The Predictable Surprise: The Unraveling of the U.S. Retirement System

Overview

Social Security is in jeopardy, private pension systems have fallen apart, and workers are trying to save on their own for retirement with the stock market in the worst shape since the Great Depression. In The Predictable Surprise, Sylvester J. Schieber shows that forewarnings of the coming retirement crisis have been apparent for decades, but we have never mustered the political will to address the problem. This book explains how we have gotten into the retirement predicament and where we can go from here. ...

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Overview

Social Security is in jeopardy, private pension systems have fallen apart, and workers are trying to save on their own for retirement with the stock market in the worst shape since the Great Depression. In The Predictable Surprise, Sylvester J. Schieber shows that forewarnings of the coming retirement crisis have been apparent for decades, but we have never mustered the political will to address the problem. This book explains how we have gotten into the retirement predicament and where we can go from here. Schieber, a renowned authority on this topic, provides a compact, insightful history of Social Security, pension plans, and other retirement options, highlighting both their original justifications and the point when things began to go wrong. He brings his discussion right up to the present morass and concludes with suggestions as to how we can reform our retirement system. Our situation is not hopeless, Schieber concludes, if we take on some of these issues and resolve them. If we do not, we will severely jeopardize the prosperity of younger generations.

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Editorial Reviews

Publishers Weekly
Blaming the derailment of Social Security reform in 1998 on Monica Lewinsky is the one note of levity in Schieber’s comprehensive, accessible analysis of the U.S. retirement system. Starting in the 1980s, Social Security trustees have been predicting deficits beginning a few years after baby boomers started to retire. The surprise is that deficits occurred in 2008 rather than 2016, and that they were larger than anticipated, due to the economic downturn and the worst decade for investment since the Depression. Though 401(k) plans seemed like a win-win for employers and employees during the bull market of the 1990s, they are proving less effective at providing retirement security than the large pension plans they’ve replaced. Schieber, former chairman of the Social Security Advisory Committee under Clinton and author of The Economic Implications of Aging Societies, cuts through the thicket of rhetoric and specialized knowledge to reveal the interplay of demographics, economic conditions, politics, and government regulations that have led to this current crisis. It’s hard not to share Schieber’s respect for the architects of Social Security and what they accomplished during difficult times, and his regret that the current political climate doesn’t encourage thoughtful discussion of needed reforms. This book is an invaluable resource for anyone who wishes to engage in that discussion. (Mar.)
From the Publisher
Winner of the 2012 TIAA-CREF Paul A. Samuelson Award For Outstanding Scholarly Writing On Lifelong Financial Security

Selected one of CHOICE's "Outstanding Academic Titles for 2012"

Selected one of CHOICE's "Top 25 Books of 2012"

Selected one of CHOICE's "Outstanding Academic Title of 2012"

"Schieber probably knows more about American retirement programs than anyone. He has advised the Social Security system, consulted with private firms and written widely on the subject. His book shows how today's 'entitlement' psychology dates to Social Security's muddled beginnings."—Robert Samuelson, Washington Post

"The topic is very timely as the entire retirement system in the US is under pressure with firms and governments facing financial problems...The author is a well known expert in the field of retirement income and has written widely on these topics. He reaches out to the reader by presenting real stories that illustrate important points. Schieber relies on his background as an executive of a benefit consulting firm, his work with the government on Social Security, and his expertise as an economist. Blending these career experiences, he is able to consider the American retirement system from a variety of perspectives..."—Robert Clark, Professor of Economics and Business Management, North Carolina State University

"Schieber cuts through the thicket of rhetoric and specialized knowledge to reveal the interplay of demographics, economic conditions, politics, and government regulations that have led to this current crisis. It's hard not to share Schieber's respect for the architects of Social Security and what they accomplished during difficult times, and his regret that the current political climate doesn't encourage thoughtful discussion of needed reforms. This book is an invaluable resource for anyone who wishes to engage in that discussion."
—Publishers Weekly

"The discussion necessarily gets deep into the weeds—analysts and policymakers will welcome the thoroughness—but general readers will appreciate Schieber's efforts to warm the material with quotations from Sophocles, Confucius, Dickens, Churchill, Lewis Carroll and even Mae West, and to demystify the arcana with a plethora of table, charts and graphs, and a useful glossary . . . Precisely the sort of levelheaded, serious discussion our political leaders appear so unwilling to conduct."—Kirkus Reviews

"The American people will only take the painful steps necessary to restore fiscal order, particularly with respect to Social Security and Medicare, when they understand the roots of the problem. Syl Schieber's The Predictable Surprise explains the demise of the retirement system with great clarity, emphasizes the importance of demographics in forcing the need for change, and provides the background knowledge necessary to sensibly consider the way forward. I not only suggest reading this book, but hope you will encourage members of Congress to do the same."—George P. Shultz, former Secretary of Labor, Director of the Office of Management and Budget, Secretary of the Treasury, and Secretary of State

"Syl Schieber's The Predictable Surprise is must-reading for scholars and students, policymakers and concerned citizens interested in retirement and retirement income issues. Schieber, an impressive researcher with sterling private-sector and policy experience, blends history, theory and data into a compelling, comprehensive analysis that confronts the difficult impending reality and points the way forward. So avoid an unpleasant surprise; read The Predictable Surprise."—Michael J. Boskin, Tully M. Friedman Professor of Economics and Hoover Institution Senior Fellow, Stanford University, former Chairman of the President's Council of Economic Advisers

"There are at least three reasons why Syl Schieber's work may be unique in the retirement security field. First, he is equally an expert about Social Security and about private-sector pensions. Second, he has a rare command of how the history of each system has led to its present condition. And third, he is an exceptionally creative analyst, going wherever the evidence leads and unconstrained by ideology. The Predictable Surprise may be the best book yet written for those who want to understand each of Social Security, private pensions, state pensions and the interrelationship between them. One hopes that it will be widely read by key decisionmakers at both ends of Pennsylvania Avenue."—Charles Blahous, Senior Research Fellow, Mercatus Center, George Mason Univeristy, former Deputy Director of the National Economic Council

"The Predictable Surprise is the most comprehensive review of our retirement system that I have ever read. Syl Schieber artfully blends detailed analyses of individual policy decisions with commentary on the macro retirement environment. If you want to truly understand the roots of our current retirement challenges, you must read The Predictable Surprise."—John J. Haley, CEO, Towers Watson

"Those who hope to tackle one of the biggest public policy issues of the next decade should imbibe Sylvester Schieber's The Predictable Surprise: The Unraveling of the U.S. Retirement System." —World

Kirkus Reviews
A former chairman of the Social Security Advisory Board offers some straight talk about our tottering retirement system. To add to our current economic anxieties, along comes Schieber (co-author: Fundamentals of Private Pensions, 2010, etc.), warning our children and grandchildren about their golden years turning to dross because of the reluctance of political leaders to grapple with a retirement system that cannot be sustained. He begins by identifying the components of the "system"--Social Security, employer-sponsored pensions (both public and private sector), personal savings, retiree health insurance and the part-time jobs people take as a bridge to retirement--and traces the history and development of each. He goes on to demonstrate how the system has been shaped by changing demographics and economics, the political response to the needs and desires of workers and the regulatory structure installed to administer and monitor private and public retiree programs. For more than 40 years the author has helped shape retirement policies, and he's not bashful about inserting his own authoritative voice and considerable experiences into his history. The discussion necessarily gets deep into the weeds--analysts and policymakers will welcome the thoroughness--but general readers will appreciate Schieber's efforts to warm the material with quotations from Sophocles, Confucius, Dickens, Churchill, Lewis Carroll and even Mae West, and to demystify the arcana with a plethora of table, charts and graphs, and a useful glossary. The author brings us up to 2010, surveys our precarious footing and makes recommendations for repairing our broken system. Even those who disagree with his prescriptions for reform--he forthrightly calls, for example, for immediate sacrifice by the boomers, would allow individual accounts as an element of Social Security, believes health-benefit plans should be taxable--will be forced to confront the dire facts. There's time to fix our retirement system, he insists, but not much. Precisely the sort of levelheaded, serious discussion our political leaders appear so unwilling to conduct.
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Product Details

  • ISBN-13: 9780199890958
  • Publisher: Oxford University Press
  • Publication date: 3/1/2012
  • Pages: 480
  • Product dimensions: 6.30 (w) x 9.30 (h) x 1.30 (d)

Meet the Author

Sylvester J. Schieber is Former Chairman of the Social Security Advisory Board, and the author or editor of numerous books on various aspects of population aging and retirement.

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Table of Contents

Contents
List of figures
List of tables
Preface and acknowledgments

Part 1: Foundations and Fault Lines
1. Retirement USA
2. Early Motivations behind the Pension Movement

Part II: Social Security, the dream and reality
3. Development and Passage of the Social Security Act
4. Early Concerns Prove Nagging and Persistent
5. Moving to Pay-as-You-Go Financing
6. A Deal too Good to Last
7. Operations under Pay-as-You-Go Financing
8. Crisis Reactions: Conflict, Consensus and Surprise
9. Sorting out the Trust Fund Semantics and Realities
10. Policy Stalemate at the Demographic Divide
11. Understanding Social Security in Modern Times

Part III: Employer-based pension provision
12. Employer Pensions Taking Root
13. Growing pains for Private Retirement Plans
14. ERISA: the Transition to a New Regulatory Regime
15. The 1980s, a Decade of Regulatory Schizophrenia
16. Good Intentions Gone Awry
17. Some Good News—or Not
18. The Unfolding of a Predictable Defined Benefit Surprise
19. And Then, a Predictable Defined Contribution Surprise
20. Public pensions: the good, the bad and the ugly

Part IV: Delivering benefits and providing retirement security
21. Retirement Income Security and Workers' Residuals
22. End Game: A Gold Watch, Pat on the Back and More
23. We've Killed the Goose, Let's Gild the Eggs
24. Tax Benefits and Benefit Taxes
25. Retiree Health Benefits: Misfortune or Malpractice

Part V: Truth and consequences
26. The Fellow Behind the Tree
27. Securing the Social Security Foundation
28. Securing Tax-Favored Benefits and Living Standards
29. Remembering the Future
Glossary

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