on faster than expected. In 1940, a65-year old man could expect to live another 12 years. Today he can expect to live another 15 years and by 2040 this will riseto 17 years. * The fertility rate is falling faster than expected. In 1960, a typical woman of child-bearingage gave birth to 3.6 children. That rate has fallen to just two today and is expected to fall to 1.9 by 2020. Since we need afertility rate of 2.1 just to replace the existing population, we are already in a negative population growth position, meaningfewer future workers. * As a consequence of these two trends, the elderly are expected to rise from 12 percent ofthe population to 20 percent by 2050. The number of retirees will rise from 34 million to 80 million. * The combination of a smaller working-age population and a larger elderly populationmeans that there will be fewer workers to support each retiree. There were more than five workers for each retiree in 1960. Todaythere are 3.3. And by 2030 there will be just two workers to pay all the taxes required to pay the benefits of each retiree. The problem, of course, is that the Social Security system was never pre-funded the wayprivate pensions are. It is a pay-as-you-go system, with each generation of workers paying the benefits of current retirees.This works fine as long as the working population grows faster than the retired population. But when the trend reverses, as itis now doing, the system is simply unsustainable. It is for this reason that growing numbers of analysts favor movingSocial Security toward a pre-funded system, by allowing workers to save some of their taxes in a private retirement account. Although a private Social Security system would be easy enough to set up if we were startingfrom scratch, trying to do so now means that the current generation of workers will, in essence, have to pay twice: first fortheir own retirement and agai...
