The study is co-authored by veteran economist Dan Mitchell, president of the Center for Freedom and Prosperity, and Robert O’Quinn, former executive director of the Joint Economic Committee of Congress. Released Dec. 13 by, the 25-page analysis shows that the United States lags among developed nations in its refusal to include market features as a significant portion of its old-age financial guarantees.
All 38 nations of the Organization for Economic Cooperation and Development boast government retirement pensions. In 16 of them, participation in a government-backed, private retirement option is mandatory, usually as the primary part of a senior’s pension. Among those 16 are top-10 per-capita economies Switzerland, Denmark, and Iceland, as well as ones as varied as South Korea, Chile, and Latvia.
Most of these plans work well and, in the process, boost those nations’ economies rather than draining their resources. As the authors explain, “People save, and their savings are invested to create an asset portfolio that will, in time, generate income for their own retirement….
Even worse, the U.S. and almost every other “developed” nation is suffering birth rates well below the “replacement” level, meaning there is a significantly declining percentage of young workers to pay taxes for the Social Security of retirees. Systems that rely on taxes rather than market investments must impose higher and higher employment levies to make up for the birth dearth. In the U.S., that system is rapidly becoming unsustainable.
As is well known, the Social Security “trust fund” is projected to become insolvent by 2034, which would require an immediate 23% cut in benefits unless corrective action is taken.that a forthcoming study of his will show that if former President George W. Bush’s Social Security investment plan had been adopted in 2005, all but the highest salary earners would by now be seeing benefits 2.5%-3.5% higher than they are.