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Partly it is a form of risk pooling, also known as insurance: not everyone lives to old age, so not everyone spends money in old age. By pooling retirement spending together, the level of spending is made more predictable for each payer.

In the United States, where I live, this program is even titled "old-age insurance." The idea is that you insure against the risk of getting old. Some people never get old, and so never receive the payments; those who do get old may receive more in benefits than they paid in.

The population statistics of the United States show that living into old age is the exception rather than the rule:

Age distribution of the United States

Source: Wikipedia: Demography of the United States

Saving enough money to live to old age is therefore expensive relative to its expected benefit. There is no need to accuse people of poor planning to realize that a rational citizen may well decide that money is better spent on near-term expenses (for example, their children's education) than on saving for an unlikely event. Or, the expense may be beyond what many citizens can afford. Insuring against old age is therefore analogous to insuring against a car accident or other unlikely but expensive event, another area where mandatory insurance coverage is common.

Partly it is a form of risk pooling, also known as insurance: not everyone lives to old age, so not everyone spends money in old age. By pooling retirement spending together, the level of spending is made more predictable for each payer.

In the United States, where I live, this program is even titled "old-age insurance." The idea is that you insure against the risk of getting old. Some people never get old, and so never receive the payments; those who do get old may receive more in benefits than they paid in.

Partly it is a form of risk pooling, also known as insurance: not everyone lives to old age, so not everyone spends money in old age. By pooling retirement spending together, the level of spending is made more predictable for each payer.

In the United States, where I live, this program is even titled "old-age insurance." The idea is that you insure against the risk of getting old. Some people never get old, and so never receive the payments; those who do get old may receive more in benefits than they paid in.

The population statistics of the United States show that living into old age is the exception rather than the rule:

Age distribution of the United States

Source: Wikipedia: Demography of the United States

Saving enough money to live to old age is therefore expensive relative to its expected benefit. There is no need to accuse people of poor planning to realize that a rational citizen may well decide that money is better spent on near-term expenses (for example, their children's education) than on saving for an unlikely event. Or, the expense may be beyond what many citizens can afford. Insuring against old age is therefore analogous to insuring against a car accident or other unlikely but expensive event, another area where mandatory insurance coverage is common.

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Partly it is a form of risk pooling, also known as insurance: not everyone lives to old age, so not everyone spends money in old age. By pooling retirement spending together, the level of spending is made more predictable for each payer.

In the United States, where I live, this program is even titled "old-age insurance." The idea is that you insure against the risk of getting old. Some people never get old, and so never receive the payments; those who do get old may receive more in benefits than they paid in.