I first got the idea to write about whether the Social Security system is fair to young people back in October, when the Social Security Administration announced that current beneficiaries would receive a 5.8 percent cost of living increase for 2009, the largest bump since 1982. The reason? The high inflation of 2008, as measured by the Consumer Price Index.
My first reaction: That's not fair to people like me. Current workers, who are funding the Social Security system through payroll taxes, face the same high inflation, but we're dealing with a weak labor market where we're lucky to keep our jobs, let alone receive any sort of raise. Why should retirees be guaranteed such an increase at time when those of us paying into the system are struggling through one of the worst recessions in decades? The fact that current 20 and 30-somethings aren't even guaranteed to receive the full Social Security benefits by the time they retire underscores the inequity of the situation. (The Social Security trust fund is scheduled to run out in 2037, at which point retiree benefits will be funded by current workers, who are estimated to be able to fund only three-quarters of the currently scheduled benefits.)
Some groups, such as the AARP, which represents retired people, dismisses those concerns because reform is likely to come well before any current 20-somethings retire. But that reform will likely involve either increased taxes for current workers or decreased benefits, perhaps through a delayed retirement age, so that isn't exactly good news for current workers, either. I can't help but think that we -- by which I mean 20 and 30-somethings -- are getting the raw end of the deal here. Still, there are some strong counter-arguments in favor of leaving the system the way it is. As you can see in the article I wrote on the subject, published today, Social Security was never intended as an investment program. The goal is to transfer wealth to the needier members of society, including the elderly and low-income. And senior Americans are particularly vulnerable to poverty. Plus, the older generations transferred their innovations and advancements to us, so shouldn't we be willing to fund them in their old age?
I understand all those agreements, and for the most part agree with them. But still, I can't help but wonder: Where is my 5.8 percent raise?
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