In 2015, 65.1 million people received benefits from the Social Security Administration and this number is constantly increasing. As we’ve talked about in class, the current demographic challenges facing our nation are daunting. It is a fact that a dwindling workforce must continue to produce in order to provide income for the expanding dependent population. Because of the dangerous momentum affecting the proportion of workers to dependents, GDP growth needs to return early post-war levels in order to maintain current Social Security benefits. Of course, many scholars are highly skeptical that this will ever happen. Increasing the tax burden on a smaller workforce would be crippling. Decreasing Social Security benefits is another possibility, though the likelihood of this occurring seems slim as well. Despite the small monthly sum that Social Security represents, people are extremely dependent on this income. In 2014, 61% of beneficiaries received at least half of their income from the program.
Social Security primarily consists of two programs, Old-Age and Survivors and Disability Insurance program, and Supplemental Security Income program. The latter benefits the neediest, as well as the blind and disabled of all ages, and 8.3 million people received support in 2015. In 2015, the OASDI Trust Funds collected $920.2 billion in revenues. 86.4% was from taxed income, 3.4% came from taxed Social Security benefits, and the final 10.1% was from interest on government bonds held by the funds. In 2015, it was projected that there are 2.8 workers contributing to Social Security for each beneficiary of the program. This number will fall to 2.1 in 2037, a far cry from the level in 1955 which was a ratio above 8. This is a testament rate at which the population is aging. In fact, growth in payments to retirees have tripled that of disabled workers over the last 40 years.
As Professor Smitka mentioned in class, the current Social Security program is unsustainable in the long term. The Social Security Trust Fund, established in 1983, has been essential towards funding the program. Social Security’s income has surpassed its costs since the eighties, but will only do so until 2019. However, given the current tax rates and benefit plans, the trust fund will most likely be empty by 2034, and it is projected that only 79 cents for every dollar of today’s benefits will be available. Unless there is some sort of reform, this is the reality.
Data from: www.ssa.gov
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