Starting the Social Security Discussion
The economic climate in the United States has been volatile over the past few years to say the least, at least compared to the general sense of security American’s enjoyed over the course of the past decade or two. Social Security, a system that has long been the friend of citizens preparing for their retirement, is soon to be a subject breeding more concern than comfort. This year marks the first time since 1983 that Social Security will pay out more in benefits than it will receive in tax revenue, starting a deficit trend that should only continue to expand as the baby-boomer generation ages towards retirement, finally collecting money after many years of paying social security taxes. Not only is there projected to be a deficit for the foreseeable future, but the gap between benefits paid and tax revenue collected is only expected to increase with each passing year. One contributing factor to the problem is the continued growing life expectancy. As technology increases, Americans are living longer. While great news on an individual basis, in terms of Social Security, this only places more stress on the system as longer lives mean more annual payments as people grow old well past the retirement age. So, the Social Security issue is universally agreed upon as an impending problem, but what kind of discussions are taking place on Capitol Hill?Paul Ryan, a Republican Representative from Wisconsin recently proposed that Americans under the age of 55 have the option of investing up to 1/3 of their payroll taxes in private retirement accounts, managed by the Social Security Administration, but with ownership retained by the individual worker. The current system would remain in place for those over 55, with the retirement age raised gradually over the course of the next century. Though it is doubtful this solution will be agreed upon across party lines, or that the proposal is perfect as it stands, the much needed debate regarding Social Security reform is now underway on Capitol Hill, with repercussions likely to affect generations to come.