Social security refers to the foundation which ensures that American citizens who are retired, disabled or deceased workers are secured economically. Close to one hundred and sixty-nine million of the American citizens pay taxes for social security funds while close to sixty-one million citizens collect the benefits on a monthly basis. According to Sherraden &Gilbert (2016), one out of four families receives Social Security funds. Even though it may not seem to be a lot on the ground, close to 48% of elderly couples and nearly 71% of the couples who are not married rely on income from Social Security for at least half of the monthly earnings (Brown, 2015). In other words, social security is a vital program for the senior citizens in The United States.
Even so, the Social Security is also facing severe challenges. One of them is the problem of the demographic shift. It is projected that by 2030 there would be more than seventy million baby boomers who would get into retirement. This, therefore, means that the number of beneficiaries would enormously increase. The experts who came up with the idea of Social Security did not predict that there would be such a surge in birth rates. In contrast, the number of workers in the labor force is too small to replace the baby boomers who would retire (Sherraden& Gilbert, 2016). In other words, there would not be enough payroll tax revenue that in turn would support the increasing number of the beneficiaries who are going out of the labor force.
Delegate your assignment to our experts and they will do the rest.
Another problem facing the social security program is the rising life expectancies. The life expectancies in the 1960's were about 70 years. By 2010, the life expectancy for American Citizens had risen to 78.8 years. The improving life expectancies are attributed to better medical care, education and existence of better pharmaceutical options. The experts of social security funds failed to predict that there would be increased life expectancies like they are currently. The effect of this is that people live for a longer time and as a result, they are –draw the social security income for a longer time.
Another problem facing the social security program is the fact that there are falling interest rates. For businesses and consumers, the falling interest rates may look like a blessing. Even so, for those who depend on money gotten from fixed-income assets, this may bring negative impact. When the interest rates remain low for a long time, the Federal Reserve’s will have less interest income, and as a result, the program will run out of the spare cash (Sherraden & Gilbert, 2016).
The Congress is not making any rush to correct the problem of cash shortfall that the problem may be facing shortly. In spite of having several solutions to choose from, the Congress is approaching the matter with reluctance. In the long run, it is the beneficiaries who will have to face the problem. Looking into the future of Social Security program, several people have given opinions on what should be done to improve the program. While some experts suggest privatization of the program, there have been serious opponents of the idea of privatization. With a privatized system, every participant's benefit would only depend on the accumulations of an individual's account, and as a result, leaving no room for any social assistance (Rejda, 2015). Privatization may not provide a complete solution to the problems facing social security program. Changes could be made that would still leave the original structure constant as this would provide workers with much higher returns than a privatized option would and could also bring lesser risk while maintaining the advanced social objectives which the privatized options would jeopardize.
Finally, the coverage for the program should be made universal so that it can cover new workers hired by both the local and state government, a quarter of who are out of the program currently. When the coverage is extended, there would be additional protections for the workers thus helping the finances of social security (Rejda, 2015). Moreover, the benefits should be seen as any other retirement income by putting them on the same tax rules that would apply to the private pensions, through taxation of benefits which are more than the worker's contribution. The revenues collected from taxes would credit to the trust funds to assist in financing future benefits.
References
Brown, J. D. (2015). An American Philosophy of Social Security: Evolution and Issues . Princeton University Press.
Sherraden, M., & Gilbert, N. (2016). Assets and the Poor: New American Welfare Policy . Routledge.
Rejda, G. E. (2015). Social insurance and economic security . Routledge.
