Social security is a pyramid scheme. Bigger than Enron and Madoff and the calling cards Michael Scott was selling on The Office.
I preface this by saying everyone that pays into the Social Security system (SS) deserves to benefit from those contributions at some point. Receiving a SS check each month is evidence that you spent a long career working hard and you are benefiting from a system you paid into. You can Google "social security benefits" and find hundreds of articles on when to start drawing SS, how spousal benefits work, and how much more you can get if you don't start drawing until 68 instead of 65. These people are at the "top of the pyramid". But what about those of us at the bottom of the pyramid, looking up and wondering what will be left if we ever get to the top?
SS was passed by Congress and signed into law by President Roosevelt in August 1935. This was a part of a nationwide recovery after the Great Crash and depression in the late 20's and early 30's. A complete history of SS can be found at the SSA website (in case you forgot it all from high school history like I did).
In general, the program was designed to help older Americans that had lost all of their savings. Almost 80 years later, the program is still in existence. The program is funded through FICA taxes, which are withheld from an employee's paycheck at a rate of 6.2% and then matched by the employer. Once an employee's wages reach a certain threshold ($117,000 for 2014) they are no longer subject to the FICA tax (Medicare never phases out, and is a whole other debate for another time).
The problem is, every dollar a 30 year old worker puts into the system is paying benefits for someone in their 60s and 70s, hence the "pyramid". The result is my kids will be paying the benefits for my parents, leaving my grandkids to pay for my benefits. Furthermore, the SS system is heavily underfunded, meaning that it projects to have greater liabilities in the future than expected assets/income. This is why you will hear some politicians suggest raising the minimum age when Americans can begin to draw SS benefits - so as to delay the number of new people signing up for benefits a little bit further down the road.
In a perfect world, I would like the option to not contribute to the SS system, and also bypass the future benefits. I have been educated on retirement accounts and insurance and understand my responsibility for myself and family in retirement. Unfortunately that is not feasible for a variety of reasons, mainly being that if I quit contributing to the system, they will not be able to meet their current liabilities. You can't do away with the program, because It would be impossible to draw a line in time and say "everyone from this age and older gets it, and everyone younger doesn't get it". You also can't apply income limits, because the higher wage earning Americans pay more into the system through the FICA taxes.
Absent any major overhauls, the greatest looming problem in my opinion, especially for Millenials, is that eventually the government will have to find a way to rectify the deficit in the SS program. According to the 2014 Trustees Report, SS and Medicare payments accounted for 41% of all Federal expenditures in fiscal year 2013. Since these benefits are set in stone and will increase as more baby boomers hit retirement, the only way to fix the deficit is to raise revenue i.e. some form of taxation. It could be in the form of higher FICA rates which would affect take-home pay, or it could be in the form of a special "other tax" like the net investment income tax that is designed to siphon tax revenue from a specific group of taxpayers.
If you are currently drawing SS or will be drawing it in the next 10 years - thank you for your years of hard work contributing to our economy. You deserve the benefits from the system you paid into, and I will gladly pay in so that you can reap the rewards of your long career. But I'm not counting on anything for me because in the next 35 years someone will figure out that the system is broken and unsustainable. And I'm not sure my grandkids will be as willing to foot the bill as I am.