A general principal that seems to underly American psychology is that an individual ought to take care of his own. That an American ought to work to feed, clothe and house himself (and his dependents, should he choose to have any), and he ought to set aside funds for the day when he can no longer work, either because of illness or old age. But it is recognized by all but the most callous that a string of bad luck can derail even the well conceived plans. So what to do?
One possibility is nothing. That the cost to society of compensating individuals for their bad luck is simply too high.
Another possibility is to provide a safety net of some sort. When an individual unexpectedly and without fault loses his job, government supplies a (temporary) flow of funds until the individual is able to find work. When an individual is unable to save enough during his working years to pay for retirement, government makes up the difference until the individual dies.
The challenge to this way of thinking is that some people will use these safety nets to live without responsibility for their entire lives. An individual may retire early, or live the high life and fail to save, or spend his money on drugs and seek food stamps to feed his children. How do we weed out these folks?
Some may suggest we shouldn’t bother. That the cost of finding the cheaters–who are, most likely, few and far between–is too high. I am sympathetic to this plight.
Here’s another solution: Set up government approved (though not run) retirement accounts. If an individual consistently (say, 11 months of the year from 18 to 65) puts something into those accounts, he’ll receive, upon retirement, full Social Security benefits. If an individual fails to consistently contribute, he’ll receive something less than his full benefits (say 95%). For those who are truly in a hard place because of bad luck (e.g. have an ailing parent whose medical bills drained everything and then some), but who are responsible Americans, a penny contribution ought to do it. And when an individual has more to save, he can contribute more. For those who cannot even be bothered to contemplate saving, even when it is made this simple, a light penalty results.