Social Security – the Ultimate Political Football
Is the Social Security system stable in the future? Will Social Security be there when I reach retirement age? These are some of the questions younger generations ask about Social Security. In response, some say the system is broken, actuarily unsound, requiring an overhaul. Others claim the various elements of the Social Security Administration are basically solid, needing only minor modifications to assure solvency. What is the actual case? Should individuals planning for retirement three to four decades hence rely upon this promised income, or the currently promised amount?
“Don’t be skeptical, Social Security is here to stay”
This is a headline in the October 21, 2016 Mat-Su Valley Frontiersman, as well as an opinion held by many. The author (the Social Security Public Affairs Specialist for Alaska) wrote, “It is important that members of Congress act well before 2023 in order to strengthen the finances of the program.” The University of Maryland’s Independent Student Newspaper The Diamondback, carried an October 24 student column postulating even when the $2.79 trillion US Government debt securities goes away, “The program will stay up and running thanks to workers’ continued contributions
The American Population Agrees On Bipartisan Action
For there to be true bipartisan agreement on any issue in the emotionally charged current political atmosphere is truly remarkable. On October 18, 2016, Karen Demasters wrote an article in the Financial Advisors Magazine entitled, “Tax More, Raise Age To Provide Social Security Benefits, Voters Say.” The article, based upon survey results conducted by Voice of the People, stated the American populace is ready to raise the payroll tax charged to employees, increase the limit upon which an individual would pay the tax, and increase the retirement age to 68.
What Does Social Security Say About Itself?
The Social Security Bulletin of 2010 (Volume 70 Number 3) is essentially a portrait of the plan painted by Stephen C. Goss, Chief Actuary of the Social Security Administration. The Introduction states, “As a result of changes to Social Security enacted in 1983, benefits are now expected to be payable in full on a timely basis until 2037, when the trust fund reserves are projected to become exhausted.” According to the 2010 projections, FICA taxes will cover only 76% of retiree income at that point. For full benefits to continue, taxes must be increased or trust fund assets (Treasury debt securities) must be liquidated. As the Chief Actuary wrote, “Congress will need to make changes to the scheduled benefits and revenue sources for the program in the future.”
We Have Become Addicted, Just As Franklin D. Roosevelt Warned!
In his 1935 State of the Union address President Roosevelt said, “The lessons of history, confirmed by evidence immediately before me, show conclusively that continued dependence on relief induces a spiritual and moral disintegration fundamentally destructive to the national fiber. To dole out relief in this way is to administer a narcotic, a subtle destroyer of the human spirit. It is inimical to the dictates of sound policy. It is a violation of the traditions of America.” Though FDR did not believe in the government doing everything, he supported the creation of Social Security as a means for government to do something preventing retirees from a life of destitution. Today, Social Security Administration statistics show 60 percent or more of seniors rely upon Social Security for at least half of their monthly retirement income. The question is, “Will our ‘habit’ eventually outgrow our ‘income’?”