In a recent interview with Bloomberg’s Sonali Basak, labor economist Teresa Ghilarducci highlighted the severe shortcomings of America’s retirement system, particularly the Social Security deficit. Ghilarducci offered a provocative yet insightful calculation: "If Elon Musk paid for Social Security just on his salary for the entire year and some of his capital gains were taxed to fund Social Security — just one person — it would save 1/20 of the deficit in Social Security."

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This statement underscores the significant impact that high earners could have on Social Security’s sustainability. Ghilarducci elaborated on the potential benefits of expanding this concept to a broader group of wealthy individuals.

"Imagine broadening that out to maybe 20,000 other people," she suggested. "This is not very much, you don’t have to raise the tax rate to any perceptible amount, but just helping share in the funding of Social Security, we could solve that problem overnight."

The crux of Ghilarducci’s argument is that seemingly modest contributions from the wealthiest Americans could greatly alleviate the financial strains on Social Security. This, in turn, would address a more pervasive issue: the cultural and psychological impact of an underfunded retirement system on average Americans.

"The problem with not funding Social Security and not having an actual report to say ‘Hey, it’s funded for the next 25 years’ is it depresses the savings rates of ordinary Americans," she noted. "We’re finding out in surveys that people are saying, ‘I’m not saving for retirement, I’m not building wealth, because Social Security won’t be there.’ The worst cultural norm that you could flame that would reduce the savings rate is fatalism."

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Ghilarducci pointed out that this sense of fatalism is detrimental to the broader economy. When individuals believe that Social Security will not be there for them, they are less likely to save for their own retirement, exacerbating financial insecurity in their later years. This interconnected problem highlights the urgent need for policy reforms that ensure the long-term viability of Social Security.

According to Ghilarducci, not dealing with Social Security "is inducing a fatalism that is suppressing the savings rate, which actually suppresses the motive for people to save for their own retirement. So it’s interconnected."

This interview with Ghilarducci emphasizes a pressing need for a better approach to funding Social Security. While she shares the impact that wealthy individuals could have on the system, her insights call for a societal shift toward shared responsibility in securing the financial future of all Americans.

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