Social Security
In 2013, I went back to college and obtained a Human Resources Certificate. I recently found the paper I wrote on Social Security. It is now 2022 and Republicans are attacking Social Security. When I started working at the age of 14, I naively thought that the money being taken out of my check every week was going into my own personal "Social Security Savings Account." My mother quickly cleared that up for me. I've been working for over three decades now, with at least another two decades of work in ahead of me. What safety do I have? What safety do you have? What will happen to social security? Please make sure to vote for those who will uphold and invest in Social Security. Many lives depend on it.
History of the benefit. (Why does it exist?)
Social Security exists in order to provide for American families.“ Indeed, ever since its passage, the Social Security Act has been designed and amended to provide a foundation of basic security for American workers and their families.” (Milkovich, et al., 2014)
The first U.S. social security program benefited Civial War veterans. In the 1930’s, because of the Great Depression, there was a need for a new system to provide benefits to the poor and elderly. “In 1932, Franklin Roosevelt was sworn in as President with the Depression in full swing. He proposed an idea known as social insurance. This idea would eventually develop into the Social Security system of today.” (Grabianowski) A few years later, Social Security was established in 1935 by the Social Security Act.
Originally, Social Security was just a retirement plan that paid benefits to the primary worker only. “A 1939 change in the law added survivors benefits and benefits for the retiree’s spouse and children. In 1956, disability benefits were added” (www. ssa.gov)
Major components/features of the benefit.
There are three components of Social Security. They are retirement and survivor’s insurance, disability insurance, and supplemental security income.
The minimum age for retirement benefits is 62, and full retirement age is 67. In order to get disability insurance, the disability must last one year or be expected to result in death, with special rules for legally blind persons. (Richard) If you receive Social Security disability payments, once you reach retirement, the benefits covert to retirement benefits.
Supplemental Security income covers some disabled, blind, and elderly people who do not qualify for retirement or disability based on work history. (Richard) In order to receive Social Security retirement benefits, you need 40 credits and you can get up to four credits per year. Thus, you need to work at least 10 years to get Social Security.
How it is funded and estimated costs. Please consider taxpayer and/or corporate expense.
The program is based on contributions that workers make into the system, which are held from paychecks. “Social Security is financed through a dedicated payroll tax. Employers and employees each pay 6.2 percent of wages up to the taxable maximum of $113,700 (in 2013), while the self-employed pay 12.4 percent.” (www.ssa.gov)
“In the beginning of the program, one percent was withheld to fund it. This was increased to 1.5% in 1950, 2.0% in 1954, 3.0% in 1960, 4.2% in 1969, 5.05% in 1978, 6.06% in 1988, and 6.2% today. In fact, the percentage withheld has been raised 25 times since inception. The percentage withheld for Medicare was 0.35% when it began in the mid 60′s. Today it is 1.45%.” (Patton, 2013)
Pro and con of the benefit.
PROS
Social Security provides a benefit that keeps up with the increase in the cost of living. It is a great resource for those in the lower class who do not contribute to a 401K or other retirement savings. It is also a great safety net, with health benefits for everyone over 65. Social Security is a huge asset to the elderly.
CONS
There is major concern that Social Security will not exist in the future. If you are younger than 55, a 22% reduction in payouts after 2041 is the prediction. “The other major changes are that traditional pensions are disappearing and individuals are not saving nearly enough to build comfortable retirement nest eggs. The traditional three-legged stool of retirement—Social Security, pensions, and savings—looks more like a pogo stick with two small struts. Social Security has become the major source of retirement income for most Americans. This is not a good thing, but it’s in no way the fault of the Social Security program.” (Moeller, 2010)
“Current fears about a Social Security crisis are based on two reports, one by the Social Security Trustees and another, more optimistic report by the Congressional Budget Office. The overall issues can be expressed in terms of "workers per beneficiary"— if there are far more workers putting money into the system than beneficiaries drawing money out, the system is in good shape. As that ratio changes, the system gets into trouble. In 1960, 5.1 people were paying into the system for every one person drawing benefits; in 2005, there are 3.3 people paying into the system for every one person drawing benefits.” (Grabianowski)
While there should be about $2.6 trillion in the Social Security Trust Fund, the money is not actually there. “… The federal government has borrowed all of that trust fund money and spent it, exactly as Krauthammer asserted. And the only way the trust fund can get some cash to pay Social Security benefits is if the federal government draws it from general revenues or borrows the money—which, of course, it can’t do because of the debt ceiling.” (Matthews, 2011)
Since this was written back in 2013, here's a link for current 2022 information: https://www.ssa.gov/news/press/factsheets/basicfact-alt.pdf
References:
Milkovich, G., Newman, J., & Gerhart, B. (2014). Benefit options. In M. Ablassmeir (Ed.), Compensation (11 ed., pp. 455-484). New York, NY: McGraw-Hill Irwin.
http://money.howstuffworks.com/personal-finance/financial-planning/social-security.htm
http://www.ehow.com/list_7154312_three-components-social-security-system.html
http://www.forbes.com/sites/mikepatton/2013/05/31/how-secure-is-social-security/
http://www.cbpp.org/cms/?fa=view&id=3261
Image credit: Social Security Card by j4p4n