Social Security is having a mid-life crisis.
Whether or not it will still be around by the time today's students are 65 depends on the reforms it will undergo in the near future.
Yesterday, National Public Radio's Justice Talking, produced by Penn's Annenberg Public Policy Center, held a panel at the National Constitution Center in Old City.
AARP Policy and Strategy Director John Rother and Private Enterprise Research Center Director Thomas Saving were recorded for NPR while discussing possible reforms to Social Security.
Social Security is a 12.4 percent payroll tax, paid for equally by employees and employers. In 2004, the money collected from this tax went to the monthly benefits that more than 47 million Americans received.
The program, created by former President Franklin Roosevelt in 1935, is largely credited with helping to lift elderly Americans out of poverty. But critics of the system argue that it gives Congress too much power over citizens' financial decisions.
Approximately 50 percent of aging Americans depend on Social Security as their primary source of income.
Social Security is a form of insurance against disability, death of a family member and old age. The problem is that -- with a future debt of over $12.7 trillion -- some say the current system is not sustainable.
The addition of optional private investment accounts would cost an estimated $3 trillion. Privatization has become one of the main issues of the debate, largely due to strong support by President George Bush.
Rother, a 1975 Penn Law School graduate, told the audience that Social Security money cannot be thought of as something that will be refunded to individuals.
"Everyone should save and invest for the future," he said. "Social Security returns are about 40 percent of your paycheck -- that's not enough."
He also explained that half of Americans don't have a "pension or a regular way of saving for the future."
Saving, however, argued that raising the minimum age for benefit eligibility would help save Social Security. He believes abolishing Social Security would lead to a "social catastrophe."
One reason Social Security is facing problems is that the average life expectancy rose from 63.3 years in 1943 to 77.6 years in 2003. As a result, Social Security has been forced to pay out benefits for a longer period than previously.
However, he acknowledges that there is nothing "more unpopular than raising retirement age ... because the average worker hates their job."
College and Wharton senior Tavis Morello believes that changing the retirement age is sensible because demographic changes have increased people's lifespan. He thinks that the system should change so that contributors are paying for their own returns instead of paying the benefits of current retirees.
NPR will air the panelists' discussion in mid-April.
