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Social Security Problems
If nothing is done now to moderate the
future growth of our Social Security entitlement program, future
generations will suffer because of our government’s present inaction. It
is up to the citizens of the United States to stand up and demand for
change! Under current law the Social Security Trust Fund will run out of
funds by the year 2052 causing an immediate 20-30% decrease in benefits
to future retirees as forecasted by the Congressional Budget Office
(CBO)
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Social
Security Revenues and Outlays as a Share of GDP Under Current
Law |
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(Percentage
of GDP) |
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Source:
Congressional Budget Office. |
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Note: Based
on the Social Security trustees' 2004 intermediate demographic
assumptions and CBO's January 2005 economic assumptions.
Revenues include payroll taxes and income taxes on benefits but
not interest credited to the Social Security trust funds;
outlays include trust-fund-financed Social Security benefits and
administrative costs. Under current law, outlays will begin to
exceed revenues in 2020; starting in 2053, scheduled benefits
will not be able to be paid. |
According to Dr. Marilyn Moon, Vice
President and director of the Health Program at The American Institutes
for Research, “My generation [baby-boom] has been negligent in saving
for their retirement”
1.
In the 1960’s Social Security benefits were 2% of GDP, now they have
doubled to account for 4% of GDP, approximately $480 billion, and future
projections have them accounting for over 6% of GDP. This dramatic
increase can be attributed to the future retirement of the baby-boom
generation. It is projected that over the next 50 years, the number of
people over the age of 65 will double, while the number of people under
the age of 65 will increase by less than 20%2.
This will cause a decrease in the number of workers supporting each
retiree from 3.3 workers per retiree to 2.0 over the next 40 years. This
will put enormous pressure on the wages of future generations.
“We
have a ship that has sailed north for a number of years and is now
nearing an iceb erg,”
exclaims Dr. Gene Steuerle of the Urban Institute when describing Social
Security, “we must turn around”
3.
This
is easier said then done. There is no free
lunch in economics; in order reduce the impact of current generations on
later generations, undesirable
changes must be made to our
system. The sooner the change, the easier the transition.
Click
here to see the solutions
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