Point: The Case for Social Security Reform

For many Americans, retirement is viewed as a time in the future when they will be able to relax and not have to worry about getting up every morning to perform the same grueling daily tasks as they have done for the past forty to fifty years. As they approach retirement, many Americans are planning to travel the world, devote themselves to their hobbies, and spend time with their grandchildren. Unfortunately, many of these same individuals are growing increasingly concerned about their retirement years and fear that the future status of the Social Security system will jeopardize their lifelong goals. A study that measured public support of the Social Security program nearly three decades ago indicated that only thirteen percent of Americans younger than thirty believed that they would receive more money in the future compared to what they paid into the Social Security trust fund? Today, skepticism about the program abounds. A recent Washington Post-ABC News poll indicated that eighty percent of Americans between the ages of eighteen and thirty believe that when they retire there will not be enough money in the Social Security system to pay them the benefits to which they are entitled. (2) This fear alone should be enough to spark reform, but there are several additional reasons why American political leaders must touch the infamous third rail of politics and reform the Social Security program before it is too late. The most obvious need for reform is the rapidly approaching financial crisis that will hit the Social Security system as a result of the drastic increase in the number of beneficiaries who will enter the system within the next two decades as Baby Boomers retire. As a consequence, the system will begin to run a deficit as early as 2018. (3) To understand why the program will hit this shortfall, one must first understand how the Social Security system works. The Social Security program is a 'pay-as-you-go' system. Taxes are taken out of current workers' paychecks and used to pay out benefits for today's retirees as well as survivor and disability benefits. Each worker pays 6.2 percent of his/her wages into the system, which their employer matches. If someone is self-employed, they pay the entire amount themselves. In the 1950s, sixteen workers paid into the Social Security system for each person receiving benefits., thus creating a surplus. (4) As the influx of Baby Boomers enters the system, however, there will only be two workers paying into the system for each person receiving benefits. (5) Consequently, by 2018 there will not be enough revenue to pay the retirees, thus forcing the Social Security Administration to tap into the surplus that was loaned to the U.S. Treasury and receives about $80 billion in interest annually that contributes to the current $1.5 trillion surplus in the fund. (6) In 2018, the Social Security program will most likely begin to use that surplus to pay recipients through 2042. At that point, the surplus will be depleted and the program will only pay retirees approximately seventy-five percent of what they are entitled. (7) This alarming projection of the financial future of the system demonstrates a real need for immediate reform of the current Social Security program. Second, Social Security should be reformed because times have changed in America. The Social Security system was established in 1935, nearly six years after the stock market crash that contributed to the Great Depression. At the time, there was great fear and uncertainty about the future. Social Security was established to alleviate some of that fear by helping individuals cope with life's insecurities. It provided a safety net for retirees, but it was not intended to provide a primary source of income to beneficiaries. The likelihood of another stock market crash is minuscule, and individual debacles, such as Enron, are extremely isolated incidents. Since 1900, the stock market has failed to make a profit for its investors only during the depths of the Great Depression in the 1930s. …