] In investing, typically you have a scale of choices that range
] from low risk, low return to high risk, high return.
This is true as far as it goes, but it does not go far enough. noncorrelated diversified high risk investments tend to have both higher returns and lower risk than concentrated low risk investments. Diversification and correlation are the most important tenets in modern portfolio theory.
] This article says "The goal of Social Security reform should
] be to provide workers with the best possible retirement
] option, not simply to preserve the current system. If solvency
] were the only goal, that could be accomplished by raising
] taxes or cutting benefits, though this would be a bad deal for
] younger workers."
] Its "Social Security" not "Federal Retirement." The goal
] should be to keep people from falling off the edge. It seems
] bizarre to me that libertarians would argue that the nanny
] state should help them plan for their retirement.
It depends how far you extend things out. There are certain demographic trends that are terrible for the entire idea of social security: people are living much much longer and population is not growing extensively. Of course, we don't have negative population growth like europe, but the growth is not nearly enough to account for medical advances that enable people to live longer and longer lives.
Sure, we can raise taxes a bit, but there is a point beyond which you get extremely diminishing results, you can also means test social security, and extend the income upon which you are taxed (right now, it's capped at 70k or so, I believe). Long term, though, if the demographic trends don't change, then social security is going to have problems (by long term, i'm speaking of the very long term, 100+ years, solvency is really not a problem for a very long time).
Due to these trends, you really have to wonder if the goal of social security (which is now, and always was a defined benefits plan, and not a retirement plan). Perhaps in the long term, we can not afford a defined benefits plan, and need to move to a plan where your benefit outputs are dirrectly correlated to your inputs into the system, which is the only type of plan which we can be certain will be sustainable.