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Norte News

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May 28, 2024

Will America be able to Continue the Social Security Program?

States pay three basic forms of taxes (federal, state, and Social Security).  Of all the three types of taxes, Social Security tax is designed to help the individual later in life, specifically in retirement years.  The money that Social Security tax collects provides many benefits to individuals, which include a living allowance and medical insurance, called Medicare.  Currently, the United States has a debt of roughly $134 trillion dollars.  This situation brings many observers to speculate whether the Social Security program can be sustained.

When young adults start to work, one large amount of expenses will be taxes.  The United Social Security program got its start out of necessity.  In the 1920s, the worst economic failure in history had many banks closed and many people left without jobs.  This period in history is famously known as the Great Depression.  During this time, many elderly citizens of the United States experienced financial problems and had a difficult time covering day to day expenses.  In an attempt to address this issue and prevent it from recurring, President Theodore Roosevelt passed the Social Security Act in 1935.  Social Security was intended to help elderly people financially (including medical benefits) by having working citizens partake in a contributive system where working citizens would have to pay for a Social Security tax that would be used to fund for their benefits when they retire. Essentially, Social Security was set up so that people could pay for their future needs as an elder in advance.

Courtesy of The Endependence Center   

 

The Social Security tax is straightforward. The government doesn’t just provide the necessary amount of money for the Social Security program, but it gets paid through taxes that citizens pay.  Social Security tax is made up of contributions from the working citizens (employees) and employers.  Both employers and employees pay 6.2% of the employees’ pay, totaling 12.4%.  The benefits of Social Security begin at the age of 62 but can also affect people with disabilities or people with diseases that could end in death.  Social Security benefits can be received through a simple check or deposit to a bank account. 

 

Currently, financial experts are speculating whether the Social Security program can be sustained.  Within the Social Security system, the OASDI program, or the Old-Age, Survivors, and Disability Insurance, is one of the ten programs that have been inaugurated since the Social Security Act.  The OASDI is responsible for providing the money to people who are retiring and people with disabilities with the money varying based on how much people in the working class contribute to Social Security.  But, last year in 2023 the amount of money taxpayers gave to the Social Security tax wasn’t enough to cover the OASDI program with $41.4 billion left unpaid.  Currently, the amount left unpaid is covered by the OASDI reserve accounts.  However, it is predicted to only be worse from that for it is estimated that by 2035 the OASDI will have to be discontinued.  This event will have a drastic impact on the generation that is known as the Baby-Boomer generation which are people who have been born between 1946-1964.  The Baby-Boomer population would be greatly affected by this since by 2035 the whole generation of Baby-Boomers will be in retirement meaning all Baby-Boomers would be left out of the Social Security benefits making them struggle to get by with their standard needs of living.  The main reason why the OASDI and Social Security as a whole is predicted to run out at 2035 is due to the ratio of people who are working and people who are retiring are unbalanced with more people expected to retire than work by 2035.  In addition, the United States deficit may have grown to unmanageable levels, at that point.

 

Should the Social Security program end or be somehow compromised, the effect on retired Americans will be immense.  Retired physician, Eugenius Ang, MD commented that if the Social Security program were to be dissolved, retired Americans will have to pay for their own medical insurance.  Dr. Ang noted that healthcare in the United States is very expensive.  The average American senior citizen will not be able to afford healthcare and get the medical attention which they will likely need in their old age.  This is currently one of the major problems that the United States and its leaders will need to solve.  

 

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