Do you know how long you will live? Do you know how long the average American will live 50 years from now? Do you know what birthrates will be for the next 50 years? Do you know the rate of immigration for the next 50 years? Do you know the rate of economic growth for the next 50 years?
Of course, neither you nor anyone else the answer to any of the above questions. However, those who tell you we do not need to change Social Security or need only make minor adjustments to the existing system can honestly do so if they know the answers to the above questions — which they do not.
Let’s start with what we do know. The present Social Security system is a “pay-as-you-go” system, in which the taxes paid by workers and their employers are used to fund the monthly benefit checks for the existing retirees. We know that in 1950 there were 16.5 workers paying Social Security taxes for every retired person receiving benefits. We know there are now only about 3.3 workers for each person receiving benefits and there probably will only be 2.2 workers for each benefit recipient 25 years from now in 2030, if we continue with the existing system. We also know the so-called Social Security Trust Fund actually contains no money, because Congress has spent all the money (the surplus from the Social Security tax over actual outlays) on other things since the program’s 1937 inception.
To fully understand the problem, let us go back to what we do not know.Continue Reading at