William_T._Bianco,_David_T._Canon]_American_Polit

Social policy today 593

full benefits. Early retirement at 62 is an option, if the retiree is willing to accept a

permanently reduced benefit level. Delaying retirement until age 70 permanently

increases the retiree’s Social Security benefits.

Social Security’s Long-Term Challenges Despite its successes and overall

popularity, Social Security faces long-term problems. Unless certain fundamental

issues are tackled, the program will be unable to cover its obligations. The longer we

wait to address the shortfall, the more difficult solving the problem will be.

Basic changes in the nation’s demographic profile are driving the projected

shortfall. The baby-boom generation, people born between 1946 and 1964, is starting

to retire. Between 2000 and 2030 the number of Americans over the age of 65 will

more than double, whereas the number of working-age Americans (20–64) will grow

by only 20 percent.^43 This trend means that there will be fewer workers to support

the increasing number of retirees. In fact, the number of workers per Social Security

recipient fell from 16.5 in 1950 to 2.8 in 2017; by 2035 it will be only 2.2.^44 See Figure 16.4

for evidence of the aging population.

“Wait a minute,” you may be saying. “Why does it matter how many workers there

are for each retiree? I thought that Social Security was a pension program that you pay

into while you’re working and then get the benefits when you retire.” Not exactly. Social

Security is not a self-funded pension but a “pay as you go” system in which today’s

workers support today’s retirees through the payroll tax discussed earlier. Therefore,

the huge increase in the number of retirees will strain the system because each worker

will have to pay higher taxes to maintain the same level of Social Security benefits. Of

course, benefits could be cut, but the third-rail status of the program has prevented

that, at least up to now.

Another problem with the pay-as-you-go nature of Social Security is the

intergenerational transfer of wealth. The flip side of Social Security’s success in

reducing the poverty rate for seniors is that more children and working poor are

in poverty today (17.5 percent of those under 18 are in poverty, compared with only

9.2 percent of those over 65 and 11.2 percent between 18 and 65).^45 Some critics have

wondered if it makes sense, for example, for single mothers working for the minimum

baby-boom generation

Americans born between 1946

and 1964, who are retiring in large

numbers over the next 20 years.

DID YOU KNOW?

15.5%

of women and 24 percent of men

65 and older are working full-time.

Source: Bureau of Labor Statistics

1900 1950 1980 1990 2000 2010 2020 2030 2040 2050 2060

5

0

10

15

20

25%

Actual Projected

85 and older

65 and older

FIGURE

16.4

People 65 and

Older as a Share

of the U.S.

Population

Elderly people will constitute a much

larger share of the U.S. population in

2060 than they do today. How might

the aging population affect social

policy—both in terms of the politics of

policy making and in terms of the fiscal

implications of this trend?

Source: U.S. Census Bureau, 2014 National

Population Projections, Table 3, http://www.

census.gov (accessed 6/9/16).

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