Elon Musk isn’t going to want to hear this
Americans have a real conundrum when it comes to Social Security. Even without Elon Musk’s “help,” it’s going bankrupt. How could that possibly happen? Whatever is paid out should be replenished by younger people who are still paying in, but it doesn’t quite work out that way. One might logically believe it’s because of baby boomers, but it’s not. The problem started with the earliest retirees from the 1930s. They were paid more than they paid in. As a result, the program is being steadily drained without adequate input. The Center for Retirement Research at Boston College said there’s only one thing to do: raise taxes.
According to the Center for Retirement Research, people born between 1946 and 1964 have paid more into the system than they receive in benefits, so we’re compromised by the people who lived through the Great Depression, who worked fewer years before retiring and collecting benefits. Because Social Security was a “pay-as-you-go” system, it was set up to fail from the beginning, and if something isn’t done to fix it, the Social Security Board of Trustees predicts that it will be depleted in 10 years. There are, however, some ways to fix that.
Market Watch suggests that the “earnings cap” be lifted, which would make Social Security solvent for decades. What does that mean? The first $176,100 of worker wages are subject to Social Security taxes. While the number does rise with inflation, it’s not enough to matter because mega-billionaires like Musk pay the same as us regular working slobs. If Congress “lifts the cap,” people like Musk would pay more, leading to an eventually solvent Social Security. Even as Market Watch discusses these options, they make two very valid points: raising the earnings cap will be considered a tax, and Republicans will never go for it, and Democrats will never go for raising the eligibility age from 62. That leaves us at a crossroads.
Today’s politicians are stuck on “our side” and “their side” instead of the side of the people. If they thought about their constituents, they would work something out. Market Watch pointed out that the last time Social Security was reformed was 1983 when President Ronald Reagan and House Speaker Tip O’Neill compromised and raised both taxes and the retirement age. Given the climate in Congress today, this will never happen. Instead, Market Watch suggests we look to Sweden.
Sweden was facing the same issue as us three decades ago. Centrist politicians on both sides of the aisle agreed that they had to do something. Sweden now takes 2.5% of wages and deposits it into individual pension accounts. Workers have control over their own investments and can choose between five different funds. If future retirees aren’t sure, they have another fund that makes the choice, and you can modify it at any time. This is basically privatizing the system, and it has worked for them. As the U.S. system stands right now, people paying into the system will never see one dime of their money, as those of us at retirement age will gobble it up faster than they can put it in. It’s an option; it’s better than doing nothing.
Shirley is a former entertainment writer and has worked in the legal field for over 25 years