Social Security Reform: Options for the Future

Abstract

Currently anticipated Social Security revenues are inadequate to pay for the benefits promised under the current law. Therefore, some combination of revenue increases and/or benefit decreases or delays is inevitable. This article describes the demographic changes behind these long-run fiscal problems and discusses the types of Social Security reform plans that have been proposed—from modest changes in the parameters of the current system to radical reform through privatization. The article reviews the goals of Social Security and discusses the pros and cons of significant privatization. The author concludes that privatization is definitely not required to save Social Security (much more traditional approaches can do that) and that we should be very careful about radically changing a program that is so important to the economic well-being of the majority of older Americans and that has been so successful and popular for more than 60 years.

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