Foreign media commented that intergenerational imbalances in the United States social security system were deepening. The article cites calculations by the United States Responsible Federal Budget Commission (CRFB) that the total amount of benefits received by retirees during the decade was significantly higher than historical contributions, while the gap was borne by the current working population.
Higher than historical contributions
On average, the United States of America that retired during the decade received about 133 per cent of its combined contributions and those of its employer, measured in present value. If only the direct individual contribution is considered, this ratio is close to 265 per cent.
For example, a worker who retired in 2027 and received a median wage received a life-long social security benefit of approximately $730,000, while his own and his employer ' s combined contributions were less than $200,000. On this basis, the accumulated benefits will exceed historical total contributions by approximately six years after retirement.
The proportion of the contributory population continues to decline
According to the article, social security in the United States is not a personal savings account model but a “pay-as-you-go” system. Wage taxes paid by the current working population are paid directly for the benefit of current retirees.
This structure is under pressure from the continuing decline in the ratio of contributors to recipients. In 1950, the average beneficiary in the United States corresponded to more than 16 contributors; by 1960, it had fallen to about 5:1 and now it has fallen to about 2.7:1 and is likely to remain close to 2:1 over the next few decades.
Early 2030 or current gaps
According to the official projections cited in the article, the United States Social Security Retirement Trust could run out in 2032 and the combined calibre of the Retirement and Disability Trust could run out in 2033 or 2034.
At that time, the social security system would cover only about 78 per cent of the established benefit level if it relied only on current wage tax revenues. This means that if Congress does not take measures before then, benefits may face an automatic reduction of about 22 per cent.
The article also notes that the baby boom generation is not the designer of the system or the first group of retirees to receive more than their contributions. The central point of the commentary is that the current payment formula has become increasingly difficult to sustain in the long term under the current demographic structure.