Social Security: The Truth Few Seem to Know
Both Democrats and Republicans See Social Security as a Forced Retirement Plan
I went to see a friend of mine who was a financial planner. He wanted to start by estimating what my social security benefits would be. I thought that was an odd place to start. I was in my 30s. Who knows what the benefit will be?
Years later, a man stood up in a meeting of conservatives and said that he calculated how much he had paid into social security, and he would have been much better off if he had invested the money himself. He said social security should be privatized.
An anti-Trump friend shared a post on Facebook yesterday that social security was not taking into account all the people who died. The post added that if you added up how much you pay into social security and a reasonable return, there should be plenty of money.
Notice what all three of those have in common. All three look at social security as an investment that the federal government is making for you. You paid into it, and you are entitled to benefit. You are just getting your money back. That is not even close to being true.
What is FICA really?
FICA stands for the Federal Insurance Contributions Act which passed in 1935. Monthly payments began in January 1940. The first person to receive monthly payments was Ida May Fuller, aged 65. Her initial payments were $22.54 per month. She lived to be 100 years old. During her lifetime, she paid $24.75 into social security and received $22,888.92 in benefits. As you can see, her benefits far exceeded her contributions. In fact, she nearly received her entire investment in the first month.
We are not reaping the rewards of our investments. We are helping to pay the benefits of our parents, grandparents, and others.
For more information on the history of pensions and social security, see the SSA website. My point in this article is that social security is much more than a forced retirement program. In 1939, amendments “added two new categories of benefits: payments to the spouse and minor children of a retired worker (so-called dependents benefits) and survivors benefits paid to the family in the event of the premature death of a covered worker. This change transformed Social Security from a retirement program for workers into a family-based economic security program.”
Should social security be changed?
I like the ideas of The Goldilocks Revolution. We want a government that pursues social justice while being fiscally responsible. I asked, Rick Raddatz, founder of The Goldilocks Revolution to give me a specific example: Apply the ideas to social security.
I thought his reply was brilliant and on point. Millionaires should not be receiving social security benefits.
The Goldilocks Revolution wants to constantly improve government by improving outcomes through incremental changes. If we can get the same or better outcomes while spending less money, that means we can spend the money we save on a different program.
Compare that idea to what has been happening in government during my lifetime. Every area of government spends its entire budget and requests more next year. The result is waste.
A great example is the door to the library of Independence Junior High School. In the 1970’s, the school got a grant to improve the library. After completion, there was an open house. The officials pointed to the wood entry door that had a fancy carved inlay. They paid extra for the door because they needed to spend their entire budget. What did my parents think? Dad, “Five hundred dollars for one goddamned door.”
No, I do not want to see social security benefits reduced for those who need it. It is time we think in terms of helping as many people as possible. We do that by being more efficient. We are more efficient when we constantly look for incremental improvement and track our results.