A new study by Michele Boldrin and colleagues examines the link between government-provided old-age pensions and the continual dramatic reduction in fertility throughout the developed world during the twentieth century.
Declining workers-to-retirees ratio is cited as a major reason why Social Security will be in trouble. Technically it is true! In pay-as-you-go social security systems, if there are lesser number of workers to support each retiree then either benefits will have to cut or tax rates will have to be raised. But I don't understand why raising the taxes should be a problem to fund the "gap". Lesser number of workers for each retiree means that current retirees had lesser number of children. That means, their spending on kids, such as for education, food, clothing, etc., must have spread over lesser number of children. Not only that, but these lesser number of workers stand to inherit more wealth per-capita as compared with their previous generation. Thus, it is only fair that they pay for these benefits through higher taxes. If that is not politically acceptable Govt. can always fund the "gap" through higher estate tax rates. As immigrant workers neither benefitted from higher spending when they were young, nor stand to receive inheritance from the current retirees, raising social security tax can discourage immigration of workers to US. If US reduces social security tax rates and increases death tax rates in a revenue-neutral fashion it will still come out ahead as lower social security tax rates will attract more immigrant workers.
None of this means that I support Govt. sponsored tax-funded social security schemes. All I want to point out that workers-to-retirees ratio does not stand in isolation and decline in that will not invalidate or trouble the Social Security on its own! Best argument against Social Security is lack of freedom and not some declining ratio or temporary deficit.