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For 65 years, Social Security has provided retirement security for tens of millions of Americans. Four generations of Americans have relied on the government to keep the promises it made to them during their working years. As demographics change and costs increase, we must make certain that the Social Security system is protected and strengthened for those entering retirement and for future generations.
The fundamental problem Social Security faces is a collision between the aging of our population and the structure of Social Security. Social Security is financed as a “pay-as-you-go” system. Social Security collects payroll taxes from workers and uses those taxes to pay benefits to seniors collecting from Social Security. The money is not saved or invested; it is, in effect, transferred from one person to another.
This system worked fine in 1950. Back then there were 16 workers paying into Social Security for every one beneficiary. But as our demographics have changed, so has the system. The number of workers in America has increased since 1950, but the number of retirees has grown much faster. This problem will become more evident between 2010 and 2030 when the “baby boom” generation retires, bringing a large additional number of recipients into the Social Security system. Between 2000 and 2025, the number of people age 65 and older is expected to rise by 76 percent, while the number of workers whose taxes will finance future benefits is projected to grow by only 17 percent. As a result the number of workers supporting each recipient is projected to fall from 3.3, what it is today, to 2.3 in 2025. Right now the Social Security Trust Fund is running surpluses of income over benefits paid to beneficiaries because of the number of workers paying into the system. However, once the “baby boomer” generation begins to retire, and the number of retirees grows in proportion to the number of workers, the amount of income Social Security takes in will not be enough to pay all the beneficiaries. The Social Security Trustees expect this to happen in 2018. This could lead to a drastic cut in benefits, if nothing is done to reform the system. It is important that we engage in a serious dialogue today on how to strengthen Social Security for the future. To wait until the program faces a melt down, constitutes a disservice to future and near retirees. Doing nothing to solve the problems of the Social Security system will cost us, as well as our children and grandchildren, an estimated $10.4 trillion, according to the non-partisan Social Security Trustees. The longer we wait to take action, the more difficult and expensive the changes we will face.
I intend to review all proposals for their merits, but will not waiver in my commitment to current and future retirees to protect Social Security. A truly thoughtful debate should yield the most benefit for beneficiaries today and for generations to come.
I will continue to be a strong proponent of the need to reform Social Security in a way that respects the needs of seniors who depend on the Social Security program for their benefits, while at the same keeping the program viable for our children and grandchildren.
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