SOCIAL SECURITY OR MIS-CALCULATION OF FUTURE GENERATION CONTRIBUTORS. YOU DECIDE.
I personally love our country. And we have the kind of system in America that people from all over the world come to be a part of.
A lot of countries are trying to model themselves after America.
We have been so prosperous as a nation that we financially carry other countries.
But recently in Washington over the Social Security Administration announced that Social Security is paying out more than Social Security is taking in. And by August 2017 Social Security will have insufficient funds. And by 2036 (approximately) Social Security won’t have anymore money to payout to the generation that will become baby boomers and retire.
In other words, Social Security will be broke
Have we as a country mis-calculated the contributions of the current generation coupled with all of the money we have been giving away.
August 2, 2011 in America is going to be one of the most important days in the history of this nation.
Why?
Because the federal government will officially be broke, will officially run out of money. This will happen if the Democrats and Republicans don’t reach a deal to either raise taxes and cut spending or one or the other.
If taxes are raised, which is what the Democrats want to do, this effects the rich, from individuals to corporations. Such could pull their money out of this country and send their money and more jobs overseas.
If domestic spending cuts take place, which is what the Republicans want to do, many of the social programs will be cut or hit very, very hard. Cuts like grants for schools, church grants, cuts to food stamps ($7 billion plus worth), cutting grants to worksource/onestop centers (this is where people go and use computers funded by the federal government to look for jobs), cuts to states like block grants for women with children and other state, county and city grant cuts.
Who will feel the crunch the hardest?
Poor people.
But because we have lived high off the hog in this country for so long, so many decades of living large, no this has caught up with us.
And believe it or not, the spending cuts have to take place.
Look at it this way. Let’s say you just lost your job, or the second wage earner in your home did. All the things that you don’t need to live with will have to go from your budget. So it is with America.
I admire the President that created Social Security. This was a way for working Americans to contribute to their own retirement.
Social Security refers to the federal Old-Age, Survivors, and Disability Insurance (OASDI) program. The original social Security Act (1935) and the current version of the Act, as amended encompass several social welfare and social insurance programs.The larger and better known programs are:
- Federal Old Age (Retirement), Survivors, and disability Insurance
- Unemployment benefits
- Temporary Assistance for Needy Families
- Health Insurance for Aged and Disabled (Medicare)
- Grants to States for Medical Assistance Programs (Medicad)
- State Children’s Health Insurance Program (SCHIP)
- SSI
- Patient Protection & Affordable Care Act
Social Security is a social insurance program that is funded through dedicated payroll taxes called FEDERAL INSURANCE CONTRIBUTIONS ACT TAX (FICA). Tax deposits are formally entrusted to the Federal Old-Age and Survivors Insurance Trust Fund, the Federal Disability Insurance Trust Fund, the Federal Hospital Insurance Trust Fund, or the Federal Supplementary Medical Insurance Trust Fund.
The main part of the program is sometimes abbreviated OASDI (Old Age, Survivors, and Disability Insurance) or RSDI (Retirement, Survivors, and Disability Insurance). When initially signed into law by in 1935 the term Social Security covered unemployment insurance as well.
The term, in everyday speech, is used to refer only to the benefits for retirement, disability, survivorship, and death, which are the four main benefits provided by traditional private-sector pension plans. In 2004 the U.S. Social Security system paid out almost $500 billion in benefits.
By dollars paid, the U.S. Social Security program is the largest government program in the world and the single greatest expenditure in the federal budget, with 20.8% for social security, compared to 20.5% for discretionary defense and 20.1% for Medicare/Medicaid.
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The 2011 annual report by the program’s Board of Trustees noted the following: in 2010, 54 million people were receiving Social Security benefits, while 157 million people were paying into the fund; of those receiving benefits, 44 million were receiving retirement benefits and 10 million disability benefits. In 2011, there will be 56 million beneficiaries and 158 million workers paying in. In 2010, total income was $781.1 billion and expenditures were $712.5 billion, which meant a total net increase in assets of $68.6 billion. Assets in 2010 were $2.6 trillion, an amount that is expected to be adequate to cover the next 10 years. In 2023, total income and interest earned on assets are projected to no longer cover expenditures for Social Security, as demographic shifts burden the system. By 2035, the ratio of potential retirees to working age persons will be 37% — there will be less than three potential income earners for every retiree in the population. The trust fund would then be exhausted by 2036 without legislative action.
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A little history. President Roosevelt signs the Social Security Act, at approximately 3:30 pm EST on August 14, 1935.
The Social Security Act was drafted during Roosevelt’s first term by the President’s Committee on Economic Security.
The act was an attempt to limit what were seen as dangers in the modern American life, including old age, poverty, unemployment, and the burdens of widows and fatherless children. By signing this act on August 14, 1935, President Roosevelt became the first president to advocate federal assistance for the elderly.
The Act is formally cited as the Social Security Act., The Act provided benefits to retirees and the unemployed, and a lump-sum benefit at death. Payments to current retirees are financed by a payroll tax on current workers’ wages, half directly as a payroll tax and half paid by the employer. The act also gave money to states to provide assistance to aged individuals (Title I), for unemployment insurance (Title III), Aid to families with Dependent Children (AFDC)(Title IV), Maternal and Child Welfare (Title V), public health services (Title VI), and the blind (Title X).
It is my understanding is that Social Security was controversial when originally proposed, with one point of opposition being that it would allegedly cause a loss of jobs. However, proponents argued that there was in fact an advantage: it would encourage older workers to retire, thereby creating opportunities for younger people to find jobs, which would lower the unemployment rate. ****************************************************************************
Most women and minorities were excluded from the benefits of unemployment insurance and old age pensions.
Employment definitions reflected typical white male categories and patterns.
Job categories that were not covered by the act included workers in agricultural labor, domestic service, government employees, and many teachers, nurses, hospital employees, librarians, and social workers. The act also denied coverage to individuals who worked intermittently. These jobs were dominated by women and minorities. For example, women made up 90% of domestic labor in 1940 and two-thirds of all employed black women were in domestic service. Exclusions exempted nearly half of the working population. Nearly two-thirds of all African Americans in the labor force, 70 to 80% in some areas in the South, and just over half of all women employed were not covered by Social Security. At the time, the NAACP protested the Social Security Act, describing it as “a sieve with holes just big enough for the majority of Negroes to fall through.”
Social Security reinforced traditional views of family life. Women generally qualified for insurance only through their husbands or children. Mothers’ pensions (Title IV) based entitlements on the presumption that mothers would be unemployed.
Historical discrimination in the system can also be seen with regard to Aid to Dependent Children.
Since this money was allocated to the states to distribute, some localities assessed black families as needing less money than white families. These low grant levels made it impossible for African American mothers to not work: one requirement of the program.
Back in the early days of Social Security, some states also excluded children born out of wedlock, an exclusion which affected African American women more than white women.
One study determined that 14.4% of eligible white individuals received funding, but only 1.5% of eligible black individuals received these benefits.
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I understand that the way Social Security was fist implemented was through the collection of payroll taxes that were first collected in 1937, also the year in which the first benefits were paid, namely the lump-sum death benefit paid to 53,236 beneficiaries.
The first reported Social Security payment was to Ernest Ackerman, who retired only one day after Social Security began. Five cents were withheld from his pay during that period, and he received a lump-sum payout of seventeen cents from Social Security.
The first monthly payment was issued on January 31, 1940 to Ida May Fuller. In 1937, 1938 and 1939 she paid a total of $24.75 into the Social Security System. Her first check was for $22.54. After her second check, Fuller already had received more than she contributed over the three-year period. She lived to be 100 and collected a total of $22,888.92.
In 1940, benefits paid totaled $35 million. These rose to $961 million in 1950, $11.2 billion in 1960, $31.9 billion in 1970, $120.5 billion in 1980, and $247.8 billion in 1990 (all figures in nominal dollars, not adjusted for inflation). In 2004, $492 billion of benefits were paid to 47.5 million beneficiaries. In 2009, nearly 51 million Americans received $650 billion in Social Security benefits.
This country also created aSocial Security Trust Fund for any surplus monies.
The managing trustee of this fund is the Secretary of the Treasury. The money could be invested in both non-marketable and marketable securities.
The largest component of OASDI is the payment of retirement benefits. Throughout a worker’s career, the Social Security Administration keeps track of his or her earnings. The amount of the monthly benefit to which the worker is entitled depends upon that earnings record and upon the age at which the retiree chooses to begin receiving benefits. For the entire history of Social Security, benefits have been paid almost entirely by using revenue from payroll taxes.
This is why Social Security is referred to as a pay-as-you-go system.
Around 2017, payroll tax revenue is projected to be insufficient to cover Social Security benefits and the system will begin to withdraw money from the Social Security trust Fund.
The existence and economic significance of the Social Security Trust Fund is a subject of considerable dispute because its assets are special treasury bonds; i.e. the money in the trust fund has been lent back to the federal government to pay for other expenses.
A worker’s retirement income benefit is based on his Primary insurance Amount , or PIA. The PIA is the average of the highest 35 years of the worker’s covered earnings (before deduction for FICA). Covered earnings in any year are limited by that year’s Socail Security Wage Base, the maximum earnings that could be subject to the OASDI portion of FICA payroll tax ($106,800 in 2010). If the worker has fewer than 35 years of covered earnings, zeros are used to bring the total number of years of earnings up to 35. Years of covered work more than 2 years before the year the worker turns 62 are indexed upward to reflect the increase in the national wage via the average wage index (AWI) from the time at which the earnings were covered in the past to the value of the AWI two years before the worker turns 62 (which is the most recent year available at the date the worker turns 62). One-twelfth of this 35-year average is the average indexed monthly earnings (AIME). The PIA then is 90% of the AIME up to the first (low) bendpoint, and 32% of the excess of AIME over the first bendpoint but not in excess of the second (high) bendpoint, plus 15% of the AIME in excess of the second bendpoint. Bendpoints designate the point at which the rates of return on a beneficiary’s AIME change. In 2008, the bendpoints for calculating the PIA are a change from 90% to 32% at $711 and a change to 15% at $4,288.
This PIA is then adjusted by automatic cost-of-living adjustments annually starting with the year the worker turns 62. Similar computations based on career average earnings determine disability and survivor benefits. These alternate computations average less years of earnings when the worker dies or is disabled before age 62 and use different base years for the inflation adjustments.
Understand that the earliest age at which (reduced) benefits are payable is 62. Full retirement benefits depend on a retiree’s year of birth. Those born before 1938 have a normal retirement age of 65. Normal retirement age increases by two months for each ensuing year of birth until the 1943 year of birth, when it stays at age 66 years until the year of birth 1955.
Thereafter the normal retirement age increases again by two months for each year ending in the 1960 year of birth, when normal retirement age stops at age 67 for all born thereafter. Since the retirement age increases each year it is important to look at how the rest of the world is vastly approaching retirement age also.
A worker who starts benefits before normal retirement age has their benefit reduced based on the number of months before normal retirement age they start benefits. This reduction is 5/9 of 1% for each month up to 36 and then 5/12 of 1% for each additional month. This formula gives an 80% benefit at age 62 for a worker with a normal retirement age of 65, a 75% benefit at age 62 for a worker with a normal retirement age of 66, and a 70% benefit at age 62 for a worker with a normal retirement age of 67.
A worker who delays starting retirement benefits past normal retirement age earns delayed retirement credits that increase their benefit until they reach age 70. These credits are also applied to their widow(er)’s benefit. Children and spouse benefits are not affected by these credits.
The normal retirement age for widow(er) benefits shifts the year-of-birth schedule upward by two years, so that those widow(er)s born before 1940 have age 65 as their normal retirement age.
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Any current spouse is eligible, and divorced or former spouses are eligible generally if the marriage lasts for at least 10 years. (Civil marriages of same sex couples are not recognized by OASDI for spousal benefits because the federal DOMA law excludes them for federal recognition.)
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A worker who has worked long enough and recently enough (based on “quarters of coverage” within the recent past) to be covered can receive disability benefits. These benefits start after five full calendar months of disability, regardless of his or her age. The eligibility formula requires a certain number of credits (based on earnings) to have been earned overall, and a certain number within the ten years immediately preceding the disability, but with more-lenient provisions for younger workers who become disabled before having had a chance to compile a long earnings history.
The worker must be unable to continue in his or her previous job and unable to adjust to other work, with age, education, and work experience taken into account; furthermore, the disability must be long-term, lasting 12 months, expected to last 12 months, resulting in death, or expected to result in death. As with the retirement benefit, the amount of the disability benefit payable depends on the worker’s age and record of covered earnings.
Supplement Security income (SSI) uses the same disability criteria as the insured social security disability program, but SSI is not based upon insurance coverage. Instead, a system of means-testing is used to determine whether the claimants’ income and net worth fall below certain income and asset thresholds.
Severely disabled children may qualify for SSI. Standards for child disability are different from those for adults.
Ther is a lot more to the history of Social Security but I* give you this brief bit just to educate you on the history.
I pose the question to you of do you feel SOCIAL SECURITY HAS MIS-CALCULATED FUTURE GENERATIONS OF CONTRIBUTORS?
Do your think SOCIAL SECURITY should be privatized now that we as a Nation will be broke by August 2, 2011 and SOCIAL SECURITY will have insufficient funds by 2017?
Do you really understand how it works?
If you are not receiving social Security yet, you need to get an idea of why you must pay into the system.
Infact if you are currently working you need to concern your self with alternative measures for your own retirement just incase there is no Social Security when you retire or become disable.
