ration. Despite wars, economic recessions, and recent government shutdowns, Social Security checks have always reached recipients in a timely fashion. What’s Wrong with Social Security?In 1935, after bank failures and a stock market crash had wiped out the savings of millions of Americans, the country turned to Washington to guarantee the nation's elderly a decent income. The solution was Social Security. More than six decades later, with the gigantic Baby Boom generation approaching retirement age, Social Security faces a funding crisis. By about 2012 more money will be going out to Social Security recipients than will be coming in from workers' payroll taxes. At the same time, Americans are living longer. Projections of longer life expectancies and declining birth rates suggest that, after 2030, more than 20 percent of all Americans will be elderly, a larger proportion than ever before. This larger number of retirees will have to be paid their benefits from taxes collected from a smaller pool of workers, relatively speaking. The system's trust fund can cover the difference for a while, but by about 2032 the trust fund will be empty and the program will no longer be able to meet all its obligations. Without Changes, the Social Security Trust Funds May Be Depleted in 2032.Future Retirees Will Probably Receive Less Generous Benefits Than Today's Elderly The benefit-to-contribution ratio on Social Security contributions has been declining since the establishment of the Social Security system. The earliest retirees paid low taxes for a short period of time and received sizable benefits upon retirement, consequently reaping substantial "returns" on their contributions. Over time, as Social Security benefits became more generous and the number of individuals receiving benefits grew, the payroll tax was increased. The benefit-to-contribution ratio of Social Security has declined for each new cohort of retirees because later generations...
