Final answer:
Social Security is an integral part of the United States welfare system, funded by payroll taxes and based on a pay-as-you-go system. The program's sustainability is in question due to a demographic shift of fewer workers supporting more retirees. Solutions to the impending shortfall include benefit reductions, retirement age adjustments, and payroll tax changes.
Step-by-step explanation:
Social Security is a fundamental component of the United States welfare system designed to provide a safety net for individuals as they age, and ensure security during retirement. It also offers support for survivors and dependents of workers who have died. Funded by a 12.4 percent payroll tax on wages up to a certain limit, which is split between employers and employees (solely paid by self-employed individuals), the program relies on a pay-as-you-go system where current workers' contributions fund current retirees' benefits.
Eligibility for Social Security benefits is typically determined by the individual's earnings during their working years, with the intent of replacing a portion of their pre-retirement income. However, the sustainability of Social Security is contested due to demographic shifts leading to fewer workers supporting an increasing number of retirees.
Concerns regarding the long-term sustainability of Social Security point toward a future shortfall, and solutions such as reducing benefits, adjusting the age of receiving benefits, or altering payroll taxes have been suggested. The federal government has encountered challenges enacting major changes due to various political and economic obstacles.