Words matter. And as the presidential campaign kicks in to high gear, some terms are being tossed around in ways that could be dangerous for current and future retirees. Those words and phrases include "entitlements" and "Ponzi scheme."
The future of
But this week, let's straighten out the talk about
An entitlement is not a bad thing by definition. In the context of
This original -- and accurate -- meaning has been under attack since the days of the Reagan Revolution. One of the first shots was fired by
One of the ironies here is that the architects of
When pollsters ask the public about
But ask the public about entitlements, and you get a negative response. "Americans are less group-oriented and more individually oriented," says Lake. "And entitlement sounds like something that is given to a group. When you describe this as an 'earned benefit or a guaranteed benefit that you paid into,' that sounds like something that is individualistic."
At that point, current revenue would allow it to pay about 77 percent of promised benefits -- absent any changes or reforms.
If no changes were made, benefits relative to pre-retirement income for the average worker would fall from 36 percent to 28 percent. And that wouldn't be the first time income replacement has changed; the 1983 reforms gradually reduced the rate from 41 percent to 36 percent, according to the
I don't expect that to happen; a far more likely outcome is reform that will keep
Despite what you may have read,
Underlying the Ponzi scheme rhetoric is the notion that the baby boom generation is somehow putting something over on younger generations. The opposite is the case; the last set of reforms to
All of which brings to mind a quote I've always liked that often is attributed to the late
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Personal Finance - Social Security: On Entitlements and Ponzi Schemes
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