Why Social Security Will Collapse

Demographics Then and Now

Social Security is an important topic in the United States, especially for Americans in the baby boomer generation and thus the advanced population of the country. Many younger individuals ask "will the money that I paid into the system be there when I get older?", and the answer is not likely. I say this not with pessimism, but with a realistic attitude. Social Security was developed in the 1930s, when the country's demographics were very different than they are today.

Death rates were high as well in the 1930s, but birth rates were slightly higher, thus the concept of social security sounded logical with stable population growth. Then the unexpected baby boomer population came soon after 1945--the population of the United States spiked. This is when birth rates became very high and death rates became (relatively) low. This demographic transition has continued to assist the baby boomer bubble reach retirement.

The key point is that demographics have changed once again, to a normalization period; now birth rates are low and death rates are low. The very unique baby boomer bubble that was created 45-60 years ago has now reached retirement. The net growth of the population of the United States finally equalized again after the baby boomer generation was born.

Yet, it is important to realize that the baby boomer generation is still present and does require assistance provided by the Social Security Administration to aid them in retirement. The coming years will prove to be a test to the concept of social security and whether it will fail or not.

Historical demographics are vital for this article, and are the basis for my thesis: the current and future expected demographics of the United States cannot possibly support the current social security situation. I say this from an objective and unbiased point of view. I invite you to keep reading as I discuss the important demographic changes that have, are and will take place in the United States through the lens of demographic transition.

Population Then And Now (Fig. 1 & 2)

Afghanistan population pyramid in 2005, nearly identical as the United States' in the 1930's.  Notice the massive youth population that could support those who were 55 and up.
Afghanistan population pyramid in 2005, nearly identical as the United States' in the 1930s. Notice the massive youth population that could support those who were 55 and up.
United States population pyramid in 2000.  Notice how the baby boomer generation is hitting the age 55 mark (as of now, they already have).
United States population pyramid in 2000. Notice how the baby boomer generation is hitting the age 55 mark (as of now, they already have).

A Broken System

When social security was developed in the 1930s, the needs of US citizens were very different than they are now. The great depression primarily influenced the need for a social security net, and thus also assisted Americans psychologically that another depression would never affect them the same way again.

Death was common in society in the 1930s, as the US was still a developing nation: modern health care was relatively weak and sanitation methods were imperfect. Although death rates were high, birth rates were slightly higher though due to larger families--this being a characteristic of people in developing nations, in order to survive.

The lack of contraceptives (since they weren't developed yet), success in World War II, modernizing health care & sanitation soon influenced the unique scale of the oncoming baby boomer generation after 1945. The population then grew exponentially for a period of 20 years (approximately), at a rate no American generation afterwards could possibly support.

I feel that it is now necessary to bring in the topic of population pyramids. Most of us have seen one (fig. 1), and are important tools for judging a country's then-and-now demographics. It is especially important for future population studies. The population pyramid of the United States during the 1930s looks a lot like... well.. a pyramid! It looks like China in the 1960s or India in the 1980s. Yet, times have changed, and so have demographics; the population pyramid today looks a lot different (fig. 2). The bottom pyramid looks un-supportive, yes? Your eyes do not deceive you.

So what does this mean? How can we decipher these changes into an objective opinion about social security? During the 1930s there was a large number of young persons (under 55) to relatively few elders (over 55), and thus the young could support the old.

Now try the same scheme with an abnormally high number of elders to relatively few young persons, it does not compute.

In order for social security to function, there needs to be about many people under the age of 55 to support relatively few people over 55. In the 1930s, this was no problem at all. Now with the changing demographics, there is not enough people under the age of 55 to support those who are over 55. The system is thus unsustainable because necessary thresholds are not being met.

Other Media

The Demographic Transition (See Above Video)

The demographic transition is a tool to help predict future population expectations. It utilizes birth rates, death rates, level of economic development and the most important concept--time, to compute a graph. There are 4 stages in the demographic transition, and a theoretical 5th. The United States in the 1930s was at the end of stage 2 and beginning stage 3 of the demographic transition. The United States is now in stage 4, and is soon expected to reach the theoretical stage 5 before 2030. Some geographers and demographers claim that other developed countries have enterted stage 5 already, such as Sweden.

Please take note that some natural and artificial variables do "throw off" the demographic transition graphs, such as the AIDS epidemic in sub-saharran Africa, and the one child policy in China, among others.

More by this Author

  • Is Lead Based Paint Really That Bad?
    7

    To answer the title and primary thesis of this article--yes, it is that bad. Lead based paint is still covering and is inside tens of millions of American homes, and the chances of your residence having a lead based...

  • Incinerators:  A Source of Renewable Energy
    6

    An incinerator is a component and tool of the waste-to-energy industry. The primary objectives of an incineration plant are: To combust organic waste in order to combat the growing presence of human created waste. ...

  • Top 10: Best Car Interiors for 2009 (15-25k)
    9

    The stakes are higher for this bracket of the best car interiors of 2009! There are more vehicles present, and the standards are higher for this sector. Once again, the graded areas include: Quality of Interior...


Comments 24 comments

blondepoet profile image

blondepoet 7 years ago from australia

Great read.Here in Down Under a lot of people born under a certain date will no long receive the pension so they are going to have to seriously look at preparing for retirement early.We are pretty lucky here with single parent pensions,unemployment benfits etc,it really makes me wonder how anyone could be homeless here.At the moment our government is also handing out large packages of money up to $1,000 to every tax earner next month and last xmas everyone who has kids got paid 1,000 for each child for an xmas bonus.Not bad hey lol


Dolores Monet profile image

Dolores Monet 7 years ago from East Coast, United States

direxmd - the problem with the elimination of social security will be that the boomers who are loosing pensions and retirement savings is that you'll have a large population of poor people. poor people who grew up in an age when it seemed like a good idea to take to the streets and raise hell whenever they were mad. many people have claimed that the boomers won't be able to retire, it'll put too much stress on the economy....hmmm, how convenient when you look at the way things are going. they say people need to save more money, that they are too greedy and materialistic but, face it, the majority of American families live on about $45,000 a year. considering the costs of housing, food, fuel, etc. how is a family making that amount of money going to save up enough to live off of when they are old. add to that the problem of age discrimination, which isn't supposed to happen but sure does, where are all those old boomers supposed to work? nobody wants them now when they are in their 50's. you think they'll be hired when they are 65? you can't live off Walmart greeter jobs. we are in for a big problem. somebody needs to think of some solutions.


Direxmd profile image

Direxmd 7 years ago from Sonoma County, California Author

I'm simply contesting the viablity of social security in it's current state--it seems that the policy may require some reformating in order for it to be successful over the next one hundred years.

Thanks for your input,

Mike


WHoArtNow profile image

WHoArtNow 7 years ago from Leicester, UK

Yeah, you guys are screwed! Glad I live in England.

Oh wait, ours is pretty screwed too! Oh s**t


WeddingConsultant profile image

WeddingConsultant 7 years ago from DC Metro Area

Don't forget that abortion has killed millions of babies and has been a HUGE negative contributor to our ability as a nation to cover social security payments...


hinckles koma profile image

hinckles koma 7 years ago from nyc

New world order !


emi1777 profile image

emi1777 7 years ago from Lund, Sweden

Good article, it will probably only be solved through painful cuts in our generation's social security once we retire...


advoco profile image

advoco 7 years ago from cadiz

Excellent article. I read somewhere that the projected cost of future unfunded social security obligations is something like 10 times the cost of the bailout. The us national debt clock (google it if you dare, it's pretty terrifying) currently shows obligations for Medicare, Medicaid, Soc Sec and free prescription drugs at 59 Trillion $ - to put that in context total US credit card debt outstanding is not yet even 1 trillion $. My latest article references this problem and is called "US economic decline is starting to look terminal" partly for this reason.


Richard Cash profile image

Richard Cash 6 years ago from East Longmeadow, MA

Great article. I think we're all on to something.


callixte 6 years ago

Great article I can say only one way is available it is simple as joining hand with other country with a different population structure to work and contribute for the scheme in other words favouring immigration look at population pyramid in sub-saharan africa other wise soon it will not possible for young population to support older


Ralph Deeds profile image

Ralph Deeds 6 years ago

Your analysis might have merit if applied to Medicare, but it's wrong about Social Security. Social Security can be put on a solid footing with a couple of relatively minor adjustments--removing or raising the $100k earnings cap on FICA tax, adjusting the COLA formula and/or raising the retirement age for full benefits to reflect the increasing life expectancy and ability of many to work longer than previously. If the size of the workforce isn't sufficient, taking into account improvements in productivity, to support people drawing Social Security we can open the immigration tap. People are waiting in line around the world to come to our country for jobs and a better life. All we need to do is open the immigration tap a bit.


G.L.A. profile image

G.L.A. 6 years ago from Arizona

What jobs!!!!!!!!!!!!


OpinionDuck profile image

OpinionDuck 6 years ago

direxmd

I agree with you and Social Security and Medicare was forced upon the workers and now the ones that forced their plan are balking that people want to retire and take advantage of their lifetime of contributions.


mel22 profile image

mel22 6 years ago from ,

very well written point of view. I don't know enough about this subject to give a decent opinion but I would say , by what you wrote, it looks like social security will die !


Jarrod1240 profile image

Jarrod1240 6 years ago

This is an important article that many people in our government need to read. The financial burden of our current inefficient Social Security system might cause it to collapse before or near 2014. Our government currently owes the Social Security Trust Fund over 2 trillion dollars and if that isn't paid, SS isn't reformed, and if our government does not begin acting with fiscal conservatism then many institutions of our social safety net will begin crumble.


Direxmd profile image

Direxmd 6 years ago from Sonoma County, California Author

Jarrod1240,

Thank you for the truth you speak of, and thankfully we agree--although many others (including those who run our legislature) care only about their terms, and thus they are inherently shortsighted. Unfortunately, i'm not sure social security can handle the upcoming weight of the baby-boomer generation. Reform alone will not fix this issue, it intrinsically cannot support the health costs of the upcoming retiring generation.

Thank you for your support and readership,

-Direxmd


JON EWALL profile image

JON EWALL 6 years ago from usa

Direxmd

Don't worry it will never happen. The U S Government will just print more money. Today social security is paying out more than money coming in.The trust fund is calling in the IOU's that were in the file cabinets.Remember the Lock Box that the Politicians talked about, never happened.


Max 6 years ago

Social security is a very important concept in all the countries and I cannot imagine it collapsing. I am sure the governments will always work to improve the current system.


JON EWALL profile image

JON EWALL 6 years ago from usa

Max

IN 2000 GEORGE W. BUSH WAS ELECTED PRESIDENT, solving the social security problems were addressed. Today 2010, social security trust pays out more money than what is being collected. There are 14.7 million workers out of work, unemployment is 9.7% furthering the problems with the collection of social security tax money. Congress will only act when there is no money to pay out. benefits.


Ravaged Nation profile image

Ravaged Nation 5 years ago from New Hampshire United States

Thanks for taking the time to write this awesome Hub. I too see Social Security for what it is. A government run Ponzi scheme. I get tired of hearing the sound byte used by democrats "Republicans want to take away your social security". I just heard this line on Rachel Maddow's MSNBC show. The senior citizens in the room are scared. The youth of America should be terrified.


Ralph Deeds profile image

Ralph Deeds 5 years ago

Social Security can and will be put on a sound financial footing with a few minor changes. Here's what the debt reduction panel proposed yesterday:

The plan would reduce cost-of-living increases for all federal programs, including Social Security. It would reduce projected Social Security benefits to most retirees in later decades, though low-income people would get higher benefits. The retirement age for full benefits would be slowly raised to 69 from 67 by 2075, with a “hardship exemption” for people who physically cannot work past 62. And higher levels of income would be subject to payroll taxes.

But the plan would not count Social Security savings toward the overall deficit-reduction goal that Mr. Obama set for fiscal year 2015, reflecting the chairmen’s sensitivity to liberal critics who have complained that Social Security should be fixed only for its own sake, not to help balance the nation’s books.

http://www.nytimes.com/2010/11/11/us/politics/11fi...


Larry Fields profile image

Larry Fields 5 years ago from Northern California

Hi, Direxmd. Voted up. Your observations about the demographic shifts are spot-on. However I do think that the word "Collapse" in the title of your hub is overly dramatic.

In light of the demographics, continued Social Security expenditure increases are not sustainable. Spending cuts are more realistic in the long term. And in the near future some new retirees will feel that they're getting screwed, which is an understandable response.

But collapse? Social Security is a popular program, and any Congress critter who voted to give it the boot would be committing political suicide.


JON EWALL profile image

JON EWALL 4 years ago from usa

Direxmd

TODAY UNEMPLOYMENT IS 9.1% and there are 14.3 million out of work. The US Government’s national debt is or will be $16 trillion .

Check these words of enlighten about Social Security and Government Pension liabilities.

The US Government paid a RECORD $268 BILLION in Pension and Health benefits last year to 10 million former civil servants, military personnel and their dependents. The retirement now have a $5.7 Trillion UNFUNDED LIABILITY, compared with a $6.5 Trillion SHORTFALL for Social Security.

http://www.usatoday.com/news/nation/2010-03-04-fed...

The Democrats refuse to understand the numbers are convincing that something has to be done to correct the system. The Ryan 2012 budget plan attempts to correct the system for those under 55 years old. Medicare costs and needs also are a problem for the government insurance system


conradofontanilla profile image

conradofontanilla 4 years ago from Philippines

In a way, social security is antidote to depression. The poor should have money to buy products of industry otherwise inventory would pile up, no turn over resulting in sluggish business and slowdown in economy. It is not so much of having less young people to support the old. Pensions spent perk up the economy.

    Sign in or sign up and post using a HubPages Network account.

    0 of 8192 characters used
    Post Comment

    No HTML is allowed in comments, but URLs will be hyperlinked. Comments are not for promoting your articles or other sites.


    Click to Rate This Article
    working