Social Security Benefits

By | August 29, 2019

The second article A Primer on Social Security Systems and Reforms written by Craig P. Aubuchon, Juan C. Conesa and Carlos Garriga discusses the issue concerning the role of social security systems and reforms in the life of all individuals. Moreover, the authors of the article represent an overview of different social security systems including funded defined-contribution system, funded defined-benefit system, unfunded defined benefit system, unfunded defined contribution system. They try to find the best variant of social security system in order to implement this variant as a social security reform.

It is known that the US Social Security system was implemented by the President Franklin Roosevelt in 1935. Today this system is known as Old-Age, Survivors, and Disability Insurance (OASDI). It is a so called pay-as-you-go (PAYG) system in which workers provide their finances through a Social Security tax; these contributions provide social security benefits to those who are retired and disabled and have no opportunity to work. As this system needs guarantees that future generations of the country will provide the same social support benefits for them. However, the fully funded social security systems “require that all social benefits accrue based on individual contributions which are paid over time. It means that future obligations are fully funded by earlier contributions. (Aubuchon, 2011, para.2)

The article discusses financial sustainability of the US Social Security system. It is known that the recent recession which was “combined with the renewed political focus on health care and long-term health costs” caused great interest to maintain the long-run financial stability of social security benefits. (Aubuchon, 2011, para.3)

Moreover, the Board of Trustees of OASDI tends to introduce a long-term reform for several years. The report demonstrates how the long-term reform is influenced by lower gross domestic product (GDP) and the number of covered workers. Besides, the report “demonstrates the need for timely and effective action”. Some possible solutions include the implementation of higher taxes and lower social security benefits, or their combination. However, some experiences financial experts and analysts are sure that the transition to a fully funded Social Security system will be the best solution.

CONCLUSION

In conclusion, it is necessary to say that social security benefits play an important role in the life of all citizens of our country. Of course, today the US government should pay special attention to the US social security system in order to guarantee appropriate benefits to our citizens in future.

References

Aubuchon, C., Conesa, J., Garriga, C. (2011) A Primer on Social Security Systems and Reforms. Journal of Federal Reserve Bank of St. Louis. Vol.93(1). Retrieved from:

Feldstein, M., Liebman, J. (2002). The Distributional Aspects of Social Security and Social Security Reform. Chicago: University of Chicago Press.

Whitman, K., Reznik, G.L., Shoffner, D. (2011) Who Never Receives Social Security Benefits? Social Security Bulletin. Vol.71, Issue 2. Retrieved from: