Question

What is the central challenge of Social Security payments? How are they addressed? Provide examples and discuss. 

Answer 1

Social security is one of the biggest social insurance program in the U.S. A major challenge that looms over Social Security is the changing demographics of U.S. The baby boomer generation is retiring and the birth rates in the U.S. are reducing which will lead to quick depletion of the program’s reserve funds. The underlying principle of this program is that the current generation pays for the benefits of the current retiring generation. However, the number of workers per retiring beneficiary has decreased significantly over the past few years. For instance, there were 4 workers per retiree in 2000. In 2017, the number of workers per retiring beneficiary decreased to 2.8. Therefore, funding issue of this scheme are a matter of immediate concern. This challenge can be addressed by reducing the benefits of the Social Security Scheme to extended to the retirees.