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I say it does, but that does not stop it from being attacked. The words Ponzi Scheme are being thrown about. The fact it is underfunded is being used as a argument that it doesn’t work. Some in government are calling for it to be replaced with private accounts. I read one official say there is plenty of money to pay all the benefits to those now collecting, but we can’t continue. Well, that’s not true on either point.
No doubt Social Security is underfunded, but that is the fault of every Congress since the 1990s and of the Americans they fear will not support higher taxes or other changes. That is not a valid reason to claim the system can no longer work.
It’s true the worker to retiree ratio is shrinking-fewer workers to support a growing number of retirees and that needs to be considered as well and can be over time by increasing the tax paying base – another discussion.
The irony is that making Social Security sustainable requires relatively minor changes and increases in funding. If changes had been made gradually over the years, they would hardly be noticed. For example, today just increasing the payroll tax by 3% (1.5% each on employer and worker) and applying FICA to employer cafeteria plans results in 97% of funding covered for the next 75 years (Committee for a Responsible Federal Budget SS calculator.) That amounts to about $17.00 a week for the median wage earner – meaning half would pay less. That seems a small price for future retirement income. The increase would be considerably lower had it been applied ten years ago.
The challenge now is a general anti-government anti-tax ideology in favor of individual empowerment and responsibility.
What’s missing is a realistic understanding of human behavior- in this case related to finances and long-term planning. Americans are not even adequately saving and managing money for their share of retirement income, let alone all the required income.
I used to joke that there was no reason to worry about Social Security, it will always be there. My confidence is waning.
I think Social Security has definitely met its original purpose of preventing widespread poverty among seniors, but the challenge now is that the system wasn’t designed for today’s demographics. When it started, far fewer people lived long enough to collect for decades. Now, with longer life expectancies and fewer workers paying in per retiree, the math doesn’t work the same way. Adjustments like gradually raising the retirement age, tweaking payroll taxes, or means-testing benefits could help keep it sustainable. The key is making changes that preserve its core mission financial security in old age without overburdening younger generations.
My comment was too long to post here, and may encourage a continuation of comments from the original article.
Please read:
Comments to 8-22-2025 R. Quinn’s “Does Social Security Work?”
Much of the discussion below centers around the FICA tax.
But, as William Dorner mentions, isn’t another necessary reform raising the retirement age? With advances in healthcare helping people live longer, 70 may be the new 65.
For decades, demographers have been telling us that Social Security will be in trouble when the Baby Boom generation retires. Indeed, that has come to pass. Yet, numerous congresses have been content to kick the can down the road.
Like other HumbleDollar readers, I’m disheartened by the failure of Congress to tackle the hard problems the nation faces. The cynic in me sees too many representatives more interested in reelection and ideology than passing tough, but necessary, legislation and taking the heat.
Raising the retirement age might be OK for those with desk jobs, but what about those who perform heavy manual labor? I turned 67 this year and have worked out fanatically for nearly fourty years both weight lifting and aerobic exercise and I’m still feeling the effects of getting older.
When I’m shot after cutting my hilly lawn for an hour with my push mower I wonder to myself what it would be like if I hadn’t kept in shape?