Mention some of the serious problems encountered by the Social Security system

Question

What will be an ideal response?

Answer 1

The U.S. Social Security system was developed in 1935. It was originally intended as a form of insurance that would partially supplement other assets when retirement, disability, or death of a wage-earning spouse occurred. Yet many older adults do not have investments, pensions, or savings to support them in retirement, and therefore, Social Security has become their major or sole source of income. During its first few decades, more money was paid into the system from Social Security taxes imposed on employers and employees than was paid out. This was due largely to the fact that life expectancy was only about 60 years of age. The life expectancy rate, however, has gradually increased to 78. There is now a danger that the Social Security system will soon be paying out more than it takes in. Social Security taxes have increased sharply in recent years, but with the old-old being the fastest-growing age group and with the proportion of older adults increasing in our society, the system may go bankrupt.
The benefits of the Social Security system are too small to meet the financial needs of older adults. With payments from Social Security, an estimated 80% of retirees now live on less than half of their preretirement annual incomes. It is unlikely that the monthly benefits will be raised much because the amount of Social Security taxes paid by employees is already quite high. The nation faces some hard choices about how to keep the system solvent in future years. Benefits might be lowered, but this would even further impoverish recipients. Social Security taxes might be raised, but there is little public support for this because the maximum tax rate has already increased more than tenfold since 1970 (about $400 in 1970 to more than $5,000 currently per employee).?