Why Social Security Is Important - Especially Today
Subscribe To Our Feed
The very first Social Security check was sent through the mail in 1940 even though President Roosevelt had signed the Social Security Act into law, 5 years earlier. Ever since, many American retirees have been grateful to receive that monthly financial safety net as they entered their retirement years. It’s difficult to believe that Social Security has been with us for sixty plus years.
In the original incarnation of the bill, Social Security benefits were only to be paid to the primary worker. But, before the bill went live, additional benefits for the spouse and children were added.
Quite a few folks erroneously think that the Social Security system is equivalent to an investment annuity, in which you send money to the government. They will then invest it and give you the resulting income in monthly payments for the rest of your life. In fact, however, the system is closer to a government welfare program. The collection of payroll taxes , which finances the Social Security program, is managed under the authorization of the Federal Insurance Contributions Act, better known as FICA. FICA is like the enforcement arm of the system. It ensures that every worker “contributes” his or her fair share to the government pool.
Each new generation of workers is responsible for taking care of the previous generation’s retirees. The amount of money you eventually get back from the government has only a tenuous relationship to the amount of money that was deducted from your check over the years. Since it’s inception, the system has collected from contributors and paid out over nine trillion dollars to recipients.
But the 1940 statute did not merely quit with allowing retirees to collect benefits. The law also consisted of the first incarnations of the welfare and unemployment systems which are still very much in evidence today.
Nowadays, with millions of folks losing their jobs each month, retirement travel is only a dream. With our financial systems going into the sewer, and the home crisis blowing up around us - these safety nets are becoming more crucial than ever before. A lot of retired women, especially, are just barely able to make ends meet even with the help of Social Security. Primarily, this is because women today are less likely than men to have additional sources of income. Partly due to working less years in the workforce because of child raising responsibilities. And partly because, even while in the work force, women typically are paid less than men. Luckily, this situation seems to be gradually changing,
But even families that don’t necessarily need Social Security to survive are helped by it. In fact, according to independent studies, if the government were suddenly to get rid of Social Security, many retired families would experience a drop in their living standards of 70% or more.
Quite a few people are concerned that the system will not be able to support itself. In fact, there have been circumstances in the past when the amount of dollars paid to recipients surpassed the dollar amount collected through FICA. In these cases, Trust bonds were sold to make up the deficit. Because of circumstances like these, Congress has occasionally increased the percentage of gross income that FICA can collect from salaries. Even these adjustments, however, as the population ages and simultaneously live longer, may not be enough to sustain the system without drastic changes to the system.
The Social Security program is the largest government program of the country - constituting over twenty percent of the federal budget. As some politicians look at cutting the size and expenses of government, this program has an inviting target on its back. To many people, however, the cost of losing this critical system could ultimately be much more than the cost of running budget deficits.
Technorati Tags: No Tags
Related Tags: No Tags
Possible Related Posts
Leave a Reply
You must be logged in to post a comment.
