Question

About the future of the Social Security programs. Do you think there should be changes in how the programs are funded?

Please!

Answer 1

The social security program in the U.S provides protection against the loss of earnings due to the retirement, death or disability. The financial operations of this program are handled through the Old-age and Survivors Insurance (OASI) and Disability Insurance (DI) trust funds.

Monthly benefits are paid from the OASI Trust fund to retired workers and their families and the survivors of diseased workers.Monthly benefits from DI Trust fund to disabled workers and their families. Both the funds are financed primarily by contributions, or taxes, paid by employees, their employers, and self employed persons. Other sources of income are interest on investments and income from the taxation of benefits.

But when we come to the future of social security program it has faced serious solvency issues for many decades; today's payments come from current workers' payroll contributions, and it remains uncertain if they will have money available for them when they retire. Social security reform-whether through legislation, tax law changes, or privatization-has been a major political issues that draws strong opinion from different demographic segments.Social security faces the real threat of becoming insolvent because of factors such as longer life expectancy, a large baby boomer population entering retirement age, and inflation.

The future is uncertain, but a solid retirement plan considers both known and unknowns.While the future of social security and other entitlement programs is yet to be determined, those planning for retirement can take steps to offset the risk of these programs reducing their benefits.