Argumentative Essay On Social Security
Why should someone spend their whole life paying taxes in order to get nothing back? This is what Social Security, a system used to provide financial aid to retirees in the United States, is becoming. In 2034, the system is projected to only be able to pay 75% of the payments it is supposed to make, declaring Social Security insolvent, or unable to pay its debts (Baldwin). Social Security, the primary source of income for two-thirds of retirees in the United States, is paying out $68 billion more than what is being taken in through taxes and is only getting worse (Baldwin). In the Crash of 1929, the stock market lost 40% of its value when a drop in confidence from consumers caused much lower demand for goods and services than usual (Historical
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Background). Unemployment levels reached up to 25%, gross national product was nearly halved between 1929 and 1932, and wages across the board dropped 40% (Historical Background). The idea of “social insurance” was first used by German Chancellor Otto von Bismarck in 1889, and several other European countries followed his example and created similar systems as well (Historical Background).
On June 8, 1934, President Franklin D.
Roosevelt sent Congress a message regarding his desire for a social insurance program in the United States in an effort to beat unemployment and poverty during the Great Depression, a period of time where many people found themselves out of work and with little money (Historical Background). On August 14, 1935, Roosevelt signed the Social Security Act, creating a consistent income for those who are retired or unemployed (FDR signs). Social Security is a system that collects taxes from workers to pay into a fund which is then used to give payments for the disabled and unemployed elderly. This act gave people more determination to find a job, knowing that if they became unemployed afterwards, they could cash in on unemployment insurance (Historical Background). In January of 1937, the first payroll taxes, meaning taxes out of a worker’s salary, for Social Security were collected, and the first monthly payments were made in 1942 (Historical Background). In 1939, two amendments to Social Security were made to supply payments to the spouse and children of retired workers and increase the amount of benefits overall (Historical Background). Since then, $8.7 trillion has been paid into Social Security and more than $7.4 trillion has been paid out in benefits, with the surplus sitting in a fund for future use (Historical
Background). Social Security today is paying out more money in benefits than they are receiving through payroll taxes by about $68 billion (Baldwin). There are two main reasons this is happening. The first reason is that people are living much longer today than they did 80 years ago. In 1940, the life expectancy of a 65 year old was about 13.7 years, while the life expectancy of a 65 year old in 1990 was about 17.5 years (Social Security History). That is around 4 extra years of collecting payments from each person in a population that is only growing. There has been little change to the legal retirement age since then, meaning people are collecting 4 more years of payments than they would have in 1940.
The second reason Social Security is becoming insolvent is the baby boom after World War II (Baby Boomers). Between 1946 and 1964, 76.4 million people were born across the United States, which covered about 40% of the entire population (Baby Boomers). It is projected that 20% of Americans will be above the age of 65 by 2030. This shift of age demographic means there will be less workers paying into Social Security, and more retirees claiming payments from Social Security (Baby Boomers). Coupling this with an ever-growing life expectancy means disaster for Social Security as a whole unless changes are made. There are several ways to change Social Security in order to make it more solvent for future generations. One way is to increase the legal retirement age (Baldwin). What this will do is decrease the amount of years that someone is able to receive payments from the fund. The current retirement age is 66 years old, which will become 67 in 2027 (Baldwin). Little change to the retirement age since the introduction of Social Security has been trouble for the system because each year the life expectancy of our population is growing. Another way to bring in more money is to raise the payroll tax (Baldwin). The current tax rate is 6.2% up to $118,500 of a person’s income, with another 6.2% being matched by the employer. A gradual increase of 1% to a 7.2% payroll tax over the next 20 years will cover half of Social Security’s funding shortfall (Brandon). A 2% increase will keep Social Security solvent for 75 more years (Lam).
The next solution, which also involves taxation, is the raising or removal of the payroll tax cap (Baldwin). Currently, only the first $118,500 of a person’s income is taxed for Social Security (Baldwin). This means that 15% of the nation’s wages is left untaxed (Clark). Removing this cap entirely would keep Social Security solvent for the next 75 years, but this could raise total taxes for wealthier individuals to very high levels (Solman). Other solutions involve reducing the amount of money retired people receive in their monthly payments. Reducing benefits is an unpopular idea among many people, but may encourage more saving and lead to less dependency on Social Security. A 5% reduction in benefits will cover 24% of the funding gap (Committee for a Responsible). Instead of strictly using one of these solutions, the best way to fix Social Security would be by using a combination of them. The best solution takes on all four of these options in order to make the trust fund, the collection of all payroll taxes, solvent for the next 75 years. (All percentages relate to the amount of money the solution will cover in the year 2091.) The first step is raising the legal retirement age to 69. This will cover 39% of payments because 2 years worth of benefits will be removed from each person (Committee for a Responsible). The next step is to raise the payroll tax by 2.5%. This will support 88% of the trust fund (Committee for a Responsible). Then, the tax cap will be raised until 90% of all wages are taxed, keeping much wealthier people from paying extremely high taxes while still bringing in more money to the trust fund. The increase will result in 31% of payments being covered (Committee for a Responsible). Lastly, reducing benefits by 5% will cover 24% of Social Security’s payments (Committee for a Responsible).
These collective solutions will cover 182% of the monthly benefits to be paid out in 2091. The excess will be kept in the trust fund to help cover future Social Security payments in case of an inability to give benefits out. Over the next 75 years and past then, benefits will continually be reduced in order to keep the system solvent and at the same time encourage greater saving. Then, with the payroll tax eliminated, the government may be free to tax more in other areas in order to spend in institutions helping those who are disabled or unemployed, lessening some of the original problems that Social Security was supposed to fight in the first place. Without any change to Social Security, today’s workers will pay into the trust fund only to receive nothing from it while at the same time, more and more retirees will fall under the poverty line. People will become furious when the retirement funds they were depending on never come, leaving them with nothing to show. Too strong of a dependency has grown on Social Security since it was introduced. In total, Social Security accounts for 41% of all retired people’s incomes in the United States (Palmer). Instead of making changes to end up paying more to retirees in the long run, we need to make saving money for retirement a priority for them. We as a country should find greater prosperity with people working in an effort to pay for their own retirement instead of being required to pay for it. I, for one, do not want to find myself paying for other people’s lack of saving by way of payroll taxes. I want to be proud of my savings and live happily through retirement, knowing that there are many other people out there like myself, living on the money they have earned and saved for themselves. Social Security was a great idea by Franklin Roosevelt, but if there are not any reforms to the system, myself and other hard workers will be sending our money down a hole.
Background). Unemployment levels reached up to 25%, gross national product was nearly halved between 1929 and 1932, and wages across the board dropped 40% (Historical Background). The idea of “social insurance” was first used by German Chancellor Otto von Bismarck in 1889, and several other European countries followed his example and created similar systems as well (Historical Background).
On June 8, 1934, President Franklin D.
Roosevelt sent Congress a message regarding his desire for a social insurance program in the United States in an effort to beat unemployment and poverty during the Great Depression, a period of time where many people found themselves out of work and with little money (Historical Background). On August 14, 1935, Roosevelt signed the Social Security Act, creating a consistent income for those who are retired or unemployed (FDR signs). Social Security is a system that collects taxes from workers to pay into a fund which is then used to give payments for the disabled and unemployed elderly. This act gave people more determination to find a job, knowing that if they became unemployed afterwards, they could cash in on unemployment insurance (Historical Background). In January of 1937, the first payroll taxes, meaning taxes out of a worker’s salary, for Social Security were collected, and the first monthly payments were made in 1942 (Historical Background). In 1939, two amendments to Social Security were made to supply payments to the spouse and children of retired workers and increase the amount of benefits overall (Historical Background). Since then, $8.7 trillion has been paid into Social Security and more than $7.4 trillion has been paid out in benefits, with the surplus sitting in a fund for future use (Historical
Background). Social Security today is paying out more money in benefits than they are receiving through payroll taxes by about $68 billion (Baldwin). There are two main reasons this is happening. The first reason is that people are living much longer today than they did 80 years ago. In 1940, the life expectancy of a 65 year old was about 13.7 years, while the life expectancy of a 65 year old in 1990 was about 17.5 years (Social Security History). That is around 4 extra years of collecting payments from each person in a population that is only growing. There has been little change to the legal retirement age since then, meaning people are collecting 4 more years of payments than they would have in 1940.
The second reason Social Security is becoming insolvent is the baby boom after World War II (Baby Boomers). Between 1946 and 1964, 76.4 million people were born across the United States, which covered about 40% of the entire population (Baby Boomers). It is projected that 20% of Americans will be above the age of 65 by 2030. This shift of age demographic means there will be less workers paying into Social Security, and more retirees claiming payments from Social Security (Baby Boomers). Coupling this with an ever-growing life expectancy means disaster for Social Security as a whole unless changes are made. There are several ways to change Social Security in order to make it more solvent for future generations. One way is to increase the legal retirement age (Baldwin). What this will do is decrease the amount of years that someone is able to receive payments from the fund. The current retirement age is 66 years old, which will become 67 in 2027 (Baldwin). Little change to the retirement age since the introduction of Social Security has been trouble for the system because each year the life expectancy of our population is growing. Another way to bring in more money is to raise the payroll tax (Baldwin). The current tax rate is 6.2% up to $118,500 of a person’s income, with another 6.2% being matched by the employer. A gradual increase of 1% to a 7.2% payroll tax over the next 20 years will cover half of Social Security’s funding shortfall (Brandon). A 2% increase will keep Social Security solvent for 75 more years (Lam).
The next solution, which also involves taxation, is the raising or removal of the payroll tax cap (Baldwin). Currently, only the first $118,500 of a person’s income is taxed for Social Security (Baldwin). This means that 15% of the nation’s wages is left untaxed (Clark). Removing this cap entirely would keep Social Security solvent for the next 75 years, but this could raise total taxes for wealthier individuals to very high levels (Solman). Other solutions involve reducing the amount of money retired people receive in their monthly payments. Reducing benefits is an unpopular idea among many people, but may encourage more saving and lead to less dependency on Social Security. A 5% reduction in benefits will cover 24% of the funding gap (Committee for a Responsible). Instead of strictly using one of these solutions, the best way to fix Social Security would be by using a combination of them. The best solution takes on all four of these options in order to make the trust fund, the collection of all payroll taxes, solvent for the next 75 years. (All percentages relate to the amount of money the solution will cover in the year 2091.) The first step is raising the legal retirement age to 69. This will cover 39% of payments because 2 years worth of benefits will be removed from each person (Committee for a Responsible). The next step is to raise the payroll tax by 2.5%. This will support 88% of the trust fund (Committee for a Responsible). Then, the tax cap will be raised until 90% of all wages are taxed, keeping much wealthier people from paying extremely high taxes while still bringing in more money to the trust fund. The increase will result in 31% of payments being covered (Committee for a Responsible). Lastly, reducing benefits by 5% will cover 24% of Social Security’s payments (Committee for a Responsible).
These collective solutions will cover 182% of the monthly benefits to be paid out in 2091. The excess will be kept in the trust fund to help cover future Social Security payments in case of an inability to give benefits out. Over the next 75 years and past then, benefits will continually be reduced in order to keep the system solvent and at the same time encourage greater saving. Then, with the payroll tax eliminated, the government may be free to tax more in other areas in order to spend in institutions helping those who are disabled or unemployed, lessening some of the original problems that Social Security was supposed to fight in the first place. Without any change to Social Security, today’s workers will pay into the trust fund only to receive nothing from it while at the same time, more and more retirees will fall under the poverty line. People will become furious when the retirement funds they were depending on never come, leaving them with nothing to show. Too strong of a dependency has grown on Social Security since it was introduced. In total, Social Security accounts for 41% of all retired people’s incomes in the United States (Palmer). Instead of making changes to end up paying more to retirees in the long run, we need to make saving money for retirement a priority for them. We as a country should find greater prosperity with people working in an effort to pay for their own retirement instead of being required to pay for it. I, for one, do not want to find myself paying for other people’s lack of saving by way of payroll taxes. I want to be proud of my savings and live happily through retirement, knowing that there are many other people out there like myself, living on the money they have earned and saved for themselves. Social Security was a great idea by Franklin Roosevelt, but if there are not any reforms to the system, myself and other hard workers will be sending our money down a hole.