The Social Security Act, passed in 1935, was part of the Franklin D. Roosevelt’s New Deal to help bring the United States out of depression. Social Security was created to give citizens something to lean on in old age and unemployment. Social Security has annually brought in a surplus in from paychecks, which the government “borrows” and promises to pay back through bonds plus interest. Many retires will be drawing from Social Security; this massive strain on the system could reduce benefits and raise Social Security taxes for future generations. Congress needs to come up with a plan to counter this problem before it gets worse.
Right now many baby-boomers are and will be retiring. Large amounts of money will be distributed to these retires who no longer need to pay into the system. This means less money for future retirees because there are less people paying into the system then there are drawing from it. In fifty to seventy years from now when people today are retiring there will be an even larger amount of people retiring then there are now; and there will be less money for everyone with less people paying into the system.
The government might try to compensate for reduced coverage by raising Social Security Taxes. Current Social Security taxes are at 12.4 % for paychecks under $102,000, according to Jeanne Sahadi’s article “Paulson: Social Security fix needed,” if this problem is not dealt with in the next seventy-five years rates could be raised to 14.4%, for future retirees to receive 100% of their benefits. One-hundred percent coverage would be preferred by many citizens but not at the expense of their paychecks. Congress needs to decide now on how to deal with this problem.
How should Congress support future retirees? People don’t like taxes so why raise them? Why not let the people decide what the government does with their Social Security money instead of letting the government “borrow” it? Or-- the taxes could be eliminated entirely so that citizens may invest in their own money-- or have someone invest it for them.
