What is Social Security?
The United States Social Security Administration is an independent agency of the United States federal government that administers Social Security. Social Security is a social insurance program that consist of retirement, disability, and survivor benefits. Social Security was created to promote economic security for the people of the nation. It began August 14, 1935. It was a direct following after the effects of the Great Depression. The Great Depression was a very serve worldwide economic depression between 1929 to 1939. The major causes of this depression were; the stock market crash of 1929; the collapse of world trade to the Smoot-Hawley; government policies; bank failures and panics; and the collapse of the money supply. This all led to president Roosevelt signing the social security act. This social security act was a part of the "New Deal". This deal refers to a program that focuses on what historians call the "3 R's". The 3 R's refers to; Relief for the unemployed and for the poor, Recovery of the economy back to normal levels, and reform of the finical system to prevent a repeat depression. Social security works by people working paying taxes. Those funds are added to the social security system. When people retire they or any dependent gain monthly benefits depending on earnings from time when working. Social security is helpful to those with limited resources, accessibility, income, and any other situations out of people's control. The Social Security Act has become the most successful, most popular domestic programs in the nations history. Social security can affect future generations who may need to rely of these funds from the government in stations where a person had been severely injured or has become disabled. Social security is something we are all familiar with, so what happens if this goes away?
What Happens If/When Social Security Runs Out?
As mentioned previously, the money put in social security is directly from the citizen's of the United States. By the year 2030, it had been determined that there may only be two workers who pay into social security for each beneficiary. This is a result of many citizens not working, and some not wanting to work anymore. A lot of this has derived from Covid and benefits lost after. People are not wanting to work, because issues and stakes are incredibly high but pay has not been improved for certain positions. As of right now the worst-case senecio would be for social security to run out in 2034 and benefits going down by 22%. Covid has been proven to be a direct correlation to the cause of social security running out. Other factors are an aging population, more people dying than being born, and of course more money being withdrawn than money being put into social security. There are many jobs open right now, but not for good reason. Many jobs are not paying employees well amongst the issues following the pandemic. Many jobs that pay minimum wage, have increased their pay but has still not be proven helpful, because if the lost of hours and employees. This causes some too work maybe too much or too little. The main risks of social security running out are the lost of benefits, increased wage taxes, and increase retirement age. If no changes are made before the social security funds run it, there would be a reduction in the benefits that are paid out. If the only funds available in the social security is what current wages being paid in, the social security administration would be able to pay around 75% of promised benefits for this qualified. A 25% reduction in benefits will significantly hurt those who plan on retiring and relying on their social security benefits, but it will be far less damaging than the complete shut down of the program. With the potential for benefits being reduced, some retirees may want to apply for their benefits early before the fund completely runs out. This could hurt their situation more. If you start taking benefits out sooner than initially planned, they will reduce to 70% of your full-retirement age benefits. Comparing this to the 75% deduction, it is a little better to wait to keep that 5% of retiree's benefits. Increased wage taxes, could be done to avoid benefit reduction. It is possible that congress votes to increase social security taxes charged on employees. Taxes would need to increase from 6.2% to 8%. This would provided an additional nine hundred dollars in taxes paid annually for an employee making around $50,000 per year. The average income in the U.S. is around $31000. The other tax wages proposal is for anyone with an income over $400,000 would have a new wage rather than increasing for everyone. This proposal has become the most popular in recent years, and personally seems like the most logical solution to me. Raising taxes on everyone does more harm than good. Most people are barely able to afford living in the United States now, raising taxes would only make matters worst. I think people who can afford to pay higher taxes should be the ones being taxed more. A different proposal that has been mentioned is increasing the full retirement age. It is said that regardless of social security running out or not, the age of retirement is likely to increase within the next 7 years. The reasoning for this is the increased life expectancy of humans in today's time. The average life expectancy today is around 82 years old, compared to just a few years ago where it was 78 years old. It is predicted that the life expectancy of humans will only get longer with our rise of technology and medical findings. The retirement age 2 years ago was 65 years old. It is now 67. The time that people will have to work before going into full retirement will only grow. This truly sounds exhausting for us future generations.
Why This is Concerning..
While Social Security seems like it wouldn't be completely eliminated in the next 10 years, it is inevitable benefits will be reduced significantly if things do not change in the next few years. A change needs to occur to insure that our retirement plans are secure. This situation affects the elderly and future generations directly. As I mentioned earlier, the life expectancy of humans is significantly longer than pass generations. This will cause the retirement age to increase, which increases a person's time in the work force. For the younger generation who will be dealing with these issues, we would be looking at longer work time before getting that retirement and relaxation that people work towards. Social Security funds are also greatly used, and depended on by those who go through mental and physical health declines. Without this fall back money in the future, it's scary to think we may may not have anything to help us or our loved ones during these tough times. I think this is such an important topic, that needs a lot more attention that is getting. Hopefully things will begin to get better, to ensure that we and future generations have a more secure future.
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Future Financial Status of the Social Security Program
Covid took one year off the financial life of the Social Security retirement fund
Why Is Social Security Running Out of Money?
The elephant in the room, of course, is that Social Security's vulnerability is such a big deal precisely because we've not secured health care for so many millions of Americans.
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