon. It’s all a matter of staying healthy and having the right attitude.

  9. Dazzler says:

    I know there have been recent studies out stating that millennials are saving more despite the fact that they have so much student debt, also they are postponing making any big financial commitment like buy cars and homes. They are just renting and crowd sharing more frequently than before.

  10. Sandeep Kumar Patel Desai III says:

    I am all for this trend, I would like to compare my generation to that of the generation who grew up during the great depression. Also after reading the USA today article, I need to start saving and investing more! Now that I am young, this would a good chance. What do you think Pam, want to help me out?

  11. Kyle says:

    Interesting. Parkinson’s and Alzheimer’s must just be the result of sloth.

    You’ve just completely deconstructed the need for any form of social insurance. Guess I should dump all of my Wellpoint stock now before this catches on.

  12. Lloyd says:

    Many Baby Boomers will admit that they have really messed things up for future generations. That makes me think that we ALL need to not only retire later, but work harder and longer just to make up for all the damage that has been done by the Baby Boomers. If I am as productive as my great grandfather was at 94, then that may mean that I will do alright.

  13. Joe The Economist says:

    The article you cite seems to ignore the fact that there is a trillion dollars of student debt and the Pew Research that says poverty in households headed by someone 35 and younger is at historic highs – but the have a 401K…

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