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Thursday, February 3, 2005

Balancing Risk and Guarantees

Carson E. Beadle, Chairman The Health Project

As the least equipped of our distinguished writers I am perhaps least to be considered. That said, I have been struck over the years by one factor in the continuing debate on the extent of social benefits. And that is the balance between the degree of personal risk that keeps us alert and the comfort of guarantees to the extent they engender complacency.

While I view the need for such a balance as a valuable consideration for most of the population throughout their productive lives, I agree it is not appropriate for those no longer able to control their destiny such as the aged, disabled, widowed or those otherwise left without support. But, I fret that without a system that involves younger Americans in early financial preparation for their ultimate retirement we will have even more people with near total dependency on their government benefits. it may be that our 401 (k) and other tax preferred programs are enough to meet this need voluntarily but it is worth examining whether a form of compulsory savings will draw attention to and provoke other good saving habits within an acceptable level of risk.

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