The average social security check received by a retired grandma is $1169. Multiply that by 35 million recipients, add to it other social security obligations, and this year, you have more money leaving than entering the social security “bank account”.
Next year everything should be okay but not for long. The crisis starts in 2016 when the system will be swamped by baby boomers. What should be done? The Congressional Budget Office has suggested 5 categories of solutions: 1) Change taxes. 2) Change benefits. 3) Pay more to low income earners. 4) Raise the retirement age further. 5) Reduce cost-of-living adjustments.
The Economic Lesson
Hoping to give “ownership” to all of us, the creators of Social Security designed a universal pay-as-you-go program in 1935. When we “pay-as-you-go”, we are giving today’s workers payroll tax dollars to today’s social security recipients.
Looking at the potential problems, should social security remain a universal program with common “ownership?”