Few political issues have been around as long and are as politically sensitive as the issues relating to making Social Security fiscally sound for the long term. The basic issues have been well known for decades: the baby-boom generation and the following smaller workforce will greatly stretch the current system, and the present method for raising and distributing revenues cannot be sustained (Social Security Administration, 2008).

Because Social Security is based on current workers paying a tax to support current retirees, the looming funding problems depend critically on the worker-to-retiree ratio. As you can see in Figure 14.3, this ratio has declined precipitously since Social Security began and will continue to do so, placing an increasing financial burden on workers to provide the level of benefits that people have come to expect. Due
to this declining ratio, if the current tax rate of 12.4% each on workers and employers is maintained, payments will exceed income from payroll taxes by 2017, will exceed all sources of revenue including interest on the available surplus (the trust fund) by 2027, and will be bankrupt by 2041 (Social Security Administration, 2008).

So it’s little wonder that young adults have little faith that Social Security will be there for them.

What steps can be taken to keep Social Security sound in the long term? In 2005, President Bush made a concerted effort to incorporate reports from many special commissions established to study the problem (including one he set up in 2001), economists, and researchers who have all proposed changes in the current operation of Social Security. Among the changes proposed over the years are these:

• Privatization: Various proposals have been made for allowing or requiring workers to invest at least part of their money in personal retirement accounts managed by either the federal government or private investment companies.

A variation would take trust funds and invest them in private-sector equity markets. Another option would be

for people to be allowed to create personal accounts with a portion of the funds paid in payroll taxes.

• Means-test benefits: This proposal would reduce or

eliminate benefits to people with high incomes.

• Increase the number of years used to compute the benefit: Currently, benefits are based on one’s history of contributions over a 35-year period. This proposal would increase that to 38 or 40 years.

• Increase the retirement age: The age of eligibility for full Social Security benefits is increasing slowly from age 65 in 2000 to age 67 in 2027. Various proposals to speed up the increase, to increase the age to 70, or to connect age at which a person becomes fully eligible to average longevity statistics have been made.

• Adjust cost-of-living increases downward: Some proposals have been made to lower the increases given to beneficiaries as a result of increases in cost of living.

• Increase the payroll tax rate: One direct way to address the coming funding shortfall is to increase revenues through a higher tax rate.

• Increase the earnings cap for payroll tax purposes: This

proposal would either raise or remove the cap on income subject to the Social Security payroll tax ($102,000 in 2008).

• Make across-the-board reductions in Social Security pension benefits: A reduction in benefits of 3% to 5% would resolve most of the funding problem.

None of these proposals has universal support, and many would significantly disadvantage people, especially minorities and older widows, who depend almost entirely on Social Security for their retirement income (Gonyea & Hooyman, 2005; Syihula & Estes, 2007).

Solving the funding problems facing Social Security will be increasingly important in the next few years. Remember, the first baby boomers became eligible for reduced retirement benefits in 2008. Will it be there for you?

Given the political difficulties inherent in tackling the issue, and the lack of perfect solutions, it is likely that Social Security will remain a major controversy over the next several years.

Concept Checks

1. What major demographic and social policy changes will likely occur by 2030?

2. What are the major issues that confront Social Security?

3. What is Medicare?

14.1 Health Issues and Quality of Life

LEARNING OBJECTIVES • What are the key issues in health promotion and quality of life?

• What are the major strategies for maintaining and enhancing competence?

• What are the primary considerations in designing health promotion and disease prevention programs?

• What are the principal lifestyle factors that influence competence?

J

ack had heard about the many things that were available on the Web, but like many older adults he was a little reluctant to use a computer. He thought that was best left to the grandchildren. But after he purchased his first home computer at age 68, he

began surfing. He never stopped. Now at age 73, he’s a veteran with a wide array of bookmarked sites, especially those relating to health issues. He also com­municates by e-mail, and he designed the community newsletter using his word-processing program.

Jack is like many older adults—better educated and more technologically sophisticated than their predecessors. The coming demographic changes in the United States and the rest of the world in the aging population present a challenge for improv­ing the kind of lives older adults live. For this reason, promoting healthy lifestyles is seen as one of the top health care priorities of the 21st century (Lunenfeld, 2008). Remaining healthy is important for decelerating the rate of aging (Aldwin & Gilmer,

2004) . Promoting healthy lifestyles is important in all settings, including nursing homes (Thompson & Oliver, 2008).