Where Did All the Money Go?|
1997 June 18|
Roosevelt introduced Social Security in the 1930s. It was intended to allow retired people to live a very modest existence without relying on charity. Given the great hardships of the time, it was decided to tax workers and employers at a rate sufficient only to pay for current benefits. No reserves were to be built up against future claims.
Since then, the benefit level expected from Social Security has risen considerably. Life expectancy has risen enough to probably double the average number of years that benefits are paid. While the FICA tax rate has doubled and the amount of income subject to the tax has risen considerably, this is still nowhere near enough to cover the retirement benefits which will have to be paid to the baby boomers.
Increasing the retirement age to 68 would greatly reduce expenditures. Many people can work less than full time once their kids have left home, increasing the number of jobs available. The discussion about the CPI may lead to a reduction in the rate of benefit increase. The elderly vote in large numbers, but might agree not to saddle their grandchildren with an unbearable burden.