The Social Security program will turn 80 years old this year, and as that milestone approaches there is a financing crisis facing the program. When Social Security was originally proposed by Franklin Roosevelt in 1935 one of the main caveats was that it would be a self-funding program separate from the United States’ budget, and for many years this was the case. Workers would pay in to Social Security over the course of their careers, and the money was set aside in a trust that was used to finance the program.
Until fairly recently this worked, and over time the Social Security system built up a trust value of close to three trillion dollars, but rapidly shifting age demographics among the American population as the Baby Boomrer generation reached retirement age has caused this to no longer be a tenable situation. In 1960 the ratio of workers paying in to Social Security to those drawing from it was slightly greater than five to one; currently that ratio is less than three to one; and in twenty years it’s expected to be approximately two to one. Less money in and more money out is not a financially sustainable proposition, and the Social Security program will be insolvent soon.
The Social Security system is made up of two distinct funds: the Old-Age and Survivors Insurance Trust and the Disability Insurance Trust. While administered by the same agency, these two trusts are separate funds, though they both are facing the same issue. The Old-Age and Survivors Insurance Trust, which is the fund that people typically think of in the context of retirement, will run out of money by 2033, while the Disability Insurance Trust will be completely depleted by some time towards the end of 2016. Once the money in these trusts is depleted there will be an automatic cut in the benefits drawn by the people on these programs in the neighborhood of 20%. Even these cuts, however, are unlikely to prevent the complete collapse of the Social Security system: the Baby Boomer generation is only just beginning to retire en masse, and this substantially depleted pool of money will continue to have greater and greater numbers of people drawing on it.
The most acceptable solution to the “financial crisis” is to remove the cap on taxation of income over $117,000.00 so that the people who make more money are taxed on their income about that amount. Why should the tax fall disproportionately on low income workers? The lifting of the cap would require the wealthy to pay more and make the FICA tax more progressive.
Ohio Social Security Attorneys
If you or a loved one is having issues with the Social Security system, retaining legal representation can greatly assist you in its resolution. Contact the Law Office of Mike Gertner today to discuss your situation with a representative today and learn about your options.