Social Security

The Social Security crisis is easily fixed. Raise the retirement age so that the number of (then increased) workers is big enough to voluntarily support the (then reduced) number of retirees. Done!

You get to spend the last (say, average) 8 years of your life on benefits, not a 30 year vacation after age 65. Raise the age so this is true, no matter how high the life expectancy goes.

Why not reduce benefits? Because SS fills a gap. It's an annuity adjusted for inflation that won't fail. The private market can't match that, because companies that might offer annuities don't last 30 years.

See for example AIG.

So the guarantee of SS is that you won't have the misfortune to outlive your savings, regardless of inflation and the misjudgments of the management of the annuity company you had the misfortune to choose.

People can easily save for an average retirement, but they can't save for a hundred year lifespan, should they happen to live that long. That's the risk that's being insured against.

If you want to retire earlier than the raised retirement age, great! Just do it on your own dime, to bridge the gap.

Problem solved, debt overhang removed.

(Argument brought up again on the occasion of the shaky condition of AIG, the huge annuity issuer.)