The U.S. Social Security System: How It Works, Its Financial Situation, and the Short-Changed Benefits paid to the Most Vulnerable

In 2018, the Social Security Administration Trust Fund has a balance of $2.9 trillion, and is expected to be fully depleted by 2034 if no changes are made. What changes will be made remain to be seen. However, here and now an evaluation of the present payout scheme is made to determine what needs tailoring going forward. The literature review reflects that lower benefits go to the lower educated, the lower incomed, the unmarried, and to minority groups, due purely to the fact that the benefits paid are a function of the taxes paid, which are a function of income. The research interest here is to project, on a macro level, the aggregate lifetime dollar difference between what will be paid to one group of earlier claimants as opposed to how much would have been paid if they collectively deferred to full retirement age (FRA). The finding herein is that the group of early claimants from 2014 will collectively lose approximately $26 billion by collecting before FRA. This is unfair and does not reflect market fairness. Proposed is a payment scheme that increases the benefits paid to the early claimants by 6.9 percent on an annual basis to correct for this imbalance.