Retired or Retiring Soon - Fix Social Security

Here's one from June that's still relevant today.

Save Social Security

Your Retirement Depends on Making it Stronger

If you are retired like I am, care about someone who is retired or plan to retire at some point, then we have something in common. Social Security. 

Most people who still work do not think about Social Security much, except perhaps to notice the deduction from each paycheck that goes into the Social Security Trust Fund. Many working Americans have fragile 401(k) retirement accounts, some funded by employers and some self-funded, that are supposed to take the place of formerly robust employer funded pension plans. Most, however, have no retirement savings and cannot pay themselves for their future because of the demands of current economic circumstances. 

As the current generation of the soon to be retired start to consider their so-called golden years, they realize their current standard of living is about to decline. Recent surveys note that 44% of Americans over 50 say that Social Security will be their largest source of income in their retirement years. With an average annual benefit of about $16,000, that is not a lot with which to pay for housing, utilities, food, medical expenses not covered by Medicare, transportation and modest entertainment, much less travel, grand children and other retirement goodies. Single women, whose earnings usually have been less than men, fare far worse than the average benefit. In some years, benefit payments increase along with the cost of living. In others, like this year, seniors see no cost of living increase in benefits paid. 

Those in Congress charged with helping people split along partisan ideological lines divorced from the harsh economic realities of modern retirement requirements. 

Republicans opposed to large government “benefit entitlements” want to get out of the retirement savings business all together by turning Social Security over to Wall Street investment firms to manage. There is, after all, a profit to be made investing all that money. Not realizing that the money going into the Social Security Trust Fund comes directly out of working people’s earnings, they claim that payments out of the fund during retirement are a benefit that people are somehow not entitled to in full measure. Benefits must be reduced in order to stretch payments further. Social Security, in their worldview, will soon be “broke” and therefore benefits need to be cut now in order to save it for future retirees. They neglect to mention that privatized investment management could never match Social Security’s current 0.7% administrative cost to benefits paid ratio.

To be fair, there are some Democrats who side with Republicans on cutting Social Security benefits, raising the retirement age when benefits can be claimed and imposing some form of means testing on benefits paid. Most, however, favor increasing benefits to retirees without such restrictions and guarantee increases in benefits paid to cover those expenses most seniors must bear such as increased medical costs and assisted living expenses. A majority of Americans support these more favorable provisions.

Current Democratic presidential hopefuls cover the Social Security spectrum with Hillary Clinton taking a more moderate approach and Bernie Sanders espousing a full blown fix that provides a decent retirement to current participants as well as those who come along after.

President Obama recently joined the discussion in a speech in Indiana this past Wednesday, coming down on Clinton’s left and Sanders’ right. 

Here’s part of what he said. “We can’t afford to weaken Social Security. We should be strengthening Social Security. And not only do we need to strengthen its long-term health, it’s time we finally made Social Security more generous and increased its benefits so that today’s retirees and future generations get the dignified retirement that they’ve earned. And we could start paying for it by asking the wealthiest Americans to contribute a little bit more. They can afford it. I can afford it.”

There are relatively easy fixes to make the Social Security Trust Fund more solvent and stable while increasing benefits to current and future retirees. Remove the $118,000 annual earnings cap on wages subject to Social Security withholding. Raise the tax rate for Social Security withholding taxes from the current 6.2% for employees and employers or 12.4% for the self-employed. Repay the money taken from the fund by previous administrations to pay for other government spending.  Remember, the money you pay into the system now is yours to live on when you retire. Benefits pay to you until you die.

There are lots of organizations working to make Social Security stronger. Try AARP, the Alliance for Retired Americans, Social Security Works or the Strengthen Social Security Coalition. Please join one or more and help protect your retirement.