1. Democrats and Republicans Competing visions of retirement
Social Security
Democrats and Republicans
Competing visions of retirement

2. The debate
SOCIAL SECURITY

4. What is a Ponzi scheme?

5. How does Social Security work?
Introduced in 1935.
Each generation pays for the generation ahead
Taken out of payroll taxes.
Currently has $2.6 trillion in funds.
Requires healthy ratio of workers to retirees.

6. Reason to worry: population

7. Reason to worry: life expectancy

10. How is it funded? Payroll tax.
2011: took in $805 billion; paid out $735 billion.
2.87 workers per beneficiary.

11. Concerns Baby boomers began retiring last year.
There is a projected shortfall that will cost $8.6 trillion over the next 75 years.

14. Republican concerns
Ideological concerns: Social Security takes up 5% of GDP.
Should the government be able to control your retirement?
Should you have to pay today for tomorrow’s retirees?

15. Republican proposals Privatization:
Individual retirement accounts invested in the financial markets.
Possibility of higher rate of return.
Can pass the account to your heirs.

16. Criticism of Republican plan
Privatization is subject to the financial markets.
Social Security is tied to inflation, it always pays more.
Privatization would be a financial boom for Wall St.
What happens to people who invest poorly?

17. Democrat Proposals Raise taxes Cut benefits
Some combination of the two.
Example: cut benefits by 1%. Raise taxes 1%. Slowly raise the retirement age to 67.

18. Spectrum I would like to eliminate social security.
I think I could make more $ investing on my own than I could from social security.
I think we should raise the retirement age.