Even more importantly, though, these reports estimate that unless corrective action is taken now, the Social Security program will be insolvent by the year 2030, a range entirely within the retirement years of the baby boom generation. More disturbing for these soon-to-be-retirees, the date at which the Social Security trust fund stops being a net contributor and becomes a net claimant on the federal budget has advanced to the year 2013 in these projections (Diamond et al
Today, more than 156 million workers are protected by the various programs administered by the Social Security Administration, and more than 47 million people are recipients of retirement, survivors and disability benefits from Social Security. In fact, by all accounts, the entire elderly population (defined as people aged 65 years or older) in the United States has benefited from the programs administered by the SSA in substantive ways, with the sole exception of the Hispanic segment (Hungerford, Iams, Koenig & Rassette 2002)
S. government have all proposed fundamental changes in the structure of the Social Security system (Niggle 2000)
They are essentially arguing that resources are lost at a rate higher than they are gained. In other words, privatization of social security in an economy populated by overlapping generations of individuals that have time-consistent or time-inconsistent preferences, face mortality and individual income risk as well as borrowing constraints (Fehr, Habermann, and Kindermann, 884)
This social safety net program was originally based on the idea that people would claim their benefits at the age of 62 after working and contributing to the resource pool their entire lives. In the 1930's, when Social Security was first implemented, not as many people lived long enough to claim their benefits or didn't live long enough to claim them for very long (Shipman, 1)
S. Social Security System Precisely, Social Security is called Old Age, Survivors, and Disability Insurance (OASDI) government program that provide financial benefits to retirees, spouses/children of deceased workers, and disabled workers (Aaron 2011)
program is financed through a payroll deduction (FICA) tax imposed upon eligible workers. Interestingly, the first social security program originated in Germany in 1889 by Chancellor Otto von Bismarck (Kotlikoff 2011)
followed suit when President Franklin Delano Roosevelt signed the U.S. Social Security into law in 1935 (Saving 2008)
In most industrialized economies and a good portion of developing countries the postwar period has been spent to dramatically expand the pay-as-you-go social security programs that already existed. Although this expansion has led to a reduction of poverty rates among the elderly, it has as well led to the tremendous redistribution of sums from young and future generations, as a group, to simultaneous older generations, as a group (Altig and Gokhale, p
This is not an obvious case. Ignoring the potential efficiency gains from social security privatization would mean fiscal policy is a zero-sum game (Cooley and Soares, p
The first and foremost effect would be a reduction in traditional social security benefits; moreover, initiating a privatization system is very costly especially the transition stage. There are special insurance protections such as disability and survivor's insurance that are provided in social security, these will be reduced by privatization (Diamond, p
Switching to private investment accounts that are funded with existing payroll tax is a better solution, this will avoid benefit cuts or hikes in tax. It is also evident that privatization of social security programs will have retirees pocket more money (Feldstein and Samwick, 1996)
One such change is that the disability insurance can be reformed. One of the problems there is that one can receive Social Security benefits for minor ailments like back pain, which has significantly increased the number of people receiving these benefits without fully paying into the system (Autor & Duggan, 2006)
While that's a little strange, the optics nonetheless, are of a poor senior eating cat food and living in a shack, when you try to curtail benefits. Even means-testing benefits seems to be off the table as far as public policy discussion, the idea often mocked as "punishing those who have worked the hardest" (Biggs, 2011) or some other such entitled drivel
The current system has today's generation of workers financing today's retirees, which is where the funding gap lies, whereas a fully-funded system would invest payroll taxes so that today's generation is effectively funding its own retirement, given positive returns on the social security portfolio. This option still creates a funding gap, because dramatically more funds would need to be raised in the short run, but it also makes the system much more sustainable in the long run (Templin, 2006)
However, by 2023, Social Security payments will dip into the trust fund that has been built up, with projections for the trust fund to be exhausted by 2036. Thus, there is a pending long-run problem with funding Social Security (Vernon, 2011)
The individual earner is not subsidizing others, as the Social Security benefits are commensurate with inputs accumulated throughout the person's working life. Correspondingly, there is a greater need in the nation overall for buffers against economic and social calamities that result from seniors being unable to care for themselves in their later years (Norton, 2011)
As an example, Steve Griggs had a sizeable nest egg based primarily on Texas Instruments stock and thought he was well positioned. However, the decline in the stock (from $83 a share to $23 a share) directly correlated to a significant decline in his retirement (Ehrenfeld et al
To come out ahead of the traditional system, an account would have to realize returns on investment of at least 3% above the rate of inflation (Weisman & White, 2005). Benefits of President Bush's Plan: First, it's important to understand that "about 75% of American families pay more in Social Security and Medicare taxes than in income tax" (Sloan et al
For every dollar that they deposit, their traditional benefit - delivered in a monthly Social Security check - would be diminished by a dollar, plus the interest rate the money would have earned in Treasury bonds. To come out ahead of the traditional system, an account would have to realize returns on investment of at least 3% above the rate of inflation (Weisman & White, 2005)