1. People & Relationships
You can opt-out at any time. Please refer to our privacy policy for contact information.

I hear that Social Security is in financial trouble? Why?

By

Question: I hear that Social Security is in financial trouble? Why?
Answer: It is true that Social Security benefits are experiencing financing problems, and while this will not affect today's retirees and near-retirees, the problems are very serious. People live longer, the first baby boomers are five years from retirement, and the birth rate is low.

This results in a large drop in the worker-to-beneficiary ratio. For example, in 1950 the worker-to-beneficiary ratio was 16-to-one. Currently the ratio is 3.3-to-one, and within 40 years it will be 2-to-1.

At this rate of decline there will not be enough workers to pay scheduled benefits at current tax rates.

©2014 About.com. All rights reserved.