Of the total federal expenditures in 1995, Social Security together with Medicare(federally founded health program aimed at helping the elderly, founded in 1965) was the largest, accounting for about 34 percent. In 2005 this figure is predicted to be as high as 39 percent. This is caused by the "graying" of America and the increased number of elderly who will collect benefits for a longer portion of their lives, coupled with a reduction of the number of workers available to pay for their benefits. Increasing costs of living and higher standards of living (as reflected in higher wages) also are consequences.
In short, if no action is taken in the interim, by approximately 2013 the federal government will have to raise taxes, increase the debt, print more money, reduce Social Security benefits immediately, or do some combination of those things to rectify the Social Security cash-flow imbalance. The surplus will be gone. The amounts needed by the Social Security system, even in the early years, are not insignificant. In 2015 experts believe that the government will have to find approximately $57 billion to meet its obligations. By 2020 the number will have grown to $232 billion.
The demographic makeup of America is changing. The share of the population over the age of 65 will continue to grow well into the next century. Today, approximately 13 percent of the population of the United States is over age 65. By 2030 that percentage will increase to more than 20 percent. Even more surprising, in less than 50 years, there will be as many Americans aged 80 and older as there are now people over 65.
People are also living longer; In 1900 life expectancy was 47 at birth, and if you lived to be 65, your life expectancy was suddenly 77. In 1993 it was 76 at birth and 82 if you turned 65. At the same time, retirement ages have sunken. So suddenly there were people living longer, on the government's payroll. Some people would then draw the...