Social Security and its Financial Challenges
Social insurance has proven very beneficial to the elderly, the sick, and the survivors of sick jobs. This is because these groups of individuals depend heavily on social security for the majority of their money. The number of working and unemployed citizens has increased dramatically over the years, leaving the future of social security in jeopardy.
The number of jobs serving retirees has decreased significantly and is expected to decrease even more in the future. Furthermore, changes in the cost of living, interest rates, and payroll taxes have exacerbated social security's financial situation. This shows that in the future, taxes generated from payroll may not be able to meet the social security benefit payments (Kotlikoff, Moeller, & Solman, 2015).
Solutions to Preserve Social Security
Social security can be saved by rising the retirement age above what is already existing as well as making changes to the earliest ages that one can claim the benefits. Changing the claiming ages will help in reducing the short fall that is present today. In addition, cutting benefits, raising the taxes on benefits, and eliminating increases in the cost of living will also help save social security.
Allowing the future participants to invest into the equities market has shown to be advantageous to social security. This is because investing into this market will help improve the solvency of the trust fund. This will help save social security and reduce the probability of inadequate funds in the future. It is, however, important for issues such as conflicts of interest, political influences as well as portfolio choices to be properly handled so that investing in equities markets becomes a success (Kotlikoff et al., 2015).
References
Kotlikoff, L., Moeller, P., & Solman, P. (2015). Get what’s yours: The secrets to maxing out your social security. New York: Simon & Schuster.
