Social Security was enacted while the country was in the depths of the Great Depression. This was a time when fifty percent of senior citizens lived in poverty and the stock market crash wiped out many Americans’ life savings. The Act was intended to limit the afflictions of poverty, unemployment, and illness. It would be hard for someone to argue against the virtue of Social Security. It is basically the nation’s young taking care of the nation’s elderly. That’s the way it should be right? The idea behind Social Security is truly benevolent. But the entire system is in trouble.
It is clear from the very start that the Social Security
System is flawed and/or mismanaged. The
first monthly retirement check issued on January 31, 1940 from Social Security
went to a woman named Ida May Fuller.
She paid $24.75 into the System and collected $22,888 over the course of
her retirement. Does this sound like a
system that works?
Over the next few decades the baby boomers entered the work
force which meant there were way more workers than retirees. In 1950 the worker to retiree ratio was 16/1. Not only was Social Security able to cover
benefits for everyone, it created a surplus of money. The Social Security Administration took this
surplus and created a Trust Fund. Everything has been fine and dandy ever since
then. The country was the healthiest
and wealthiest it will probably ever be during the second half of the 20th
century. But that is no longer the case.
Social Security is facing a double edged sword. The nation is in serious decline at the same
time that the baby boomer generation is retiring. The worker to retiree ratio is shrinking very
fast. Today
we are at 3.3/1 and we are projected to be at 2/1 by the 2050’s due to low
birth and mortality rates. The Baby
Boomer Generation and preceding generations will benefit greatly from Social Security, but the generations
after them will be paying for it and get short changed. Declining Social Security The Social Security payroll tax is the
highest it has ever been and it is not going to be nearly enough to stop the decline that is coming.
Very soon, by 2017, payroll (FICA) taxes will be
insufficient to cover full benefits. At
this point, the system will begin drawing from the surplus trust fund created
when we had that wonderful 16/1 ratio. The
fund has over two trillion dollars in
it. It sounds like a lot of money but
the fund is projected to last until just 2036.
At this point, if nothing is
done,Social Security will begin its slow decline. After 2036 retirees will see their benefits
cut by 23% up to the year 2085. After
2085 the benefits will decline another 3% and so on.
So what can be done to stop the impending extinction of
Social Security? The proposals are to
raise taxes of course, raise the retirement age, and cut benefits to retirees
right now and for future retirees. It is hard to say whether Social
Security should ever have been implemented in the first place, but at present
there is no point dwelling on that. Now that it is here and elderly citizens
depend on it, I would propose that ALL of the above mentioned proposals be enacted. Hopefully these measures will ensure that Social Security will survive the Boomer retirement and the system will balance back out after then. If not, then we need to look at privatizing Social Security wholly or partially. However, the biggest mandate I would add to this
is education. Financial responsibility
and frugality need to become an integral part of the education curriculum from
kindergarten through college. The young
generation needs to be made to understand that any system, whether it be
government or private, can potentially fail them, and cannot be counted on for a
fully secure retirement. They must know
it is up to them first and they must live responsibly.
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