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The Social Security Divide
Are You Last-Generation or Next-Generation? Since its implementation in the 1930s, Social Security has been a financial constant in the lives of Americans, first as taxes assessed against earnings to fund the program, later as a monthly retirement income. Except for some limited exemptions (most of which came at Social Security’s beginning), all Americans participate in Social Security; everyone pays into the program, and everyone qualifies to receive a monthly retirement income.
Social Security is a group plan in which current taxes fund current benefits; even though taxes and benefits are calculated based on individual incomes, Social Security does not keep separate accounts for each future recipient. Although previous tax collections built significant reserves, since 2010 Social Security has run an annual deficit, and the shortfall between the taxes and benefits is increasing. According to its most recent annual report, current tax and benefit rates are projected to exhaust the plan’s assets by 2033. Read more…
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