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Social Security

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Title of Paper : Social Security

Social security, created in 1935, is the most costly item in the federal budget. The program provides old age, survivors’ and disability insurance to a healthy portion of Americans. Workers and their employers fund the system by each paying payroll taxes. The Internal Revenue Service collects the taxes and deposits the money in government-administrated accounts known as the Old Age and Survivors and Disability Insurance Trust Funds(OASDI). The payroll tax revenues are used to pay benefits to those people currently collecting Social Security pensions. Social Security taxes also pay for Medicare, the national health program for the elderly.

The huge problem with the current situation facing Social Security is the increasing deduction of workers in the work force paying for workers retired.

“Due to the large number of aging baby boomers, American 65 and older are the fastest-growing segment of the population. The population growth of Americans age 65 and older is 112% in the years between 1995 and 2040. The population growth in age 20-64 is 24%. The population growth in ages under 20, is 5%.

What these numbers essentially represent is a cause problem with age differences in the future. Soon, less workers will be in the job force trying to supply more retirees with Social Security. Currently, many ideas have been juggled around trying to find a sound and reasonable way to resolve this problem. Granted, the problem will not happen overnight, but rather over a long arduous duration of time.

The question first arises, “Can the existing system survive without major reforms?” The early designers of Social Security and many Democrats are baffled at the recent proposals to change Social Security. Most believe that Social Security is still able to provide a safety net for retirees and their survivors if minor adjustments are made. “Occasionally raising payroll taxes or recalculating the way benefits are paid out.” Some Democrats look at major reform as a way of pitting war between generations. They stand on common beliefs that Social Security has worked for over 60 years by providing a steady stream of monthly payments that beneficiaries can rely on. Also, it has helped lift millions of seniors out of poverty. Democrats also criticize the Grand Old Party for “playing”...

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...vatization of personal savings would be advantageous to the nation’s economy, delivering bigger pensions to workers and helping the economy grow faster. Some believe the emphasis on personal savings would give the added feature of encouraging more individual responsibility at a time when the nation prepares for a surge in its elderly population. Privatization would differ from Social Security in two important ways. First, the amount a worker receives at retirement depends solely on how much one contributes to savings and how well the investments perform. In simplified notation, those who set aside more and invest wisely enjoy more comfortable retirements. Secondly, pensions are paid out of an individual’s accumulated savings instead of financed by taxes on active workers. For example, Chile for a little less than two decades has replaced it’s system which was much like Social Security with a system incorporated around the idea of privately invested accounts. The results are astounding. The plan is relatively elementary because it focuses on workers placing 10 percent of their monthly income into a savings account. With this, government leaders boosted the national savings rate
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