How is social security in the US at risk of running out of funding, if every tax payer pays into it?
In: 1004
So the idea behind SS is that the working age people pay into a pool of money which gets handed out to people older than working age. This means the money you put in is not the same money you’re getting out, it’s not like a bank. It’s every generation funding the retirement of the previous one.
This works out great as long as the number of young people keeps going up (more people paying in=more money for old people) or stays the same. The biggest issue is that for many many years people have been having less and less kids, so less people that grow up, have jobs and pay for the previous generations retirement and at the same time we have a particularly big generation which is all entering retirement age.
So less kids=less workers=less SS funds.
Meanwhile more old people= more SS being taken out.
Latest Answers