Aug. 14 marks the 80th anniversary of President Franklin D. Roosevelt signing the 1935 Social Security Act, which provided a safety net for senior citizens hit hard by the Great Depression. The entitlement program has continued to help retired workers for decades, but these days, the future of Social Security is looking a little insecure.
A person can start receiving Social Security checks between ages 62 and 70. But the full retirement age — the age when a person can receive full benefits — is 67 for those born in 1960 or later. The Social Security Administration provides a chart listing the full retirement ages for anyone born before 1960.
The program is funded through a 12.4 percent Social Security tax. Workers pay half and employers pay the rest. This tax is applied to a worker’s income up to $118,500. Currently, there is about $2.8 trillion in the Social Security trust funds, but the government has predicted that by 2033 there won’t be enough money to satisfy demand.
Why? Changing demographics. More and more baby boomers are retiring each year, leaving fewer workers to pay the Social Security tax that keeps the system solvent. People are also living longer. Nearly 60 million people receive Social Security checks each month — and not only retired workers get benefits. The spouses and children of deceased retirees also receive checks, as do people with disabilities.
Only 20 percent of Americans believe there will be enough money left when it’s time for them to retire. To fix the problem, some people believe Social Security should allow means testing, where benefits are based on a person’s income. Others think the tax should be raised, the retirement age should be raised or the benefits should be cut down.
Though there’s disagreement over how, Social Security is a program that almost everyone agrees needs to be fixed before the well starts to run dry. So as Social Security turns 80, when it comes to the future of the biggest and oldest benefits program in the United States, at least after watching this video you can say, “Now I get it.”