While social security beneficiaries are very likely to see a 3.5% increase in benefits for 2012 beginning in December of 2011, the program cannot continue paying out without running out of money in about 15 years. The Social Security Administration made this prediction based on current income, expenditures and estimates of the baby boomer population reaching retirement age.
Politicians and analysts proffer solutions to the problem but none of them are without risk and cost. In the end analysis, taxpayers will have to give more during their working years or retirees will receive less. There really is no plan that doesn’t do one or both of those things that will solve the problem.
Privatizing the system might make people feel better because it would give them more direct control over how their funds are being invested and some accountability for gains and losses in their social security accounts. George W. Bush tried a similar plan and it hit a political wall.
Increasing payroll taxes above the current 12.4% is another way to help balance the books. However, it takes more money out of the pockets of taxpayers who are already struggling with unemployment and underemployment in a week economy. Raising the cap so that higher income workers pay more is a favored idea by some politicians but again hurts the economy.
Cutting existing benefits is of course unpopular with those who were promised social security checks of a certain amount and the increasing number of people who are completely dependent on those payments for day to day living. Raising the retirement age also has the effect of reducing the Social Security Administration financial obligations. Older adults are already struggling to find employment, and the older, the more difficult it is. This effectively reduces the so called safety net that the program was intended to provide to those who were forced to contribute to the program through payroll taxes.