An intergenerational exchange was thought to be a flawless way to help those who immediately needed it, and provide a system that would benefit almost everyone in the long run. However, several factors have made the program more and more unsustainable over the years. The Baby Boomer generation has begun to retire, and very soon there will be a drastic increase in the number of recipients of Social Security retirement benefits. In addition, life expectancy has increased to 79.8 years as of 2016, the highest it has ever been in the United States. This means that the large Baby Boomer generation will very likely be receiving Social Security benefits for longer than any previous generations. In addition to this data, the birth rate of the United States has been declining since 1976, despite a small peak in 1990. The rate is currently at 12.5/1000, according to the CIA World Factbook. This indicates that there will be less people paying FICA taxes to support the larger population receiving Social Security benefits. In 1960, the labor force paying benefits to Social Security recipients had a ratio of 5.1:1. It is estimated that in 2030, this ratio will be 2.2:1. Although the Social Security Trust Funds had been growing and accumulating a surplus (in part due to the 1983 raising of FICA tax to prepare for the retirement of Baby Boomers), beginning in 2010, the Social Security expenses have …show more content…
On average, an American who graduates college will pay approximately $840,000 into Social Security. After retirement, the average American can expect to receive about $1.2 million, or a 1.6% rate of return. Economist Anotny Davies, P.h.D claims that if $840,000 was instead put into a private account, and invested in a mixture of stocks and bonds, the return would be about $6.8 million in benefits. Indeed, the Dow rate of return calculator estimates a 275% rate of return over a 45 year period. Based in these statistics, using a private account to prepare for retirement is a significantly wiser financial decision that the current Social Security Program. The rate of return on a private account would cover more than the 40% of earnings the SSA claims to provide. $6.8 million and an average life expectancy of about 80 years (13 years of retirement) would be equivalent to $43,500 to live on per month. This is a rate of return more than 5 times that of the current Social Security