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Social Security is described by defenders as an “insurance program”–one in which individual risk is reduced by putting everyone’s contributions into a common pool. Theoretically this is–as in all insurance programs–to protect against the “unforeseen.”
The degree to which a person’s contributions may be enough to cover his or her retirement expenses, however, is not entirely unforeseen. It depends on income, health, gender, family history and even race. Under more privatized accounts, a person who reasonably can expect a long retirement would then have an incentive to, if possible, delay retirement to help cover those likely expenses. Under the present plan, there is no such incentive–indeed, quite the contrary.
