THE THREAT OF FINANCIAL HARDSHIP
Life is full of risks. Most of them stem from events that no one else can do much about—the end of a love affair, a rejected first novel, a failure to win a coveted promotion. But some common hazards can be minimized by legislation. Indeed, many acts of government—food and drug laws, for example, or speed limits—can be described as efforts to reduce risk. One fre- quently used device for this purpose is some sort of mechanism that spreads the cost of misfortune widely and thereby softens the blow to individual victims.1 Compulsory unemployment and au- tomobile insurance are familiar examples. Through their use, the government gives peace of mind to large numbers of people while saving many others from acute distress.
The economic crisis of 2007-2008 focused attention on a set of financial hazards that have persisted and increased in recent years, bringing mortgage foreclosures, bankruptcies, and other forms of economic hardship to millions of American families. Three risks are especially widespread: the possibility of having too little money for a satisfying retirement; the risk of falling ill without the means to pay for needed health care; and the threat of losing a job with the attendant loss of income and self-esteem. The worry and pain these risks have caused are sufficiently serious and long-lasting to warrant a search for policies that will bring relief and increased well-being.
Almost all older Americans enjoy at least a modicum of financial se- curity in retirement. Virtually all will receive Social Security benefits,