February 13th, 2012|
Society Security is running almost $50 billion in the red each year, deficits that are being covered by reserves in the General Fund, reports the Kipsap Peninsula Business Journal.
But because the number of people getting benefits is outpacing the number of people footing the bill, the program will be insolvent in 20 years.
When Social Security started in 1935, the employer and worker each paid a one percent tax on the first $3,000 of earnings. Today, the tax is 10.4 percent on the first $110,000 in earnings–and it’s still going broke.
Social Security worked back in the ’30s because the average life expectancy was 58 and benefits didn’t start until age 65. In other words, Social Security worked because not many people lived long enough to collect benefits.
Today, people are living longer and retiring earlier.
In 1935, when Social Security began, there were roughly 16 workers for every beneficiary. Today there are just 3.3 workers per beneficiary, and officials project that in 18 years, there will be just two workers paying for each person collecting Social Security benefits.
We’re going to have to look at changing the benefits. But historically, such suggestions have hit a brick wall.
A lot has changed with Social Security in the 77 years since its inception. The math worked back then–it doesn’t work now.