Fixing Social Security
We all know that the Social Security program is heading for trouble. According to the SSA, the trust fund will be exhaused in 2040. However, the trust fund is a myth. Currently, we pay more in FICA taxes than is paid in benefits. The surplus goes into the "trust fund," which holds nothing but government bonds. The amount we are overtaxed goes into the general fund in return for those bonds. As soon as that surplus becomes a deficit (in 2017 by current projections), the Social Security Administration will have to start redeeming some bonds. That money will have to come back out of the general fund, which is already several trillion dollars in the hole.
Any business owner who tried to set up a similar retirement system for his employees would soon find himself playing golf in a government-run country club.
The real problem with Social Security is that we are, as a nation, getting older. Our medical advances have increased our longevity, and we are, on average, having fewer children. The result of this aging is that the ratio of working-age people to retirees is expected decline drastically. Now that the problem is identified, the solution is obvious: freeze that ratio.
Here's how it would work. According to the 2000 U.S. Census, 12.4% of the population was 65 years old or older. So, let's assume that when the 2010 Census is released, we find that the oldest 12.4% is over 65 years and 10 months. Then in each of the next ten years, we raise the retirement age by one month, and repeat the process with the next Census.
The real beauty of this solution is that it only has to be passed once.
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