Baby boomers have not reproduced enough children to replace themselves, thus the number of taxpaying people has shrunk. This raises an interesting question: Will Social Security be around for those who are students now?
The taxpaying workers of today pay Social Security benefits to the current retirees. Unfortunately to say, the demographics of the baby boomers and present students are against our favor 2: 1. Meaning for every one retiree there will only be two taxpaying supporters. Unlike earlier times when the baby boomers just began, they were paying social security benefits at a ratio of 16: 1. Clearly this is an enormous difference and if this pattern continues the possibility that Social Security will not be around for current students seems imminent.
Another piece of evidence supporting the theory that Social Security will go bankrupt is the government's borrowing of these funds to pay for other obligations. The government takes in more money than it puts out and uses this money in other areas of need, such as military expenses. Once the fund is exhausted the government will have to repay their borrowing which could mean the general shrinking of the government. To add to this reasoning the life expectancy of people is longer. People are now living until their late 70's due to the major advances in health and medical treatments. This means that retirees will be receiving Social Security benefits longer than they ever have before, considering that the earliest age they may retire at is 62.
Although it may seem like a losing battle, there are some things that the government can do to help ease the likelihood of the Social Security system from going bankrupt. An obvious decision would be raising Social Security taxes, but this could possibly be a politically unpopular choice. The decision to raise Social Security taxes would be a significantly high increase at that and in addition there could be a cut in benefits too. Another possible answer could be privatizing Social Security. The downside is that switching to a privatized system would be very expensive to start and could possibly be worse than just sticking with the current system. The government could also increase the age of when a person can start receiving Social Security. Seeing that people are living longer, raising the age does not seem so unfair.
Because people are aware of this Social Security crisis, people can start to plan for it on their own. Setting up a 401 (k) is a way of saving directly for retirement by having a portion of their earned money sent to their separate 401 (k) account. Unfortunately, not all employers offer this option to their employees. Another governmental action that could be taken is forcing those who earn + $ 97,000 a year to begin paying Social Security taxes.
The question is still raised as to whether there will be money in the system for students today when they are of retiring age after the baby boomers. I do not believe that the government would continue to give out full benefits until the fund runs out completely, leaving it bankrupt by the time college students are of retiring age. Rather they should reduce the promised benefits to a percentage that would allow longevity of the account until the baby boomers pass through the system, and the demographics are more stable. Although by the time the current college student generation retires, I do not think that they will be receiving full benefits either. It will take time for the system to regenerate itself to full operation.
The thought of Social Security benefits not being available to students today due to the baby boomers is a scary thought. Even though the 2: 1 demographics, as of right now, are against us there are several ways that the government can help soften the blow of the possible bankruptcy by the time current students are retired. They can do many things from raising Social Security taxes, start repaying their debt, to raising the age of retirement. Many people might not like these solutions, but people also need to realize that the hard times need to come first in order for the situation to mend. "The pig in the snake" will not stay in the system forever.