Social Security was founded in the early 1930s in America. To be more precise, Social Security Act was signed by President Roosevelt in 1935 as part of the New Deal. To-date, it is one of the largest programmes of the government in the United States. The program is based on the theory that each one generation of the workers that are retiring will be sustained in retirement by those who are still working in the current times. Undeniably, during its introduction, the program showed a great achievement more especially during the era of the Great Depression. Unquestionably, this program was helpful in fighting the Great Depression not forgetting that about fifty percent of senior citizens in America were below the poverty line. Its success was attributed to the fact that the program was capable of funding itself even though it had no money to start it off.
Notably, Social Security has been getting its resources from the annual income tax. The tax is applied on both the government workers and the self-employed on a fixed rate annual basis. Arguably, sometimes the benefits to be paid are much lower than the amount of funds that have been collected for this purpose. In this case, the surplus funds are invested in government securities to earn interest which will be of great help when the program experiences deficits. In an interview, Ambrose, Zack argued that, although the program proved to be a success during the early days of its foundation, in the current times it has proved to be not working effectively due to the changing life conditions or rather experiences. The essay seeks to analyze reasons why Social Security program is experiencing failures in the recent times, unlike the era when it was founded.
To begin with, it has been noted that the program has become outdated. Originally, social Security was meant to supplement the individual retirement program. However, the public began to adopt a wrong motif of the program in that they began to think that they can survive solely on Social Security when they retire. Personal retirement program includes investments and personal savings in preparation for the future. Due to this reasoning, people are reluctant to save and invest their income for future as they consume almost everything they earn. This has become a big challenge in the sense that Social Security lacks enough funds to support the increasing number of retired people, (Social Security Administration, 2010, pp 10-13). Moreover, during the early times of its foundation, the number of people who were depending on the program was few as compared to those who were working. Hence, funds to support the few retired individuals were not a big deal as many people were contributing for the program.
Corruption is another major problem which has made Social Security to fail as compared to the time when it was initiated. It has been observed that cases of embezzlement of funds meant for this program has become very common. Those who are in charge of the program divert Social Security funds for their own programs. As such, those who are supposed to benefit from the program are not getting what they are expected to. This has greatly contributed to lack of faith in Social Security from the general public who now prefer saving for their future rather than contributing to the program. Not unless the government finds ways of eradicating or rather reducing embezzlement of funds of the program, people will continue being reluctant in parting with a share of their income to the program in preparation for their retirement days. Generally, management of social security funds is a big challenge.
According to (United States, 2009, pp. 14-19), it is very worrying to realize that most people are working longer in order to substantiate their income. It is a dream for many people to retire early so as to get time to enjoy for their life. However, when people retire early than expected, the payment that they will expect from Social Security at every end month will be a bit smaller as compared to those who work for longer time. According to research that has been carried out, it has been found that when an individual retires early than the expected age of 62 years in the United States reduces the Social Security payment by approximately thirty percent. This implies that a reduction in the monthly payment will not be enough to meet an increase of expenses that is experienced during the aging period. Schultz, argued that, during the old age, there will be an increase in expenses for instances, the medical bills. It is a common phenomenon that the elderly people face many medical challenges and not unless they have other sources of income other than depending on social security, chances are that they will die early than expected. Based on this argument, people prefer to work longer so that they can be able to earn more from social security when they retire.
It has also been noted that social security program is not gender sensitive. Women are discriminated in the sense that they are not accorded the same treatment that their male counterparts get from this program. It is very disappointing to note that women do not get fair benefit stipulations as compared to men. In most cases, men and women are not treated equally in the workplace. Consider a scenario where although men and women in an organization are doing the same kind of job, women are paid less as compared to men due to the belief that men are a bit powerful than women, (Women and Retirement in the U. S 1991, 2005, pp. 15-21). What this means is that women will be contributing less to this program as contributions are based on percentage of income earned. This implies that, when women retire, they will be receiving a lower monthly payment from this program as compared to men. Thus, elderly women struggle to meet their daily needs as they lack enough financial support even after investing their money in social security during their early working days.
Bishop Danny asserts that, diversion of social security funds by the government to other projects may be another reason why this program is not effective in the recent times. In most cases, the government operates on a deficit budget. In this case, deficit budgeting implies the planning for government projects that will cost more than the available income. Therefore, the government is forced to look for other alternative sources of income to fund the excess costs. Social Security funds happen to be one of such sources. In most cases, the activities or rather the projects in which the government invests such funds are non-profit projects or take many years to realize profits if any. Therefore, due to the diversion of its funds to other projects, Social Security program sometimes lacks enough funds to pay the ever increasing retired population. Besides, due to bureaucracy issues, it may take a long time before one starts receiving his/her monthly payments from this program. The delay in processing has been attributed to the minimal funds available to service the retirees as part of the funds meant for this purpose had been spent on other projects at one point by the government. From the point of view of the public, the diversion of these funds to other projects by the government is seen as a kind of embezzlement.
Although it is a form of a saving program, Social Security program is not attractive more especially to the working people. The program is taken negatively mainly due to the fact that people are forced to save by the government. Moreover, taxes that are imposed on people to service this program are relatively high as compared to the returns that people get when they retire. Arguably, the interest that is applied to the contributions that individuals make is much lower than what the funds could have earned if invested in other projects. This is very discouraging to the taxpayers explaining the reason why a good number of people are against this program, (Santow, Leonard & Mark, 2005. Pp 45-49). Notably, many people argue that rather than investing in the social security, the public should be educated on how they should save and invest their income individual for the future. This way, individuals will be realizing full benefits of their investments unlike for the case of investing in social security program.
Another argument that has been put forward against Social Security is that the program has generated a fake sense of security and the view that the government will cater for the well-being of its people no matter what. For instance, it has made many people to believe that the government can cater for them if it happens that they lose their means of survival due to bad investments. Therefore, to some extent this program promotes some degree of irresponsibility among the general public, (Social Security Book, 1991, pp. 89-95). People lose the desire of thinking for their future hence doing little in planning for their retirement through investing in other ventures. It is very unfortunate to note that majority of people spend their income just like the government does. They never set aside some share of their income to cater for the unclear future such as instances of lay off but rather, they buy all that their income can buy now without any worry. Therefore, this program can be said to be planting seeds of irresponsible spending among the general public.
The ever increasing retired people depending on social security funds have become a significant challenge for this program. It was mentioned early that the main source of funds for this program is income that is generated through taxation of the working class and to some degree the self-employed, Flowers (1977. pp 23-28) .During the early stages, the program proved to be successive mainly because those who were working and contributing to the program were many as compared to the retired. In the recent times, this is never the case. Studies indicate that the ratio of those who are contributing to social security to those who have retired and depending on social security funds is declining. To be more precise, the retired people are increasing at a higher rate as compared to those who are being employed. Basically, this scenario is attributed to the improved lifespan as well as a decline in the mortality rate of elderly people due to improved life style. As long as the ratio of the retirees is increasing faster than those who are working and contributing towards this program, it will be a big challenge to get enough funds to service this program.
Fieldstein, Martin & Jeffrey (2002, pp 31-35) argue that to some extent, social security program can be asserted to be unfair in the context of those who have and have not. The program was designed in such a way that only those who are employed at one point in life are likely to benefit from it. To some people, contribution to social security proves to be impossible because they lack the means of obtaining the needed monthly contributions. Therefore, it is only the educated and employed who can access these services. The poor are not in a position to access this service due to the fact that to them their current needs are more worrying than the unpredictable future; hence, they live one day at a time depending on circumstances. Lack of employment opportunities in the recent times has made the situation even worse as compared to the times when the program was initiated. Thus, this program has proved to be outdated; hence, other mechanisms of dealing with the unclear future ought to be designed.
In conclusion, Social Security proved to be very successive during its early stages of initiation. The major objective of this program was to supplement peoples’ personal savings after retirement. However, the program has proved to be ineffective in the recent times due to a number of reasons. Such reasons include: misappropriation of social security funds by the government, mismanagement of funds by those in charge of the program, instigating irresponsible behavior among the public, as well as unfair stipulations for women. Therefore, there is need for finding other ways of catering for the unclear future during the retirement period besides social security programs.
Works Cited.
Fieldstein, Martin S., & Jeffrey B, L. The Distributional Aspects of Social security and
Social Security Reform. Chicago: University of Chicago Press, 2002.
Flowers, M. R. Women and Social Security: An Institutional Dilemma. Washington, DC:
America Enterprise Institute for Public Policy Research, 1977.
The Social Security book: What Every Woman Absolutely Needs to Know. Rev. ed. Washington,
DC: Consumer Affairs Section, American Association of Retired Persons, 1991.
Santow, Leonard, J., & Mark E. S. Social Security and the Middle-Class Squeeze: Fact
and Fiction About America’s Entitlement Programs. Westport, Conn: Praeger Publishers, 2005. Print.
Social Security Administration. Social Security Programs Throughout the World: The Americas,
2009, 2010 Print
United States. “What Every Woman Should Know.” The States Social Security Administration.
Version 05-102127. United States, July 2009. Wed, 1 Apr. 2011.
“Women and Retirement in the U. S.” Women and Work: A Handbook. NY and London: Garland
Publishing, Inc., 1996. 25-27 print.
Schultz, Inez. Phone interview. 6 Apr 2011.
Bishop, Danny Bishop. Phone interview. 3 Apr 2011.
Ambrose, Zack. Personal interview. 3 Apr 2011.
