Will Social Security Last in America?

The Retirement Benefit of the Social Program is not an Entitlement.

Nov 18, 2009 Carmen Sofia Grant

The massive Social Security program, created in 1937, helps keep elderly people above the poverty line, according to the SSA. Is it doomed for bankruptcy, or will it last

Social Security constitutes 37 per cent of the governments expenditure and 7 per cent of GDP, according to M. Feldstein's article Rethinking Social Insurance, which was published in the American Economic Review in 2005. The author says that people who have paid into it the most, are the ones who are going to be left with nothing. That is because the money is depleting at a rapid rate, and nobody is legally entitled to social security money even though everyone has to pay into it. According to a Supreme Court ruling which was established in Flemming v. Nestor (1960) "entitlement to Social Security benefits is not a contractual right."

Is Social Security Failing?

A report by the Associated Press written in May, 2009, states that Social Security will pay out more in benefits than it collects in taxes by 2016, and the pot will be completely depleted 2037. The end of Social Security will come four years sooner than predicted because of the latest recession which led to greater unemployment and less Social Security funds to collect.

Treasury Secretary Timothy Geithner, the head of the trustees group, said that the Social Security annual surplus will be completely gone by 2016 because of the increased demands from the 78 million baby boomers in line to retire. A report by the Heritage Foundation states that "younger workers are especially aware that Social Security will not be able to provide the benefits they have been promised when they retire." This is because the WWII Generation paid very little into the program, yet they received the greatest benefits, more than they ever paid into it at all. When the baby boomers start retiring, many believe the system will be shocked

However, the Social Security trust fund is picking up assets at an alarmingly fast pace. According to the 2008 OASDI report, the Social Security trust fund assets are projected to increase to approximately $4.3 billion by 2017. This balance is approximately 385% of the expected annual program expenditures for that same year. This shows that the system is not going bankrupt at all, rather almost evening out what it is projected to lose.

Will Social Security Be Reformed?

Social security still exists because it has helped many older citizens out of the poverty line. It has been successful for a lot of citizens, particularly the first few decades of collectors. While the OASDI is doing what it can, the system needs an overhaul in order to continue paying out support for American citizens. The Social Security debate is not new. As a result, many of the baby boomers, who are more educated and versed on personal finance than their elders, have followed the debate and have been saving and investing more of their money to prepare for their future. They will depend less and less on Social Security money once they hit retirement age as a result and can choose to opt out of the program.

There is no clear future for Social Security. The intentions of the program were always good, and with reform those intentions have a chance of helping Americans longer than expected.

The copyright of the article Will Social Security Last in America? in American Affairs is owned by Carmen Sofia Grant. Permission to republish Will Social Security Last in America? in print or online must be granted by the author in writing.

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