The Social Security Act of 1935, part of President Franklin Roosevelt’s New Deal program, was drafted in response to a need to address financial insecurity in old age.

While it did provide public assistance for the aged poor, it more notably legislated a national social-insurance system to provide pensions for retirees. Although not made explicit at the time, it is commonly believed that the legislation was also intended to address the problem of unemployment by removing a significant number of persons from the jobless statistics. While improving income security for older Americans, it simultaneously and unintentionally set the stage for a form of age discrimination by insinuating that older adults do not have a place in the labor force, a sentiment still held by some today. Maximum payments in 1999 are set at $1,373 dollars for fully vested individuals, although benefits vary widely in terms of amount of contribution, time of withdrawal and additional income.

The Old-Age Assistance component of the Social Security Act, Title I, is funded through general tax revenues, and guarantees public assistance to poor elders regardless of employment history In contrast, Title II, which mandates universal pensions for retired workers, is financed through a payroll tax shared equally by employee and employer.

When first enacted in 1935 only workers in commerce and industry were covered, representing approximately 60 percent of the labor force (Myers 1987). It wasn’t until the 1950s that subsequent legislation broadened the scope of the program to include most of those previously excluded, such as farm workers and the self-employed.

Social Security pension benefits were originally and deliberately portrayed as having been earned by the elderly through premium-like payments into the system during their working years. However, it has become increasingly understood that the Social Security system is a tax on today’s generation of workers to support those who are currently retired—not an insurance program. There are, in reality no reserves of accrued premiums—a deliberate feature of the program. Thus, there exists an arrangement whereby elderly recipients are, in a sense, at the mercy of the current workforce and their continued commitment to supporting the program as it now stands. Many fear that the sense of obligation to perpetuate the system will diminish, which will usher in momentous modifications to its structure and potentially undermine its solvency A further threat to the Social Security system is the changing demographic profile of the American people. As an aging society the United States is experiencing an increase in the elderly dependency ratio, the number of dependents over sixty-five per hundred persons aged eighteen to sixty-five. This figure for the year 2030 is projected to be twice what it was in 1960 (Pifer and Bronte 1986), reflecting an increasing pool of Social Security beneficiaries dependent upon a significantly smaller cohort of labor-force participants. Given a design founded on resource redistribution, not insurance, this connotes high and increasing costs for maintaining the elderly The potential for strained relations among generations is apparent.

There is significant debate over the future of the Social Security program. Many still subscribe to the belief that the structure will collapse due to inadequate funding to perpetuate the system, despite significant legislated improvements in 1983. Public confidence has declined drastically in light of such commentary. In reality the ability of the nation to keep the system solvent is not in question and there is, in fact, a substantial surplus of funds at present. The question is, therefore, not whether the United States can guarantee the continued existence of the Social Security system but how Those who have subjected the program to critical scrutiny answer that question with solutions ranging from minor tweaking to a significant overhaul (Dentzer 1999). Regardless, the critical issues to be addressed include the formula used to collect the necessary funding, the amount of benefits to be distributed to individuals, the criteria under which benefits are distributed and the source of financing.

Future retirees across the generations are deeply concerned about the ongoing successful management of the Social Security program and fear that they may receive no benefits in exchange for their years of contributions. Today’s politicians recognize the alarm among the populace and are crafting various proposals to “fix” the system. Some are acting out of a sincere concern for their constituents while others, perhaps, merely see the universal fear as an opportunity for political gain. The politicization of the issue has been both beneficial, by drawing needed attention to the matter, and harmful, by generating undue panic over the continued solvency of Social Security Debates, both political and scholarly over the matter of adjusting benefit levels based upon the relative economic status of beneficiaries have contributed to the polarization of the American public. At the heart of the matter is the question of whether means-testing is a useful method of improving the financial health of the Social Security system or simply a path towards the further division of the American populace along class lines.

Those in support of the latter position argue that better ways of modifying the program exist (Scharlach and Kaye 1997).