No one is proposing curtailing current recipient payments or even those within 10 years of retirement. That's the reason something must be done now. If adjustments of some kind are not made now, there won't be the luxury of 10 years time to let people plan, save and adjust.
The problem is that there are just not enough young workers paying into the "system" to support the number of baby boomers that are retiring now and those that will retire. It's that simple. These demographics have been apparent for about 30 years now and the Government has failed to save enough money to pay future benefits. The government has been spending the money on other stuff. It's a pay-as-you-go system and, going forward, there will not be enough people paying in. It's all about unfavorable demographics. The same problem affects Social Security. Social Security is easy to fix.
What is evil is people that refuse to do anything despite the glaring inevitability of the demographic bust. So bravo to Mitt and Paul for providing leadership in this important matter. Yes, we have to discuss, compromise and work-out the details.
But the other side doesn't even want a discussion because it would expose how ill-prepared they are despite 30 years of warning. Also, they believe that America is not smart enough to understand the issues or that they are too hysterical to even discuss it. They assume that America is just like them!
A similar explanation from Thomas Sowell from Real Clear Politics:
Neither Social Security nor Medicare has ever had enough assets to cover its liabilities. Very simply, there has never been enough money put aside to do what the government promised to do.
These systems operate on what their advocates like to call a "pay as you go" basis. That is, the younger generation pays in money that is used to cover the cost of benefits for the older generation. This is the kind of financial pyramid scheme that got Charles Ponzi put in prison in the 1920s and got Bernie Madoff put in prison in our times.
A private annuity cannot play these financial games without its executives risking the fate of Ponzi and Madoff. That is why proposed Social Security and Medicare reforms would allow young people to put their money somewhere where the money they pay in would be put aside specifically for them, not used as at present to pay older people's pensions, with anything left over being used for whatever else politicians feel like spending the money on.
It is today's young people who are going to be left holding the bag when they reach retirement age and discover that all the money they paid in is long gone. It is today's young people who are going to be dumped over a cliff when they reach retirement age, if nothing is done to reform entitlements.