The Good News About Social Security --- Print It & Share It
Social Security and Medicare are two of America's greatest success stories. Social Security has helped generation after generation of America's retire with dignity and Medicare has helped reduce senior poverty by two-thirds since it began in 1965!
Social Security is not part of the country's debt and deficit problem, it is the most fiscally responsible federal program--self-financed through dedicated contributions. Ninety-nine percent of contributions are paid out in benefits, with only one percent spent on administrative costs. There are no private investment plans coming anywhere near that!
We are hearing that Medicare is in a crises and that "baby-boomers will bankrupt the system and the country". The influx of baby-boomers into Medicare does present challenges, but the recent health care reform legislation promises to save Medicare about $475-billion over ten years and is expected to extend the program's solvency another nine years. Health care reform will, over the same period, cut the federal deficit by $138-billion.
*All these are verifiable fact. And there are other truths:
More than one-third of those 65 and up rely on Social Security for 90% or better of their income. Without it, 55% of the severely disabled, 47% of elderly households would be plunged into poverty and another 1.3-million children, and 2.4-million grandparents rearing 4.5-million grandchildren would lose the single most important source of income for these grand-family households.
Not merely a "Retirement Program", Social Security, pays more benefits to children than any other federal program. Six-and-a-half million U.S. children receive assistance from its survivor program--which protects virtually all U.S. children in the tragic event of the death of a parent.
While in the worst recession since the great depression, Social Security continues to issue benefit payments, on time, in the full amount due, and without the slightest twitch. According to the 2009 Annual Report of its Board of Trustees, it is safe and solvent, without any change, for at least the next 30-years.
Social Security is perhaps the world's greatest poverty fighter, it certainly is America's. Older women and people of color are the ones most likely to face poverty in their older years. Right now, women comprise 60% of Social Security beneficiaries and depend on it more than their male counterparts. Over 75% of Latino and nearly 80% of African Americans count on Social Security for more than half their total incomes.
Social Security benefits are protected from inflation and guaranteed for life...no Wall Street backed private investment plan can truthfully make that claim. In fact, since the economic meltdown, $10-trillion in asset values have evaporated--check your 401K or other stock market investments if you'd like to debate that figure!
Simply put; Social Security is even more vital to old-age security and it is clearly and utterly impossible to reliably replicate those on-time, life-time, guaranteed benefits in the private market.
Anyone telling you otherwise is a liar and less trustworthy than an aluminum siding telemarketer.
And, that's a fact!
* Source: Alliance for Retired Americans
5 comments:
Social Security is not part of the country's debt and deficit problem
How do you figure? Deficit = receipts - outlays. At $721 billion, Social Security is the single largest line item in the federal budget. At $526 billion, Medicare isn't that far behind. Medicaid? $483 billion.
Why is it OK to omit these programs from federal outlays? Because there's a separate tax with their name on it? Maybe if I could opt out of that tax, that would be a good reason. But it's a tax, like any other tax. I have to pay it or I go to jail.
Ninety-nine percent of contributions are paid out in benefits, with only one percent spent on administrative costs. There are no private investment plans coming anywhere near that!
Last time I checked, the expense ratio on Vanguard's S&P 500 index fund was 0.18%. But I guess you're right - that's nowhere near 1%.
Furthermore, the only important number is the bottom lime. How much do I get out compared to how much I pay in? According to the CBO, the answer isn't pretty.
Health care reform will, over the same period, cut the federal deficit by $138-billion.
First of all, that's only a projection. And, just like Medicare and Medicaid were only supposed to cost less than $1 billion per year, I'd be willing to bet that projection is overly optimistic.
In fact, the CBO has already reassessed that projection. I guess we'll know in 10 years.
Perhaps I could have been a bit more precise and said that these programs are not the cause of our current deficit miseries.
I did not suggest that they be omitted from federal outlays. Those are your words.
I'll take your word on Vanguard, only because I do not have the time or inclination to drill into it to prove otherwise..but I doubt very much that we're comparing apples to apples in your citing of Vanguard..
I will take your citation of Vanguard much more seriously when you supply a graph of its value, say from 2006 to now!
The bottom line is the most important number? !No, you're mistaken, the most important number is most certainly not the "bottom line". The most important number is that of those millions and millions of hard working Americans who at the end of their laboring years have federally guaranteed insurance program which provide them safety nets protecting them from a decent into poverty.
Throughout George W. Bush's recession, Social Security benefits have been paid on time and in the full amount and Medicare continued to protect older Americans from falling into poverty or bankruptcy as the result of illness, disease, or accident.
Those are the important numbers!
Yes, projections change. As I recall, the Clinton Administration projected an emergence from the Reagan/Bush deficit into surplus much further out than what actually occurred. That surplus was handed over to George W. Bush who promptly squandered it on lavish tax breaks for the wealthiest of Americans and two wars of invasion and occupation fought on our national credit card.
Thank you for your interest and comments.
I did not suggest that [Social Security] be omitted from federal outlays. Those are your words.
OK. Then Social Security IS part of the country's debt and deficit problem. And has been every year that the federal government has run a deficit (which is pretty much every year since the inception of Social Security).
but I doubt very much that we're comparing apples to apples in your citing of Vanguard..
I will take your citation of Vanguard much more seriously when you supply a graph of its value, say from 2006 to now!
I readily admit the S&P 500 is down 6% since 1/1/2006. Now let's compare that to Social Security. Over the past 4.5 years, my return from Social Security is -100%. I've paid tens of thousands of dollars in Social Security taxes and don't have a dime to show for it. You must contribute to Social Security for at least 10 years before you qualify for benefits. And you have to be at least 62 years old, of course. And your contributions are averaged over 35 years.
So you're right - comparing Social Security to 4.5 years of returns from the stock market is comparing apples to oranges. It's more accurate to compare Social Security to 35 years of returns from the stock market. The absolute worst the market has ever done over 35 years is 2.89% per year (after inflation and fees). According to the CBO, Social Security averages -1.57% per year.
The most important number is that of those millions and millions of hard working Americans who at the end of their laboring years have federally guaranteed insurance program which provide them safety nets protecting them from a decent into poverty.
If poverty elimination is your goal, that could be accomplished for FAR less than we currently spend on Social Security. In 2008, the total income deficit in the United States was about $200 billion (that figure includes all citizens, not just seniors). Compare that to $625 billion spent on Social Security. So how about we just give people enough money to keep them out of poverty? That would save tax payers hundreds of billions of dollars a year.
Bill,
You've managed to throw kumquats in with some prunes in your apples and oranges analogy.
First, Social Security, is not an investment program...it is an insurance program which provides a safety-net for older Americans beyond their work years, widows, orphans, and the injured and disabled.
So, comparing it to any stock, bond, or investment program is fallacious.
Secondly, the benefits come on time, month-in-and-month-out, and in the correct amount in a way that makes it the most successful social program in America.
Third, you seem to object to there being a structure for contributions and participation..aside from exercising your right to rant, what is your point? Life is rife with limitations, rules, regulations, terms and conditions. Read your auto, boat, or home insurance policy someday and you'll see what I mean.
Finally, absolutely nothing prevents you from creating an investment program (401K, for example) to build a retirement nest-egg, while establishing and contributing to your Social Security account as insurance against changing circumstances.
As to the 35 year averaging, well, I am damned grateful that they tossed out my earning from age 14 to 30--between the Marines and start at the bottom management jobs, I really didn't make diddly squat until I was about 35!
And, I am damned thankful for my Social Security, since what havoc was not wrecked on my 401k by Bush's Great Recession is being done by Greece and Spain..and..wait, yep, there it is England!
And the equity in my house?...Oh, hell that is a ugli fruit!
Nope, Social Security is a bargain!
First, Social Security, is not an investment program...it is an insurance program which provides a safety-net for older Americans beyond their work years, widows, orphans, and the injured and disabled.
If Social Security is a safety net, then why do the wealthy collect it? Surely, if Social Security is just a safety net then Warren Buffett (you know, the 3rd richest man in the world) shouldn't be collecting it.
Secondly, the benefits come on time, month-in-and-month-out, and in the correct amount in a way that makes it the most successful social program in America.
It's easy to keep game going when you rig the rules. The rules used to be you pay 2% of your income and you collect benefits when you're 65. Now the rules are you pay 12.4% of your income and you collect benefits when you're 67. Not to mention the tax base has been increased 135% over inflation.
I'm curious what you think makes Social Security so successful. It hasn't eliminated poverty. It hasn't even eliminated senior poverty. In fact, because there's no exemption for Social Security taxes, Social Security can (and does) tax people into poverty. I don't call that a success.
Finally, absolutely nothing prevents you from creating an investment program (401K, for example) to build a retirement nest-egg, while establishing and contributing to your Social Security account as insurance against changing circumstances.
You're absolutely right. But I can only invest what's left over after I pay the hefty Social Security tax. I would far prefer the freedom to choose what to do with that 12.4% of my earned income. Isn't it better to have more choices?
Nope, Social Security is a bargain!
Then why not allow people to opt out? If, as you claim, Social Security is a bargain, then only idiots like me would opt out. And we would have no one but ourselves to blame.
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