Is the Social Security System broken?
Problems with the Social Security System
Problems with the Social Security System
The Social Security System, created in 1935, is the one of the most costly items in the federal budget today. The program was created to provide old age, survivors’ and disability insurance to a large portion of Americans, mostly the elderly who are now out of the work force. The Social Security Act was a major turning point in American history (William, 2007). Today the U.S. Social Security system has been in the news a lot lately. While politicians throw around dramatic words like “crisis” and “bankrupt,” regular Americans have more mundane concerns. Social Security has assisted to defend millions of employees from scarcity in their elder years, but demographic truths have transformed over the last seventy years and are still altering. (Smith, 2010) If Social Security does not transform with them, the system will be incapable to fulfill its guarantees to tomorrow’s retirees and will load the next generations, our children and grandchildren, with hard taxes. The President would let Americans save some of their Social Security taxes in personal retirement accounts that they own and that Congress can never legislate away. Personal retirement accounts would strengthen Social Security by assisting all US citizens to raise their retirement income and pass on a nest egg to construct a better fiscal future for their households. (Smith, 2010)
Several Social Security professionals think the system is in crisis because it will soon be incapable to fulfill its guaranteed distribution payments to qualified retirees (Koitz, 2003). Republicans and Democrats tend to have extremely different concepts not only about how the Social Security system should encounter this disaster, but they also vary considerably on how the regime should address personal retirement requirements. Social Security is financed by the payroll taxes of existing employees to pay the advantages of current retirees (Smith, 2010). Projected long run project costs are not sustainable under new program parameters. Social Security’s yearly excesses of tax income over expenses are anticipated to fall sharply this year and to stay about stable in 2010 because of the financial depression, and to increase only briefly before declining and turning to stable cash shortfalls starting in 2017 that will increase as the baby boom generation retires. By 2046, the Social Security trust funds will be exhausted and advantages would need to be cut by about twenty-five percent (25%) across the board. (Smith, 2010) Additionally, this excess is a product of an intergovernmental move system. The Social Security surplus is provided to the Treasury Department and restored with IOUs. This intergovernmental transfer is various type normal regime debts as we consider of it, because when a person purchases a regime bond, he or she has an economic claim against the regime. When the regime problems itself an IOU to one of its own accounts, it has not bought anything or established an accusation against another organization or individual. (Smith, 2010) The major cause for the looming monetary crisis is that our community is aging. The “Baby Boom” generation has previously begun to gather their Social Security retirement benefits. As a consequence, there are fewer employees to support each retiree than when Social Security was made. Raising life expectation, and the approaching retirement of more Baby Boomers continues to put growing stress on Social Security every year. Over the next many years, the number of retirees is anticipated to grow more quickly than the number of people whose taxes will pay for future benefits. Because of this, the number of employees supporting each Social Security beneficiary is estimated to fall from 3.3 nowadays to 2.2 in 2041. When evaluating these figures with those from 1950 (when there were sixteen employees for every one...
References: William, J. (2007). Social Security System. New York: The Free
Smith, D. (2010). “Issues with Social Security System.” New
York: Thomson Gale.
Koitz, David. (2003). Social Security Reform. California: Hoover
Zeleny, Jeff. (2009). Social Security System. New York:
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