Advantages of Social Security:
Social Security is an “enforced savings” system. By law, employees– with a couple of exceptions– should pay the so-called F.I.C.A (Federal Insurance Contributions Act) tax.
If an employee has actually paid sufficiently into the system, they are “insured.” That suggests they can draw Social Security at Retirement (above age 62 ), Disability (if authorized at any age) or Survivor’s advantages at the death of one’s partner– for kids, too.
Consider this: if there were no Social Security system, none of the above would be readily available at important times in one’s life. None.
Well, how would desperate individuals handle? Let’s look at people who are not insured under social security system and faced some emergency in life. It’s terrible!
If you look before 1935, then there is no such system were in place, and more than 80% of people lived in a terrible life. Now this rate has been largely reduced to nearly 15%. The big decrease is mostly due to Social Security.
So, Social Security is “enforced savings system” in a land that saves nothing. More than 20% of Americans conserve absolutely nothing. Absolutely nothing! They waste their earnings in the Vegas or anywhere. Well, when they get up the threshold of retirement– and hardship they can find this money as a blessing from God.
And that brings me to the:
Disadvantages of Social Security:
When I operated at Social Security, I was stunned at the number of Americans believed Social Security was all they required for security!
No. Social Security was developed to be one leg of a “three-legged stool:”
- Social Security
- Cost savings
Without a doubt, the best drawback is that it’s a pay-as-you-go system. To puts it simply, that F.I.C.A. tax in your wage is “sustaining” the advantage of some retired person, handicapped individual or survivor– with some aid from the quick vanishing Social Security Trust Fund.
Back in 1935, we remained in the Great Depression. People required Aid Now! So the Roosevelt administration chose not to develop an enormous, multi $$ trillion “savings” using F.I.C.A. which would then spin off advantages up until completion of time without decreasing the savings.
So, with pay-as-you-go, things get tighter as the number of employees “feeding” the fund gets less and less as compared to the number of beneficiaries. We are approaching a scenario where simply two employees will be “feeding” the system for someone on Social Security.
That suggests that in about 30 years, Social Security will just have the ability to pay 70% these days’ benefits. If you have $2,000/ month Social Security and your kid had a similar profits record, they’ll just get $1400.
Our political leaders might repair the system now. However in the federal government, Social Security is called the Third Rail, describing the 3rd energized rail in our city train systems. Touch that third rail and exactly what occurs? ZAP!
Political leaders understand that senior citizens vote. Oh, kid, do they vote! And any talk of “reforming” Social Security sends out shock waves through the bingo halls, the assisted livings, the majority of the states of Florida and Arizona. Elders quickly correspond reform with reduced advantages.
Hearing “the R word” they begin descending on DC in incredible numbers, ferreting out congressmen and senators and other authorities with anything to do with Social Security. It’s really just like the NRA. A large, extremely directed ballot bloc.