But what is a country going to do?
Answer:
Provide a mechanism wherein all citizens are able/encouraged to do the above. It's called privatization of Social Security and has worked like gangbusters for Chile.
But, you probably already knew that...
“It’s called privatization of Social Security and has worked like gangbusters for Chile.”
Exactly. Appropriately incentivized individuals can do collectively what government cannot. An individual saving for his/her own retirement (and not expecting Uncle Sam to provide it) has a built-in incentive to save rather than over-consumer as well as a built-in incentive to work longer/harder. Collectively, these individual actions will result in a much bigger pie in the future regardless of whether there might be a generational imbalance in the number of people in one generation versus another.
In contrast, when politicians are in charge of retirement, there’s the risk that a) they will divert surplus payroll taxes to be spent on government goodies other than the purpose for which they were collected; and b) they will enhance the promised goodies to today’s retirees knowing that they’ll be long gone from office by the time the tab comes due. These perverse incentives are exactly why SS is in a heap of trouble in the first place.
Well, suppose all citizens did save money in stocks and bonds, but failed to have children. What would happen then? Of what value is stock in a company located in a country where all the workers are retired?
They’re going to find out about this pretty soon in Japan. The bulk of their savings are in Japanese government debt.