Question

The social security system has been a topic of political debate for over 25 years. Various positions have been taken on its ability to meet its objective of providing a minimum level of economic security for retiree's, the need for drastic changes in the system, and the possibility of allowing for alternative private funding arrangements for social security.

This chapter discusses the mechanical process required to compute and collect the taxes that fund social security. Because the health and future of the social security system is important to all of us, I would like your views on whether you feel the current system is adequate (is it meeting the needs of retirees), whether you feel it will be able to meet the demands of the next generation of retirees (the baby boomers), and what, if any, changes could be made to the system to improve it.

What do you think will be the impact of President Trumps executive order to Defer Payroll Taxes between September 1st and December 31, 2020?

Answer 1

The social security system is a federal insurance scheme providing benefits for pensioners and those who are unemployed or disabled.In simple terms, it helps retirees, unemployed and disabled from financial crises at a given point of time.

Recent research from the Center for Social and Demographic Research on Aging at the University of Massachusetts Boston found that many older Americans don’t have enough money to get by.The report estimates that 50% of adults age 65 and older who live alone, and 23% who live in two-elder households don’t have enough money to cover their basic needs,this is where social security comes into action.

In the current scenario where COVID has been in an increasing state,times when retiress needs support the most the social security has been brought in place by the officials.

In my opinion, the social security for the retirees is very less as out of the total population of us 13.65% are retirees and needs financial support in one way or another.Although the current stats states that the social security for a retiree per year is 17640$ and 1470$ is the monthly income stated according to the centre on budget and policy priorities. Retirees are always the one in need of medical attention most of the time and their income barely satisfies it.Hence ,rightly said that current system is not adequate for retireees , although they are bringing in policies to increase social security.

For baby boomers it is going to be tough time becuase roughly 10,000 baby boomers are retiring each day, with insufficient numbers of younger people entering the workforce to pay into the system and support them. And life expectancy is increasing. hence eventhough the amount of social security has increased it will be engulfed totally by the baby boomers and existing retirees.

In order to improve the social security ,change the cost of living adjustment is an option wherin retiress must be compelled to change their lifestyle to the lowest cost of living .Raising the full retirement age from 65 to some age lesser than 68 can help the government ease the pressure on social security benefits. Another way to cope up with the situation is to increase the payroll taxes of employees.

President Donald Trump ordered a deferral of the 6.2% tax workers pay toward Social Security, effective from Sept. 1 through the end of the year.This is going to drastically impact the employees in huge scale,one of the issues will be increase in prices as employers will have to pay more towards tax and have less for themselves.Increase in tax will although be engulfed by the users totally as it will not be completely useful although most demand may be subdued due to it.

Hence, to conclude I would say that social security benefits wont be enough for the retirees as well as baby boomers and they need to alter some policy to tackle this situation such as change in cost of living, raising full retirement age,or to increase payroll taxes fro evryone.The impact of executive order of deffered payroll taxes will be an burden on employess.