The benefits of Social Security funds are slowly running out. An article in Newsroom Solution, 2009, warns all Americans below the age of 55 to stop relying on Social Security for retirement padding but rather, should start investing (par. ). This is due to the reason that benefit allocation of the system is presumed to be more than the income. Further, workers currently contributing into this system are likely to reap fewer benefits during their retirement age than the current retirees. Caplinger (2007) reports that Social Security will run comfortably till the year 204(par.3), but Sloan (2008) disagrees with Caplingers view. Sloan (2008) states that the exaggerated prediction of Social Security being saved is not realistic, since problems will crop up when the Security will start cashing out more than it receives (par. 2) as from the year 2008. Sloan further states that the Social Security Fund does not own any asset rather it holds treasury securities. Therefore, this cannot help the government to reduce its deficit as its part of the federal government.
Kollman and colleagues denote that, the revenue of the Security will increase to $7.2 trillion but the system subsequently will run into depletion due to increase in payouts (par. 3). At this point, oth
er receipts will be needed to pay up for the deficit, but if there is no other government revenue to pay up the deficit, then the following might be implemented; increases in taxes, reduction of spending or borrowing. A big number of people do not have faith in the Social Security system as they foresee that it will be under par to their future expectations.
Social Security reform has proposed an increase in taxes and this has brought about mixed reactions in the public. In 2005, Hederman, Beach and Grossman pointed out workers were paying 6.2% tax of their wages towards Social Security and employers added 6.2% on the workers contribution. In reality, the workers gave up 2.4% of their wages towards the Security fund (par. 5-6). In addition to this, Social Security trustees are estimating, and at the same time proposing an increase of .89% on the payroll tax to go up to 4.29% in total. Their prediction is that the increase in the taxes will help to reduce the deficit in the Social Security system which is meant to occur later on in the future. An average worker might oppose this proposition as it has a negative impact on their household budget. Hederman and colleagues carefully points out the impact of increase in taxes on the US economy as follows (par. 4);