Since passed by Congress in 1935. Social Security has been considered by Americans to be one of the most good and supported authorities plans. supplying benefits to society and the aged. Despite its widespread popularity. the plan faces major support issues. doing the hereafter of Social Security seem unpromising. In the 2013 one-year study by the Social Security and Medicare Board of Trustees. the Social Security plan is estimated to be drained by 2033. after which it would be able to fund merely 75 per centum of promised benefits ( “Social Security. Present and Future” ) . This projected ruin of Social Security has many people inquiring if the plan will still be around for them by the clip of their retirement. Due to Social Security’s inability to alter with the economic system over the past 80 old ages. the federal authorities plan will non last without a combination of benefit reduction. income increasing. and income redistributing reforms to the foundation of the system. Although the current plan portions the same initiation intent as the original Social Security Act of 1935. to supply security for workers. the design of Social Security has changed drastically over the past 80 old ages.

Originally. the Social Security plan provided merely two types of benefits: monthly old-age benefits for retired persons and lump-sum decease benefits for workers ( Moore ) . Since so. the lump-sum decease benefit has been replaced with two new benefit classs: benefits for the households of retired workers and benefits for widows. lasting dependent kids. and lasting dependent parents ( Moore ) . In add-on to the alteration in benefits offered. the restrictions on the work forces covered by Social Securities have changed. Merely 56 per centum of the work force was covered by Social Security originally. nevertheless the current system covers approximately 96 per centum of workers in the state ( Moore ) . Besides. the disablement insurance and Medicare plans have been added to the Social Security system since it was originally enacted ( Anders and Hulse ) . In short. the Social Security system has been altered in many ways since passed by Congress in 1945. Although supplying benefits to more people in demand is a positive facet of Social Security. these alterations have greatly affected the cost and support of the plan. A lifting job with Social Security is the worsening ratio of workers to retired persons. which causes a lessening in the financess contributed to the plan. despite the increasing figure of retired persons having benefits.

As said by author Bob Burnett. “During the first half of the 20th century. the U. S. population was actuarially immature. due to comparatively high birthrate. worsening baby and childhood mortality. and high rates of net in-migration to the United States by immature workers and families…between 2010 and 2030. the figure of people aged 65 and older is projected to increase by 77 percent” ( Burnett ) . This “baby boomer” coevals negatively affects Social Security because one time their retirement clip comes ; there will non be adequate workers to financially back up all the retired person benefits. When Social Security began in 1945. there were 50 workers for every retired person. ( Anders and Hulse ) . By 2006. this ratio had declined to 3. 3 workers for every retired person ( Anders and Hulse ) . Another facet of this issue is the increasing mean life anticipation of Americans. In the past 50 old ages the life anticipation for work forces has increased 15 old ages. and twenty old ages for adult females. ( Anders and Hulse ) . Although a longer life anticipation is a good thing. it means that more retired persons will necessitate extra old ages of Social Security benefits.

Economists besides claim that Social Security encourages early retirement. which farther reduces to the worker to retiree ratio. and increases the force per unit area of public assistance plans on the federal budget ( Gorry and Slavov ) . Due to this addition in retired persons. and lessening in workers to fund the plan. Social Security will non be able to supply the current benefits to all that are eligible at this rate. Along with the diminishing worker to retiree ratio. the deficiency of personal nest eggs by Americans is a major lending factor to the ruin of Social Security. Harmonizing to the New York Times article “Social Security. Present and Future. ” “less than half of families ages 55 to sixty-four have retirement nest eggs. and of those. half have less than $ 120. 000” ( “Social Security. Present and Future” ) . This deficiency of nest eggs causes retired persons to trust entirely on Social Security to back up them after retirement. Some blame the benefits offered by Social Security for detering personal nest eggs. as the personal economy rate has declined from 10. 4 % in 1984 to 1. 4 % in 2003 ( Anders and Hulse ) . The diminution in the personal economy rate in the U. S. causes donees to trust more to a great extent on Social Security income after retirement.

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As said by the writer of “It’s Easy to Fix Social Security” . “more than 40 per centum of people 65 and older would populate below the federal poorness line of $ 11. 490 were it non for Social Security payments. harmonizing to estimations from the left-leaning Center on Budget and Policy Priorities” ( Cook ) . Because of their deficiency of retirement nest eggs. that 40 per centum of retired persons are trusting entirely on Social Security to back up them. One of the chief ends of the Social Security plan is to assist retired persons by stabilising their income ( Shiller ) . Therefore. if people were to salvage more for retirement they would non necessitate every bit much fiscal alleviation from Social Security. In add-on to the increasing figure of retired persons. and the decreasing personal economy rate. income redistribution is a major defect within the Social Security plan. One issue with the manner the plan redistributes income is that people with higher mean net incomes receive less monthly benefits as a per centum of their net incomes ( Gorry and Slavov ) . In other words. workers with a lower income receive a better “return” than workers with a higher income.

Another issue with income redistribution is that workers with shorter callings have a disadvantage due to the manner Social Security determines retirement benefits. Each person’s benefits are based on an norm of their highest 35 old ages of income. therefore a individual with a longer calling has more one-year incomes to be considered. Last. the manner income is distributed to single persons vs two-earner and one-earner twosomes is unfair. In a twosome with one earner. the partner receives Social Security benefits equal to fifty per centum of the earning spouse’s benefits ( Anders and Hulse ) . Unlike two-earner twosomes. one-earner twosomes do non pay extra paysheet revenue enhancement in exchange for the 50 per centum benefit that the non-earning partner receives ; therefore the plan is detering the employment of both partners ( Gorry and Slavov ) . The redistributing of income to Social Security donees is non merely unjust to workers with higher-income. longer employment. and/or a partner that besides works. it besides encourages unemployment by its system of paysheet taxing for two-earner twosomes. A controversial solution to the jobs environing Social Security is puting the financess into private histories. a procedure normally known as denationalization.

The denationalization of Social Security fundamentally means that each history would be separately owned and operated ( Anders and Hulse ) . Soon. the financess received from each individual’s paysheet revenue enhancement are invested in the Social Security trust fund. which is controlled by the authorities ( Koleva ) . As said by author Yoana Koleva. “these histories really do non belong to the employees and are more of a tracking mechanism that provides information to find the benefit sum received one time the employee reaches normal retirement age” ( Koleva ) . Therefore. denationalization proposes that the histories are in private owned and controlled. as opposed to the current system in which each individual’s Social Security history is controlled by the authorities. The denationalization of Social Security is considered to be one of the most controversial reform proposals due to its possible positive impact on the economic system. yet the increasing hazard and hard passage for the plan associated with the reform. With denationalization. workers could potentially gain higher grosss by puting their Social Security financess in the fiscal markets ( “The Privatization of Social Security-Opportunities & A ; Challenges” ) .

A few positive facets of this reform include promoting single duty and salvaging. along with the riddance of the subsidisation of one-earner twosomes ( Anders and Hulse ) . As said in the article “The Outlook for Social Security Reform: Proposals and Implications” by author Yoana Koleva. “investing in in private held securities such as stocks and bonds in the unfastened market may pay higher rates of return. which would assist retirement nest eggs accumulate faster and supply for a larger retirement benefit” ( Koleva ) . In other words. denationalization enables persons to potentially increase their retirement nest eggs by puting in fiscal markets. as opposed to the current system in which the authorities controlled financess have a specific involvement rate. The investings made as a consequence of denationalization could besides hike the economic system and make more economic chances ( “The Privatization of Social Security-Opportunities & A ; Challenges” ) . The downside of this reform is that the passage from the current “pay-as-you-go” system to denationalization would be really hard. Besides. denationalization is hazardous to the proprietor because many people do non cognize how to sagely put their money.

Although denationalization has many positive possible effects on our economic system. the challenges environing the reform outweigh the benefits. Many of the easiest and most cost efficient proposed Social Security reforms involve cut downing the benefits offered by the plan. In the 2014 Budget Proposal. President Obama suggested that Social Security benefits be indexed to Chain Consumer Price Index for All Urban Consumers ( chained CPI ) . as opposed to the current indexing by the Consumer Price Index for Urban Wage Earners and Clerical Workers. in effort to decently step and calculate rising prices in retiree benefits ( Shiller ) . As said by author Nancy Cook in the article “It’s Easy to Fix Social Security. ” “the Congressional Budget Office estimates that chained CPI. which is a sort of budget cut. would salvage $ 130 billion over the following 10 years…this would shut the Social Security funding spread by 23 per centum and widen the program’s solvency for approximately 17 years” ( Cook ) . The downside of chained CPI is that the longer one lives. the larger the decrease of benefits for the retired person would be. Benefits could be cut in assorted ways such as. raising the retirement age or cut downing the cost-of-living accommodations.

Along with being the cheapest and easiest pick of reform. cut downing benefits would besides profit the economic system by doing donees to work longer and salvage more in response anticipating lower benefits ( Anders and Hulse ) . A unfavorable judgment of cut downing benefits is that the Social Security would non accomplish its chief end. to cut down poorness among the aged. Another suggestion proposed by many economic experts and politicians to repair Social Security is to raise paysheet revenue enhancements. Raising the paysheet revenue enhancement by 2. 61 per centum would give Social Security another 75 old ages of solvency ( Cook ) . Besides. a one per centum addition in the paysheet revenue enhancement could be distributed over a 20 twelvemonth period and still make adequate gross to shut half of the support spread in Social Security ( “Social Security. Present and Future” ) . Although this minor addition in the paysheet revenue enhancement rate seems manageable. contemporary workers and employers. every bit good as workers with low-income would be negatively affected. Some positive facets of this reform include the easy passage. and the speedy alleviation it could convey to the Social Security crisis. Due to the many jobs with the set-up of the Social Security system and the economic challenges our state has faced in recent decennaries. the hereafter of Social Security is really unsure.

Some of the major jobs with Social Security include: the worsening ratio of workers to retired persons. the diminishing personal economy rate. and the hapless income redistribution done by the plan. These lifting issues do many people to inquire if Social Security will be about in the hereafter for their retirement. The reply is no. it will non last without reform. Deciding on which reform is another issue for the authorities. because each proposed reform has both positive and negative effects. There is non a individual reform that will work out all of Social Security’s jobs. No version of reform will positively impact effected all parties. Therefore. both retired persons and workers need to accept that they will hold to do forfeits. whether it is reduced benefits. or increased paysheet revenue enhancements. because without these alterations Social Security will non last. The lone manner to salve the plan is to unite benefit cut downing and gross increasing reforms. and to happen lasting solutions to the support issues so that reforms will non be needed in the hereafter.

Plants Cited

Anders. Susan B. . and Hulse. David S. “Social Security: The Past. the Present. and Options for Reform. ” The CPA Journal 76. 5 ( 2006 ) : 20-31. Business Source Complete. Web. 20 Oct. 2013.
Burnett. Bob. “What’s Incorrect With Social Security? ” Huffingtonpost. com. The Huffington Post. 21 Oct. 2013. Web. 20 Sept. 2013.
Cook. Nancy. “It’s Easy to Fix Social Security. ” National Journal April 2013: n. pag. Academic Search Premier. Web. 21 Oct. 2013.
Gorry. Aspen. and Slavov. Sita Nataraj. “How to Restructure Social Security. ” AEI. American Enterprise Institute. 19 Dec 2012. Web. 20 Oct. 2013.
Koleva. Yoana. “The Outlook for Social Security Reform: Proposals and Implications. ” Journal of Financial Service Professionals 66. 3 2012: 26-31. Business Source Complete. Web. 29 Oct. 2013
Moore. Kathryn L. . “The Future of Social Security: Principles to Steer Reform. ” The John Marshall Law Review 2008: n. pag. LexisNexis. Web. 29 Oct. 2013. “The Denationalization of Social Security-Opportunities & A ; Challenges. ” Northern Funds. Northern Trust. n. d. Web. 20 Oct. 2013.




Shiller. Robert J. . “Want to Fix Social Security? Use the Right Wrench. ” Nytimes. com. The New York Times. 8 June 2013. Web. 22 Oct. 2013.
“Social Security. Present and Future. ” Nytimes. com. The New York Times. 30 March 2013. Web. 21 Sept. 2013.

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