Review of Public Administration and Management

The Social Security Administration and Its Programs

Michael G Kilgour^* Department of Health, Education and Welfare, California State University, California, United States
^*Correspondence: Michael G Kilgour, Department of Health, Education and Welfare, California State University, California, United States, Email:

Received: 07-Apr-2022, Manuscript No. RPAM-22-16664; Editor assigned: 11-Apr-2022, Pre QC No. RPAM-22-16664 (PQ); Reviewed: 25-Apr-2022, QC No. RPAM-22-16664; Revised: 02-May-2022, Manuscript No. RPAM-22-16664 (R); Published: 09-May-2022, DOI: 10.35248/2315-7844.22.10.337

Description

The Social Security program is 75 years old, and there is talk of reform. Some argue that the benefits are insufficient and that they should be expanded, particularly for lifetime low-income earners, women, and minorities. Others, speaking more forcefully, declare that the system is in financial trouble and would soon go bankrupt if nothing is done. Social Security trust funds presently have $2.5 trillion in reserves, at least on paper, as a result of the last major modifications approved in 1983. The trust funds, on the other hand, are an accounting mechanism. There isn't any actual cash on the table. For the past 25 years, it has been used by the Treasury to support other government programmes while also masking a large component of the federal deficit.

Social Security benefits, employer-provided pensions (including retirement accounts), and income from assets or savings are the three traditional major sources of retirement income in the United States—often referred to as the "three pillars." Social Security is a government-run programme that pays retired people an inflation-indexed lifelong income. In addition to the protection offered by indexing, a future recipient who delays claiming Social Security payments effectively acquires additional longevity insurance by increasing his or her lifetime monthly pay out, minimizing the danger of "running out of resources." Many observers consider Social Security benefits to be the foundation of retirement income, owing to the fact that they are a consistent and stable source of income for practically all elderly households.

When people consider the state of the Social Security program's finances, they frequently wonder, "Will I get my benefits?" Assuming no further legislative changes, the "solvency" of the Social Security trust funds can be simply answered. The ability of the trust funds to pay the full scheduled benefits under the statute on a timely basis is characterized as solvency for the Social Security programme at any point in time. The entire Old-Age, Survivors, and Disability Insurance (OASDI) programme is overseen by the Social Security Administration (SSA). There are two funds: the Old-Age and Survivors Insurance (OASI) Trust Fund for pensioners and the Disability Insurance (DI) Trust Fund for persons with impairments. Each has a very distinct financial situation, with varied possible answers to their financial challenges.

Americans pay into Social Security during their working years and get a monthly pension in retirement, similar to traditional employer pensions. However, there are significant distinctions. Benefits from Social Security are determined by balancing two principles: equality and adequacy. Equity refers to the relationship between what you put in and what you get out; in other words, workers with higher wages, who pay more into the system, receive bigger benefits subsequently. However, the Social Security benefit calculation ignores years of low earnings (for example, when a worker was disabled or unemployed), and it replaces a higher proportion of earnings for the poor than for the wealthy.

Benefits from Social Security are based on a pay-as-you-go mechanism. This means that current workers’ pay Social Security taxes, and current retirees receive benefits based on those taxes and earned income from trust fund bonds. The worry with such pay-as-you-go system is that the massive baby boomer generation (those born between 1946 and 1964) may generate a catastrophe since so many will begin collecting Social Security benefits. When the youngest boomers reach the age of 67 in 2031, there will be 75 million persons over the age of 65, roughly double the 39 million in 2008. The ratio of pensioners receiving benefits to workers paying into the system will alter as a result.

Social Security works because it is a broad-based agreement that covers all income levels. If the wealthy leave, the system will devolve into a welfare state, without the political clout that comes with widespread involvement. The result would be a selffulfilling downward spiral. Social Security also works because it is a multi-generational agreement. For decades, the programme was purely pay-as-you-go, with workers' taxes going directly to current retirees. When those people retired, they had to rely on the following generation to keep Social Security going. Then, in 1983, Congress increased payroll taxes above the level required for immediate benefits to help the baby-boom generation save for retirement.