Question

how do we treat retirement and social security problem?

A government report concluded that Social Security will be insolvent in 2035 and Medicare will be depleted by 2026. What do you think of the social security and retirement problem in the upcoming 20 years? What policy needs to be made? Should we take any actions or we should just wait?

Answer 1

Retirement and Social Security Schemes (SSS) are implemented by US Federal Government in order to achieve the primary objective of ensuring full protection for the Aged People by fullfiling the economic needs. Old-Age, Survivors, and Disability Insurance(OASDI) program was administered by Social Security Schemes. US Fed collected sources the funds for Social Security Schemes through Finanial Aid Tax system like Federal Insurance Contribution Tax Act (FICA) and Self Employed Contributions Act (SECA). This Aid Tax system categorically comes under the Payroll System. And also the fund for SSS is also collected from the Internal Revenue Service (IRS),  Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund.

Every year the Fresh Employees joins the company in the particular year and in the same year, no. of Employees who have retirement age will exit the company. This situation is coined as Employee-Beneficiary ratio. The Ratio of entry and exit of the employees decreases gradually year by year. Previous year the ratio lied in 2.8 :1 was fallen to 2.1:1. Evidently speaking the funds for SSS are collected Payroll Taxes System. Due to decreasing fall in ratio, the Demand for more labourers to involve them in the Goods and Service Production was a very challenging one. There is the situation of scarcity in relation to hiring employees will took place. So the contribution of the funds towards Payroll Taxes System will effect drastically. In one side payment beneficiary (new employees) will be very less and in another side payments beneficiary out (Retired employees) will be more. So there will be imbalance between new employees and retired employees.

Then Health isssue prevailing in the Middle-Aged people say nearly 45-50, forces them to quit the job. So the ratio of the fund allocation is disbursed unexpectedly to the Voluntarily Retired People. Actually Fed Government haves the scheme. Actually the admissable fact is that Retired Senior Citizens who are aged 70 and above can enjoy the benefits of SSS to the full extent. At the age of 70 extra benefit will be granted by SSS in order to collect all the accured dividends. And at the same time when the employee not full completes the Work cycle up to retirement age, then they wont enjoys the benefits of SSS.

Recently US has announced the Retirement as to 67. This was not the immediate implement. But this was the gradual appending programme. Due to this situation, the policymakers cannot able to fix the Tax Slab rate for the Tax Payers. And also Employers will need to workout on more mechanism of paying Health Insurance Premium to each of the employees whose retirement age will be up 67. The Fed also need to evaluate the estimate of how much Payroll Tax Funds need to pooled from the people who are voluntarily retired people. They need to pay an extra allowance of parting money. Retired People of 67 years will get full benenfit. But the voluntarily retired people will not get full matured amount.

In order to tackle the situation of issues in Health and Social Security measures, The FED government should closely monitor the Ratio of Optimal Medical Expenses and the Basic necessity expenses incurring by the Retired People and also they should consider the Life Expectancy Rate of the Retired People, so that policy makers can plan accorindly to fix the Frequent and Optimal Slap rate for Payroll Taxes.