Jeremy Siegel writes,

The reasons why retirees cannot turn their savings into consumption is because wealth can only be transformed into goods and services if they are sold to those willing to defer their consumption. In a modern economy, wealth does not represent “stored consumption,” such as a cache of acorns that squirrels bury to bide them through a long winter. You cannot consume your stock certificates, but must sell them to someone else who wants a chance to consume at a later date. If there is a shortage of these savers, this may cause a long and painful bear market in stocks, bonds and real estate that will leave retirees with insufficient assets to enjoy retirement.

This reminds me of one of the first essays I posted on the Internet, called Farmers and Parasites. I wrote,

Consider an economy with two types of people and only one good, food. Farmers both grow and eat food. Parasites simply eat food. Food cannot be stored. It must be consumed right after it has been produced. Notwithstanding the pejorative name, everyone agrees that feeding the parasites is the just and humane thing to do.

Now, suppose that we can forecast that in twenty years the ratio of parasites to farmers is going to rise sharply. What can we do?

There really are only three ways this situation can be resolved. One or more of the following must occur.

1. Productivity can rise, so that farmers grow enough for everyone.

2. We can cut back on the food given to parasites.

3. There will be less food for the farmers.

To me, the safest and fairest option is to cut back on what we promise the future parasites. In terms of social security, this means reducing future benefits. Of the various ways to do this, the one that I favor is raising the retirement age.

Siegel reaches the same conclusion.