SOCIAL-SECURITY REFORM - AN OVERVIEW

Recent decades have seen a trend toward longer life expectancy and red uced birth rates across the globe. This is good news - the pressures c reated by rapid population growth are being relaxed, and people are mo re likely to live to old age - but it creates problems for programs su ch as Social Security, which are designed to provide for the consumpti on needs of the elderly. Ln the United States, the retirement of the b aby boom generation will result in a decrease in the number of workers per Social Security beneficiary from 3.3 now to 2.2 in the year 2030. The decrease in the ratio of workers to beneficiaries will necessitat e changes in our Social Security program. The fiscal problems faced by Social Security are just one component of the more general problem fa ced by society: How do we provide for the consumption needs of an incr easingly aged population? Policy decisions made in the next few years will have a large impact on the economic well-being of both future ret irees and workers. Social Security reform may cause changes in nationa l saving, labor markets, and financial markets that affect all members of society. Because of the potential importance of these changes to t he economy and to future living standards, the Federal Reserve Bank of Boston devoted its forty-first economic conference, convened in June 1996, to Social Security Reform: Links to Saving, Investment, and Grow th. This article reviews the presentations at the conference and the t hemes that developed from the discussions.