Social Security in the 21st Century

The 2004 Report of the Social Security Trustees is in; but the jury is still out ýarguing the findings of the report. Agree or not, the masses have a good idea of ýthe final ruling and they all agree that the current state of the social security ýsystem has suffered, for a very long time, from an ongoing deficit problem that ýwill continue to grow unless immediate steps are taken to address the problem. ýPeople, on both sides of the fence, argue in support or against the president’s ýproposed plan to save the Social Security system. Yet, they all concede and ýacknowledge that in reality a problem does exist; and unless calculated ýmeasures are taken, this problem cannot be controlled and will snow ball the ýSocial Security System into bankruptcy.ý
The Social Security system was designed in 1935 for a world that is very ýdifferent from today. In 1935, most women did not work outside the home. Today, ýabout 60% of women work outside the home. In 1935, the average American did ýnot live long enough to collect retirement benefits. Today, life expectancy is 77 ýyears. (2004 Report of the Social Security Trustees, p. 81) Benefits are expected ýto rise dramatically over the next few decades. Because benefits are tied to wage ýgrowth rather than inflation, benefits are growing faster than the rest of the ýeconomy. This benefit formula was established in 1977. As a result, the current ýý20-year old contributor is promised benefits, which are 40% higher than what will ýbe paid to seniors who retire this year. However, the current system does not ýhave the money to pay these promised benefits. Furthermore, the retirement of ýthe Baby Boomers will accelerate the problem. In just 2 years, the first of the ýBaby Boom generation will begin to retire, putting added strain on a system that ýwas not designed to meet the needs of the 21 century. By 2031, there will be ýalmost twice as many older Americans as today, a drastic increase from 37 ýmillion today to 71 million. ý
Currently, there are fewer workers to support our retirees. When Social ýSecurity was first created, there were 40 workers supporting every one retiree. At ýthe same time, most workers did not live long enough to collect retirement ýbenefits from the system. Since then, the demographics of the society have ýchanged dramatically where people are living longer and having fewer children.