Reforming the U.S. Retirement Income System: The Growing Role of Work

Introduction

The U.S. retirement income system has two main components — Social Security and publicly subsidized and regulated employer plans. The federal government created Social Security in the Great Depression, when the problem of old-age poverty was especially severe. Social Security is an employment-based social insurance program that assures older workers a basic replacement income they can no longer work. Contributions are proportional to earnings up to a maximum level; benefits are based on a worker’s earnings and contribution history, with a significant redistributive twist to assure a basic old-age income to low-wage workers…