Social Security

Social Security is much more than a retirement program. It is universal guaranteed retirement money for everyone and is the primary source of income for most retired people in the United States. "It is a family in come protection program that reflects the commitment of the country to the economic security of workers, retirees and their families." Social Security protects workers and their families through their retirement. "Sixty percent of today's beneficiaries derive more than half of their income from Social Security. In most low income households of retirement age, Social Security represents eighty percent or more."

In addition to paying benefits to retires and their families, Social Security provides a foundation of income for workers who become disabled, and for spouses and dependent children of wage earners who die or become disabled. In fact, "one in every three beneficiaries today is not a retired worker." Women and minorities are most likely to depend on Social Security. Minorities because their employment opportunities are sometimes limited and they are more likely to work for lower wages and in jobs without retirement programs such as pensions. Women are sometimes in the same predicament, working in lower wage jobs without pensions or retirement programs. Since women on average work fewer years at lower pay, they contribute less in payroll taxes over their lifetimes than do men. In their various roles as spouses, and widows, women collect Social Security benefits for more years than men. The result is that women get more net benefits in their lifetimes than do men. "Since the Social Security system pays retirees, widows, orphans, and the disabled and their families each year out of the funds collected from current workers' payroll checks and some of the income taxes paid on benefits, it is sometimes referred to as a pay-as-you-go system."

Social Security was signed into law on August 14, 1935 by President Roosevelt. The Social Security act of 1935 made a promise to Americans trying to make it through the Great Depression. President Roosevelt said in 1935 that Social Security was to "frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age" The first recorded applicant for a lump sum payment was Ernest Ackerman, who retired only one day after the Social Security program began. For his nickel put into Social Security, he received a lump sum payment of seventeen cents. The system worked great for years but the system is becoming very old and is facing hard times. Most people have been alarmed by this for a while. The Social Security system is expected to be running a deficit within only fifteen years. The system is paying out more than it is collecting in taxes. "Current estimates calculate that, without reform, it will be unable to pay promised benefits until around 2037. What began as a plan for increased financial security has instead thrown the country towards a future of uncertainty." Also, a decline in fertility rates means there will be fewer workers available to support each retired person once the baby boom generation starts to retire. "As a result of declining birth rates and increasing life expectancy, the ratio of workers to Social Security beneficiaries is expected to shrink from 5.1 in 1960 to 3.4 today to 2.1 in 2030."

When Social Security was designed, it was designed as a "pay-as-you-go" system. There was no money actually set aside by the government for the system. When workers pay their Social Security taxes, most of the money is immediately paid out as benefits to the retired. The leftover money goes straight to the Treasury in exchange for Federal IOUs and are used to finance the National Budget. The problem is in 2014 when Social Security begins running a deficit. There will be no more leftovers and the government will have to start paying back it's IOUs in order to keep the system working. Since there is no money saved for this purpose, the government will have to increase taxes, the public debt or drastically cut spending. In the case that absolutely nothing is done to fix this problem, by 2037, the entire Social Security system will be bankrupt and have nothing to pay anyone. "The government will owe an estimated $9 trillion more to current workers when they retire than it will have collected from them in taxes."

As of today, "Social Security's income is currently exceeding its outgo but its bored of trustees projects that on average over the next 75 years Social Securities outgo will exceed its income by fourteen percent and by 2041 all funds will be depleted." At that point, its revenues will only be able to pay for about seventy percent of the costs of the program. The primary reason is that the baby boom generation will soon be retiring and increasing the life expectancy is creating an older society. By 2005, "the ratio of people 65 and older will increase by seventy-four percent." In contrast the number of workers who will finance the program is expected to grow by only fourteen percent. This means that the number of workers supporting each recipient will fall from 3.4 to 2.3 in 2025.

Social Security revenues are paid to the United States treasury. Most of the money is used to pay for benefits. The rest the funds are invested in federal securities . Whenever current Social Security taxes are not enough to pay the benefits, the Treasury makes up the difference with other receipts. Today, "the annual cost of the system, $465 billion, is equal to 10.84 % of worker's pay subject to Social Security taxation." The number is expected to slowly rise over the years. When thinking of a solution to this problem there has to be fairness and no discrimination of any kind. One thing that needs to be done is to address fundamental needs. The basic purpose of a government system of Social Security is to help those at the end of their life to maintain more than a poverty level of income and insure that they receive adequate health care services. It should also be equal for everyone. All laws should promote equal justice, they should try to avoid any difference in taxes and benefits among those who are equally situated.

There are many views on Social Security reform. The two main views are either to reform the program or keep the existing system. Some people say that the problem is not as serious as people think. They argue that the system is now running at surpluses and that there is a big risk involved with reform. They claim that only small changes need to