Rampell, C.R. and Saltmarsh, M. (2009, September

¶ … Rampell, C.R. And Saltmarsh, M. (2009, September 2). A reluctance to retire means fewer openings. The New York Times.

From the earliest years of the program, Social Security has been a three-legged stool steadied by a precarious balance of retirement savings, social insurance, and transfer programs.

Economists have recognized for decades that the economic well-being of an aging American society has been undermined by a "perfect storm" brought about by the Industrial Revolution, urbanization, the reconfiguration of families from extended to nuclear, and a considerable increase in life expectancy. The social and demographic changes have eroded traditional strategies -- charity, labor, family, and assets -- that fostered economic security. An agrarian society linked labor to prosperity and generally ensured that families could subsist through their own efforts. In the move from farms and rural villages to cities and towns, people traded crops ruined by weather and pests for recessions and layoffs.

Retirement savings. To that perfect storm, deregulation of banking and financial services must now -- in retrospect -- be added. In essence, those workers who did follow the rules and saved for their retirement were broadsided by corporate greed. The move to privatize retirement savings did not carry sufficient "social insurance." Private retirement savings are likely to play an increasingly important part in the fiscal security of retiring citizens, but to do so successfully will require that some stipulations on investments be imposed. Research has shown that about a quarter of U.S. citizens between the ages of 56 and 64 invested more than 90% of their 401(k) funds in stocks instead of bonds. Essentially, these investors put themselves at risk for the loosing substantial portions of their retirement fund corpus in the next round of high volatility or corporate fraud.

Privatization of retirement savings will impact the financial markets, particularly if the investments are made in equities. If people treat their private retirement savings as their own, they may save less money elsewhere -- in essence, they will increase their borrowing against their own newly accumulated assets (Wyss, 2005). And, too, national savings rate will drop as investments are made in stocks, which -- with any luck, if households behave rationally, and assuming appropriate regulation of banks and financial services -- will contribute a rise in the average return on capital (Wyss, 2005).

Social insurance. Two socio-economic forces are in direct conflict: The Social Security retirement age when eligible workers can receive full benefits has been increased, but businesses notoriously are not hiring older workers. The policy -- on the one hand -- decrees that older workers must stay in their jobs longer, while the practice -- on the other hand-results in age discrimination that places unemployed older workers in the middle of steadily closing vice grip. When people can be required to work later in their life, revenues will increase to help fund the Social Security program and benefits will be reduced for those years before maximum retirement age is reached. But when baby boomers retire, as postulated in 2005, a labor shortage would encourage people to continue working well into their retirement -- and this is underscored by the resistance of business to hire older workers (Wyss, 2005). But the labor shortage is not a reality of the 2008-2010 fiscal crisis -- the ramifications of which continue into 2012 and ostensibly beyond. The reality is that "…American companies aren't hiring -- business losses, tight credit, consumer retrenchment -- add the fact that many of their older workers are unable, or afraid, to retire" (Rampell & Saltmarsh, 2009).

Transfer programs. Increased immigration can be viewed as a long-term support to the Social Security funding problem since most immigrants enter the U.S. As young adults, which could help to increase the ratio of workers to retirees above the 2 to 1 that is anticipated. The notion that increased immigration results in increased government spending in education is based on the provision of education prior to the plethora of online and e-learning college courses.