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Why Social Security Will Collapse
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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)
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.
Sources & Other Resources
- Population pyramid - Wikipedia, the free encyclopedia
- Demographic transition - Wikipedia, the free encyclopedia
- UC Berkeley Social Security Experts
- :: Social Security Advisory Board ::
- Social Security - Just Facts
- Social Security Online - The Official Website of the U.S. Social Security Administration
- Social Security Q&A
- Social Security Topics Index - Great Basin College
- Whitehouse.gov Site on Social Security
- Social Security Information - Southeastern Louisiana University
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.