Litigation, Arbitration, Mediation—What’s the Difference?
Millions of people in this country depend on a program called Social Security to help them retire, or continue to care for their family after an accident leaves them disabled or dead. This system has been in place since it was created during Franklin D. Roosevelt’s administration during the Great Depression. The basic concept for Social Security is that workers pay into the system out of each paycheck for their retirement, and then are able to get paid back incrementally over the course of their retirement. This makes Social Security decidedly different from programs like welfare, as Social Security is an earned right, not an entitlement program. However, this program is now in a crisis, one that may threaten its existence. And here’s why…
How is it happening?
In the period after World War II, the was a sudden rise in the birth rate, leading to a spike in the population. We call this generation the Baby Boomers. Now, this large swath of the population is getting older and reaching retirement, while they and their children didn’t have quite as many children as their parents did. In the meantime, millennials are having even less children. So now the program is caught in a situation where more and more people are taking of the system, while less and less are putting in. This cycle may be self-sustaining, unless measures are taken to fix it, now.
What will happen from here?
On the current path, the entire program could end up bankrupt by the year 2034. However, this doesn’t mean that the program will end. Instead, it will move to a pay as we go system, since the built up trust fund that the Baby Boomers put in will be diminished. In this case, benefits will shrink to 77% of what they are now. This scenario will make a good deal of people angry, as they paid into a better system than the one they are getting.
Why it’s important now
If nothing is done about this problem now, it will end up being much, much more difficult to fix down the line. Because of the political volatility of this situation, failing to fix the problem could actually lead to the destruction of the program. Americans depend on Social Security for retirement, and there will be widespread anger if this happens, understandably. While it may seem hard to fix, it is much easier to do so now than waiting until the program’s judgement day.
For the future…
Understanding the nuances of this situation can provide us with a viewpoint that we can use to solve the problem. This is a series about various ideas that are floating around to fix the program. There are pros and cons to each of these ideas, but the seemingly impossible goal is to save money without cutting benefits or raising taxes…
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