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If the Social Security retirement system was a private retirement system, it would be declared bankrupt. Discuss why this is so and why the Social Security system can continue to pay benefits despite the fact that it can be considered bankrupt. Discuss why the Social Security tax rate has increased so much in recent years. What measures could be taken to reduce the Social Security payroll tax rate?

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Social security would be bankrupt simply because there's not enough money in social security, even right now, to continue funding social security recipients in the way that it was designed to. Social security is in dire straits for money due to the current situation that has been created, and if this were a private investment, it would have been shut down due to a lack of proper funding. One of the main factors that we have to consider, which is now one of the main causes of this problem, is that back decades ago, the economy was at a higher point than it is now. There was an influx of workers in the economy that were on payroll, paying into social security, being productive, and making money. You would look through the newspaper during this time and there were at least 20+ pages of job openings waiting to be filled. All of these people were then paying into social ...

Solution Summary

This solution clearly explains the measures that could be taken to reduce social security payroll taxes. The reason as to why the social security system can continue to pay benefits even though it is bankrupt is explained, along with why social security taxes have increased so much in recent years. Detailed explanations are provided for each part of this question.

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1) Explain why workers who reached retirement age in the early years of the Social Security system are perceived to have received a better deal than workers about to retire and those who will retire in the future.
2) Various proposals have been made to improve the Social Security system's finances and to reform the pension system or increase the tax rates. Explain one or more of the proposals.
3) Discuss how you would improve the Social Security system and why your approach is sound. Please use outside sources to help justify your position. Given what you've learned about the future of Social Security, what savings and retirement planning decisions might you or your children make in the future? Why?

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