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Social Security - A Problem

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Demographic projections indicate that the number of elderly retirees will grow sharply by 2025, but the number of young, working-age individuals will increase only slightly. This implies a steep decline in the ratio of contributing workers to retired beneficiaries in the Social Security system - from 3.3 today to 2.2 by 2025. Such a sharp swing in the proportion of workers to beneficiaries will devastate a pay-as-you-go system in which workers' contributions are immediately and directly transferred to retirees as benefits.

Suggested citation: “Social Security - A Problem,” Federal Reserve Bank of Cleveland, Economic Trends, no. 97-06, pp. 14, 06.01.1997.

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