The Social Security System is a pay-as-you-go system (Social Security Information). The money paid into the Social Security system is immediately paid out to retired workers (How Does.Work?). There is no specific Social Security fund (Social Security Information). The idea of the pay-as-you-go system was for each generation of retired workers to be paid by the people who were working (How Does.Work?). The reason that President Roosevelt set the system up this way was because there was no money to start off with (How Does.Work?). The system is set up so that 69 percent of the taxes go to a trust fund to pay for retirement and survivor benefits, 19 percent goes to a trust fund to pay for Medicare benefits, and 12 percent goes to a trust fund to pay for disability benefits (Social Security Information). .
There are many problems with the current Social Security system. The main problem is that since the Baby Boomer generation will soon be retiring and Americans are living longer, there will not be enough working people to support the retired Baby Boomers (Francis, D.). According to the Black Commentator web site, "There is no good way for the design of the Social Security system to handle a population spike like the Baby Boomers" (The Attack.Security). The recent Social Security Commission's report states, "By 2016 Social Security will collect less money in tax revenues than it is supposed to pay out" (What's the.Security?). Federal Reserve .
Chairman Alan Greenspan warns, "We will eventually have no choice but to make significant structural adjustments in the major retirement programs" (Francis, D.). Even if the economy would start to grow faster, wages would rise, unemployment would fall, life expectancies would fall, fertility rates would increase, and fewer workers would become disabled, the shortfall of the Social Security system would only be delayed by about four years (What's the.
