The welfare state is supposed to redistribute funds from times of plenty to times of need, as well as from rich to poor. That is why the nation’s mo

The Overextended Retirement State

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2024-10-31 10:30:04

The welfare state is supposed to redistribute funds from times of plenty to times of need, as well as from rich to poor. That is why the nation’s most generous publicly financed benefits are reserved for seniors, who have less capacity to earn money and who face higher health-care costs, while taxes are concentrated on working-age households.

But working-age Americans, despite typically earning more income than seniors, also bear substantial child-rearing costs, have rarely paid off their mortgages, and must spend more to live near good jobs and schools. As a result, this group now has lower material standards of living than retirees: they have less living space, are more likely to go without meals or health care, are less able to pay utility bills, are more likely to live in pest-infested houses, and are more likely to live where they feel threatened by crime. This also means that families have less money to invest in their children.

The U.S.’s increasingly costly entitlements for middle-class retirees result in substantial redistribution away from young workers. If this system is not reformed soon, major tax increases on workers at all income levels will be required, which will only exacerbate redistribution away from age groups who are worst off.

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