6/21/2012 4:02 PM ET|
The great Social Security lie
If you think the retirement of baby boomers is the problem, perhaps you should know about the real root of the problem -- and how it needs to be addressed.
The headline machine was in overdrive earlier this year with the arrival of the latest Trustees' Report on SocialSecurity and Medicare. And while much of the media continues to herald the coming bankruptcy of Social Security, they do so at the risk of ignoring the real story -- a story that is neither difficult to explain nor hard to understand.
Technically speaking, an entity is deemed bankrupt when its obligations exceed its revenues. Therefore, if the projections are accurate, Social Security will, indeed, be deemed bankrupt in 25 years -- absent modifications to resolve the funding problems.
However, that does not mean that the money will be all gone come 2035. Nor do the headlines explain why we have the projected shortfall.
Subsequent to the projected expiration of the period where the trust can pay out 100% of the promised benefits, the fund will then be in a position to pay out 75% of promised benefits for the foreseeable future -- and that is not OK. Clearly, there need to be some changes made to Social Security so as to make up the 25% annual shortfall in benefits we anticipate will begin a quarter of a century from now.
The cause of the shortfall
But if we are to hope to make these adjustments in a sensible and realistic way, it might not be a terrible idea for the American public to actually understand the real causes of the shortfall in anticipated trust revenues.
We are consistently led to believe that it is the "aging workforce" that rests at the heart of Social Security' funding problems. Tune in to any of the media reports covering the numbers just out and this is what you are going to see and hear.
The claim, while legitimately representing a small piece of the problem, fails to explain the lion's share of the crisis we will experience in the Social Security Trust --and by lion's share, I mean a full 60% of the entitlement's funding shortages.
The "aging workforce" narrative serves to encourage and support the critics who claim that our problem is too many retirees lining up to collect their entitlements only to find that the government has failed to properly manage the Social Security Trust -- leaving the next generation of beneficiaries to be shortchanged 25 years down the line. As a result, the privatization pushers argue that Americans would be far better off looking out for their own retirement accounts so that government mismanagement will not come between hard-working citizens and their retirement money.
This is the Great American Social Security Lie.
It is a lie concocted by those seeking to fulfill Wall Street's eternal quest to get its sweaty palms on trillions of dollars of our retirement cash, allowing them to expand their casino operations beyond their wildest imaginations -- and Wall Street has a very healthy imagination.
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@Donald Miller - Wall Street isn't the only place people put their money for retirement purposes.
In fact U.S government securities demand (hence lower yields) is on the rise due to people moving their money away from Wall Street. Privatization allows people, who make the market demand to have more control over their money.
Government Bonds/munis, real estate, small business ventures are done everyday not involving Wall Street directly or at all.
Many that are for privatization believe people can get a greater ROI by having greater options than just paying into the fund that they themselves have no say in how it is managed.
Its your freaking money you should have a say in how it is managed. Privatization was meant to allow this as well.
Raise the cap to get the tax base back to 90% of all earnings. That should be simple enough, and seems rather obvious and common-sense.
The less obvious thing is how do we address the growing income inequality that is threatening our overall economy.
Dotty, when you say, "NO ONE who has not put onto the system should EVER get to draw from it. " I hope you're including all those women who were stay at home moms and housewives (a large part of your cohort) who supported their working husbands but paid no tax, you know, like 'immigrants' (although, I'm an immigrant and paid tax long before I became a citizen, including FICA and Medicare tax).
How about the idea of opting out of SS permanently?? After all this is only a lgealized pyramid scheme. I say quit paying in to this broken system and save your own money for your own retirement. If all Americans opted out and put the same amount of money into a savings account we wouldn't have such a problem. Also if people were responsible for themselves again, you would soon see a change in the way we work again. People would once again be working hard at their jobs and taking pride in what they do. SS has been one of the major tools for destroying this country.
This is in response to the comments by MEARBEAR. Sorry to have to correct your assumptions but benefits are not determined on the highest wages but on the wage history over 35 years. The wages for past years are then indexed up tc current levels. Secondly, the benefi amount is determined based on the amount of wages which fall into each of three levels. The levels are determined by whats called the bend points. Wages falling into the first bend point receive 90% of their wages, wages in the second tier receive 32% while wages in the highest tear recive 15% repacement. Bottom line is that people with very high wages receive a much lower average replacement amount eventhough they contriuted the full tax rate on all of their taxable wages.
Your most recent rant talks about people recieving benefits who have not paid in a dime. In order to receive benfits you must have had taxable wages or qualify as a dependent or spouse of someone who paid SS tax. In addition there are requirements that you must have had a certain number of years of reported wages. Suggest you call SS and get your facts right . You may then want to correct your postings.
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