24 • MARTIN H. RUBY
Seventy-seven cents on the dollar? That’s a pretty dire outlook. So why the warnings? Demographics, demographics, de- mographics. Here’s the thing: when most people think of Social Security, they think of some pot of money in Washington that the govern- ment gives out to retirees each month. If you were to actually fly to Washington and look in the Social Security Trust Fund, you’d mostly find a bunch of IOUs. Social Security is paid from the current Social Security taxes collected. This is why demographics matter. In 1960, there were five tax-paying workers supporting each Social Security beneficiary. That means five people were paying the taxes to deliver one Social Security check to one senior citizen. Not too bad. By 2009, that demographic had shifted dramatically. That year, there were three-and-one-half workers supporting each Social Security beneficiary. Imagine a pyramid with five people holding up a single person. Not too hard. Now try to hold up that same person with only three helpers, and it gets a little harder. This decade, it's expected there will be only two workers for every Social Security beneficiary, meaning you and your spouse are ba-sically paying taxes to support one retiree all by yourselves. Your pyramid is looking pretty weak, right? That’s why many experts have questioned whether today’s So- cial Security system is sustainable for the future. What’s causing these dramatic demographic shifts? Our U.S. population is aging . . . fast. Seniors are living longer than ever be-fore, and couples are having fewer babies as well. That means we’re creating more retirees, but fewer future workers to pay So-cial Security taxes.
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