Totally individual or a group insurance
by Reader Arne (lifted from comments)
TJ asks “Either Retirement Security is a societal imperative …”
An interesting proposition, but has little to do with SS.
Consider a cohort of 65 year old guys just reaching retirement. To simplify the math, assume they all need the same amount to live on. In the absence of SS, how much do they need to have in savings?
If each of them assumes they will live 17 years and budgets precisely, half of them will run out of money. If they pool their money (and all live within same budget) there will be money left at the end. In other words, the amount a cohort needs to insure themselves against not having enough if they live longer than expected is less than what the cohort needs if they act as individuals. Retirement insurance is a winning proposition for the cohort.
SS is greatly more complicated, but one of the underlying reasons that SS works is that retirement insurance is mathematically a winning bet.
Update: Arne says:
I suppose if I had known my comment was going to become a post I might have been more careful in my wording. My point was that retirement insurance is good for each individual independent of whether it is good for society. You don’t need to be of a mind to help those who cannot help themselves, retirement insurance is good for those who just want to help themselves.
The way SS is implemented does partake of social imperative and political compromise, but it is soundly grounded in self-interest.
Short and sweet. Good for many many people, and proudly paid for by the insured.