When I started working at age 16, I was told that I would be taxed to supplement my old age. I was told that this tax would go into a fund that pays retirees back the money they put in, plus interest. I was given charts from that program over the years showing what my income would be at retirement.
Everyone born since about 1950 who is eligible has paid into the Social Security Administration for their entire working life. If Social Security is not fixed so that those benefits are not paid, I was lied to, for decades.
There are a lot of free rides being bandied around these days: Pay off student loans, pay off renters, pay people not to work, but Social Security is not a free program. It was put into effect in 1935 and mandated that a tax be applied to each person in the program. Not free, funded.
It is the largest program in the U.S. budget. The 2021 budget is $4.8 trillion, of which Social Security accounts for $1.2 trillion. Roughly one-fifth of the entire U.S. population of 336 million people receives some sort of SSA payment.
Unlike programs that the government doles money out to, like lunch programs, poverty payments, even things like education for veterans and many more, Social Security is directly funded by the people in the program. It is not a general fund program.
Some opponents of the Social Security are saying that a 401(k) should be the main retirement fund and not the SSA. But since the 401(k) law started in 1978 and was not really popular with employers until 1985 to 1990, the 401(k)s were really underfunded for a very long time.
It is fine to say more should be put in now, but what about the people retired now or within the past 10 years? There is no way to go back and fund these programs more. On the other hand, since retirement planning included SSA funds, and we are being taxed for the SSA money (funded) we would receive, less was available for 401(k) money respectively.
There are plenty of reasons the Social Security Administration is in trouble today, but here are the biggest reasons, all of which can be fixed.
• The U.S. government has been taking money from the program for years to fund other things. Currently it owes the fund $2.9 trillion.
• Not taxing enough to fund it.
• People living longer, therefore taking more payments.
So, let’s look at each one. First, put back the money taken from the fund or at the least continue to fund deficits in the fund.
Next, tax an amount equal to a real-life scenario. In 1985, the SS tax was 7.05 percent; today it is 6.2 percent, even though the administration knows it is underfunded.
Lastly, use better actuarial tables. If an insurance company can do it for the past few hundred years and not go bankrupt, so can the SSA. Extend the full retirement age to reflect people living longer.
Other fixes include stopping the cost-of-living increases. Have no limit of taxable income, currently capped at $142,800. Increase the SSA tax amount for people contributing now.
The main problem is that unless something is right in front of government eyes, it is ignored. The problem de jour always gets the attention and not very much planning a decade in the future is ever done today. If this was not true, we would not be talking about this issue now.
So instead of funding outlandish wars — our last 20-year debacle is estimated as high as $7 trillion, free education, pie-in-the sky space programs, pun intended, do the right thing and stick to the commitment that was given 86 years ago, which was pay now and receive later.
If the Social Security Administration is not fixed, all of us who were taxed, for decades were lied to by our own government.