by Grand Forks Herald
September 2, 2012 at 2:15 am in Grand Forks Herald
Americans prefer a balance between ‘efficiency’ and ‘equality,’ not either carried to an extreme. Continue Reading
Tags: Government, healthcare, medicaid, Opinion, social security, updates 25 Comments »
I don’t believe Social Security should be scrapped. Let’s look at the information in this editorial. From 1925-1932, nearly half of elderly lived on less than $25 per month. Using an internet inflation calculator, that is equivalent to about $400 today. That isn’t much. No one should want to go back to that.
It is also widely reported that SS will only be able to deliver 75% of the benefits in the future. So what would happen if SS benefits were reduced to 75% of their current value? Someone working at a minimum wage job ($15,000 per year) will get about 50% of their final wage if they retire at 65. This would be $625 per month. If this were cut to 75%, that would be about $470…. not much different than in the 30s. This assumes a single person. If married, the benefits are about 50% higher.
So….. how many people make only $15,000 per year? Internet search shows about 17% (1 in 6). Not the 1/2 of elderly as in the 30s, but still a reasonable number of people. 1/3rd of people in the US make less than $27k/year and at $27k/year would get about $880 per month in SS (or $660 per month if reduced to 75%).
So what does all this rambling mean? Well I EXPECTED to show that, even if the benefits were reduced to 75% (so that Social Security was viable for the long-term) people would be MUCH better off with SS than they were in the 1930s. What I found was a retired minimum wage earner on SS would be ABOUT the same as 50% of the population in the early 30s and 1/3 of the 2012 would only be a little better than those in the 30s. Of course this assumes there is no other income or support than SS.
Still, something needs to be done to bring the SS payments in-line with the SS income.
Like or Dislike: 14 2
No subject shows America’s disdain for history like Social Security. As the editorial points out, in the case of Social Security, both sides are in fact correct.
Social Security was created to keep grandma from starving to death during the last six months of her life. My use of gender specific language was intentional. The vast majority of Social Security recipients during the Great Depression were elderly woman. The men had already died.
It was an invaluable assist for those who qualified. It was also very difficult to qualify. The original Social Security Act was a monument to American racism (think of the classic 1920s film about the KKK: “Birth of a Nation”). The congressional record clearly shows that if African Americans were made eligible, the act would never pass. It is for this reason that agriculture was specifically exempt. If you were a sharecropper or laborer you did not qualify. Since the majority of African Americans in the south at the time were employed in agriculture, they were excluded.
Social Security was never designed or funded to be a retirement program. The fact that it is going bankrupt under the pressure of the baby boomers is no surprise. People have been foretelling this since the great expansion of Social Security in 1968.
Social Security is not a savings plan. It is not a 401K. It is a plan where the workers of today pay for the recipients. As long as there are enough workers to support the number of recipients, the program works. When the number of recipients overwhelms the number of workers, the program fails. That is what we are facing now.
How do we reform Social Security? We return it to what it was designed for: a temporary aid to the elderly poor. How do we do it? We let everyone 40 years and younger know that it will not be there for them. It is really that simple. We also increase the age of eligibility.
Again, Social Security was never designed or funded as a retirement program. That was a 1968 invention designed to keep the Democrats in power (it failed, Vietnam had other ideas). Age 65 for retirement is not set in stone. It was chosen when you only lived to 68 or 70. Living to 85-90 breaks the bank.
Get people back on the road to being responsible for their own retirement and save Social Security for what it was meant to be: a way to not starve to death when you are too old to work.
Well-loved. Like or Dislike: 24 6
You left out the original premises: an 8-1 pay-in ratio and a life span of 68.
Like or Dislike: 10 0
I knew the 68 (I mentioned that above). I haven’t heard 8:1 but that sounds about right.
Like or Dislike: 8 0
Yes…401K’s and company stock are so reliable….I’ve taken modest hits on mine since 08, but I have relatives who really got hit bad because of he risk they took…..And personal saveings is a great idea….I have both savings and CD’s which only really make money when I add to them because the interest is so low that it’s almost no interest…..And I’m sure people who had company stock in Enron have no hard feelings about having their retirement wiped out……..Being responsible can still get you knocked on your ass if you make the wrong move when the big game players make their wrong moves….Maybe the system needs to be adjusted (And kept from being robbed so taxes wont need to be raised), but we do need a safety net one way or other……One that we pay into without an option to get out anyway
Like or Dislike: 1 8
Well, people who think the fund managers on the stock market are really concerned about them can invest as much as they want. My husband and I had a combination of savings, IRAs, and pensions, though without Medicare (and we do pay for private insurance as well) we’d be foraging for roots and berries. Until I turned 65 my health insurance cost nearly a grand a month and I didn’t dare switch because I’d had cancer. How many of you with retired parents could see them as being able to pay for health insurance without Medicare and Social Security?
Let’s see…… Two parents, previous health problems, probably — just for the health insurance — around 25 grand a year. Consider how much interest you get on your savings account and you’ll be ready to, oh, just spit.
Like or Dislike: 1 3
Since we are told SS is a sacred social contract, I expect the same return on my SS contributions that Ida May Fuller received.
“By the time of her death, Fuller had collected $22,888.92 from Social Security monthly benefits, compared to her contributions of $24.75 to the system.”
Like or Dislike: 15 10
Kevin, oh my dear boy. If Ms. Fuller retired in 1939 and died in 1975 (at the age of 100), she’d collected social security for 36 years. If you divide the $22,888.92, the total she received, by 36 you will find that she took in a whopping $635.80 per year. Well, if that’s what you want I hope you have somebody helping you pick out a good IRA because you’ll need it!
Like or Dislike: 1 2
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Social security was designed as an insurance program. That is what all is, an insurance program. You pay in during your working years and get back a monthly sum, dependent on your wages before retirement.
The real reason Social Security is in trouble is because our Living Wage Jobs that have been eliminated or sent overseas. Those Living Wage Jobs were what paid the freight, not only for Social Security, but in keeping the economy going also. This country will not and cannot recover without those Living Wage Jobs.
The reality is, Social Security is not now and will not be in trouble for something like another 35 years, due to the built up trust fund. 35 years, plenty of time to get our Living Wage Jobs back in this country and our economy going again. That is the purpose of the trust fund. To be a reserve, a reservoir during the lean times, such as now. That is why Social Security was setup the way it was, with a fall back reserve. Insurance companies do the exact same thing. So what’s the problem here?
The Republicans are the ones trying to tell us Social Security is bankrupt and not sustainable. During the Bush Administration, they tried to privatize Social Security by putting that money into the stock market. I think we all know how well that would have worked, if they had succeeded. The Stock Market crashed twice with Bush at the helm. With privatized Social Security money in the stock market, millions of people would have been left destitute, lost their homes and everything they had worked a lifetime to acquire. Luckily, they did not succeed… Yet. But they are still trying. Government run and controlled Social Security was not affected.
All this raising the retirement age, cutting benefits, tying Social Security trust fund to the General Budget, even telling us it is unsustainable and in trouble, are all attempts by the Republicans to destroy Social Security. Social Security is far from being in trouble, if we can only keep the Republicans out of all that money they are greedily trying to get control of.
Poorly-rated. Like or Dislike: 12 22
You are absolutely right about this. The Repubicans have been trying to “privitize” social security for a very long time. The problem is that for most people, the difficulty of saving the amount of money necessary for a sustained retirement is impossible. Why? We’re human and the lure of a growing nest egg is impossible to resist if we have hard times. In fact, it you have big medical bills, for example, any money you have has to go to pay those bills. That’s why a lot of people go into bankruptcy. The idea that money could be withheld from salaries and saved so that it was there for people when they retired was an attractive idea when the system was instituted and it is attractive now. The SS system can be adjusted to maintain it’s viability for the future. That is what the Democrats want to do. The Republicans want to eliminate it.
Hot debate. What do you think? 13 20
Seriously Realist, your view of the world is that it is better for government to make your decisions for you than allowing you to make your own decisions. That as human beings we are incapable of self-sufficiency and must be under the supervision of a paternal government that can make “correct” choices for us. Yikes, I am very frightened for this country if we have reached the point where we have abandon even attempting to be responsible for ourselves and have decided simply to allow the government to be responsible for us. Yes, government intervention is necessary for a small segment of society that has cognitive of physical challenges, but your suggestion that the majority of Americans are incapable of self-sufficiency is freighting. Government’s role is to protect the minority, feed the poor and provide for the needy; in my opinion government’s role is not to act as a segregate parent for the masses. There are plenty of reasons to argue that Social Security shouldn’t be changed, but I find your suggestion that a majority of Americans are incapable of providing for themselves appalling.
Hot debate. What do you think? 22 9
When government tells you what kind of lightbulbs you can use, it has already taken over.
Well-loved. Like or Dislike: 23 2
Joe, I agree with most of what you’ve said, except when you said “Government’s role is to protect the minority, feed the poor and provide for the needy;”.
Like or Dislike: 6 0
While I share your ambivilence about a privitized social security system, your characterization of social security as an insurance system is false. As we discussed above, it is in reality a ponzi system; one where those who are working pay for those who have retired.
Every legal worker in the United States pays social security. The lack of living wage jobs does not greatly affect this. If you work for minimum wage you pay social security up to a certain amount (? $68,000) and if you earn $3.5 million a year you pay social security on the first $68,000.
In fact, this is an area people wish to reform. They want people to pay social security on either everything or at least the first $100,000 to $150,000.
Another area of reform would be taxing capital gains. As it stands now, Romni et. al. pay very little social security because the majority of their wages are from dividends. These are not taxed.
As for living wage jobs, yes we need them, especially in ND. On the other hand, what have you done to prepare yourself for one? They are there, but you will not get one without at least a certificate in a skill from the tech.
If you are waiting or advocating a living wage job that requires only a high school education and on the job training: I agree. Those are gone and they are not coming back.
Like or Dislike: 6 11
” These are not taxed.”
I wish I had knwn that when I made out my return.
Like or Dislike: 12 0
Correct me if I am wrong Gene, but it was my understanding that social security taxes applied only to earned income, not dividends, interest, etc.
Good old fashioned greedy Uncle Sam taxes: of course.
Like or Dislike: 8 2
I misread your post. Thought you were saying dividends wer not tax, period.
Like or Dislike: 9 0
Flying, Social Security taxes currently apply to the first $110,000 of income. Since 1990 high income earners (the top 10-15%) could expect to receive less than they paid into the system. This year those who will receive less than they paid in grew to include much of the middle class (the top 40%). In addition, for the past four years the rate of employee contribution has been reduced by almost 1/3 by reducing the tax rate by 2%.
Like or Dislike: 15 1
My prediction is that the current trends will continue; the earnings limit will continue to increase while at the same time the rate imposed on employees will continue to decrease. This will continue to shift the funding of Social Security to a progressive tax system with the majority of the funding coming from employers and high earners. This is similar to the continuing shift in income taxes. The United States has the most progressive income tax system of developed countries and Social Security is following a similar path. There are arguments for and against the progressive nature of income tax and Social Security, and to some extent taxes need to be progressive. However, my concern is that at some point you cross the line where a progressive tax system shifts the burden to a minority for the benefit of the majority. At that point it becomes virtually impossible to sustain because those who benefit are the majority and they have no incentive to do anything but increase the amount of collection.
Well-loved. Like or Dislike: 17 0
Thanks for the info. It makes sense.
My generation (I am 50) has been saying since we were in HS that Social Security will not be there when we retire. While that may be untrue, it most certainly will not be there in a form we would recognize. There simply are not enough people paying into the system.
Like or Dislike: 14 0
Flying, it is also important to note that the Medicare portion of employment taxes (2.9%; 1.45% paid by employers and 1.45% paid by employees) does not have any limits and has .9% additional tax (employee paid) for earnings over $200,000. The additional .9% was part of the new healthcare law.
If having a safety net promotes risky behavior and if you think that’s a bad thing, then should the safety net of having wealthy parents be removed and not just social programs? Instead of reducing the estate tax maybe we should go to 100%.
Poorly-rated. Like or Dislike: 6 20
Guess what? I just got my mail. The mailman just put it in the box. This is a record day for me. This beats the old record by almost two hours. This is due to the EGF post office no longer sorting their own mail. They have to go to GF to do it. It’s no big deal to me but odd nonetheless.
Like or Dislike: 11 0
So you’re going full fledged Nucker now the eh?
Like or Dislike: 0 0
The projections for Social Security are based on a reasonably robust economy. If the economy goes further in the tank it is in deep trouble much sooner.
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