Ep. 3 Sexy. Sumptuous. Social Security.
Today we are talking about social security. We admit, not the sexiest of topics, but something we should all pay attention to. Where does the money go and why is it running out?
The Social Security Act, signed into law by President Franklin D. Roosevelt in 1935, created Social Security, a federal safety net benefits for victims of industrial accidents, unemployment insurance, aid for dependent mothers and children, the blind, and the physically handicapped.
- FDR asked for a social security bill in Jan→ it had all the private people opposition → but passed in August the same year?! Where did our efficiency in legislation go??
- Ronald Reagan created the FICA tax to supplement the long term outlook for Social Security in the 80s.
The Trust Fund represents a legal obligation of the federal government to program beneficiaries. Under current law, when the program goes into an annual cash deficit, the government has to seek alternate funding beyond the payroll taxes dedicated to the program to cover the shortfall. This reduces the trust fund balance to the extent this occurs. The program deficits are expected to exhaust the fund by 2034.
QUICK SOCIAL SECURITY FACTS:
- Social Security supports tens of millions of Americans, providing essential benefits to help them make ends meet in retirement or if they become disabled.
- Annually, Social Security gives those receiving benefits a cost-of-living increase in the size of their monthly checks. The amount varies from year to year based on inflation figures→ 1.6% starting at the beginning of 2020.
- Research shows the program’s benefits will start to exceed its tax collections in 2020, and the program will deplete its $2.9 trillion reserve fund in 2035 if no action is taken.
- As politicians suggest “fixing,” cutting, or even expanding Social Security benefits through a variety of methods (primarily focused on increasing taxes on the wealthy), it is clear the public should expect either smaller benefits, higher taxes or both in the future as the government looks to extend the runway for a program born in 1935 that roughly four in 10 Americans rely on as their sole source of retirement income.
- The average Social Security benefit was $1,503 per month in January 2020. The maximum possible Social Security benefit for someone who retires at full retirement age is $3,011 in 2020. However, a worker would need to earn the maximum taxable amount, currently $137,700 for 2020, over a 35-year career to get this Social Security payment.
- Roughly 40% of Americans rely soley on Social Security for retirement at this moment in time.
- Social security for people who choose not to get married to their partners (as many young people are doing) AND for women who take more time off during their working life to care for family members are hurt the most…. Making sense when Social Security was created in the 30s, when it was a white male dominated framework and why we need diverse representation so that the new systems we put in place are not tailor made to white males.
- Social Security is an important income source for 7 in 10 recent retirees. According to Secure Retirement Institute research, it makes up 37% of their total income on average.
Bernie Sanders has noted in his presidential campaign that “a billionaire today pays the same amount of money into Social Security as someone who makes [2019’s cap of] $132,900 a year because the Social Security payroll tax is capped.” What in the hell is that about?!
AMERICANS SUCK AT SAVING FOR RETIREMENT (because they live paycheck to paycheck, sooooo it kinda makes sense)
- The average working household has virtually no retirement savings.
- When all households are included— not just households with retirement accounts—the median retirement account balance is $3,000 for all working-age households and $12,000 for near-retirement households.
- More than 38 million working-age households (45 percent) do not own any retirement account assets, whether in an employer-sponsored 401(k) type plan or an IRA.
- Households that do own retirement accounts have significantly higher income and wealth—more than double the income and five times the non-retirement assets—than households that do not own a retirement account.
At least one economist says that the problem lies primarily with the plans, NOT with Americans’ savings habits…
“The system is designed to make people feel bad about themselves — everyone privately thinks that they’re screwing up. And yet if everyone is screwing up, then it’s clearly a system flaw,” Monique Morrissey, economist at the Economic Policy Institute and author of the report.
TRUMP’S ECONOMY BEFORE CORONAVIRUS:
What this all boils down to… The one thing every person could safely say without being considered a jerk about Trump, was how good he was for their stock portfolio… EXCEPT that only half of Americans have stock, so that leaves half the population out.
ALSO, the house of cards fell when the Coronavirus curtain pulled back and showed the stark naked little man Trump just shaking his little hands like, “it’s not my fault. It was China.” This suddenly made everyone remember that the President or even one country is not responsible for the US economy because it is a global economy. How easily it was to make people forget the actual multi-facets of the economy with all of its tangles, tentacles, and intertwining.
As discussions go, we also tangentially talk about planning for the future. Can you depend on social security to be then when you retire, probably not?
For more on social security and the Social Security Administration visit: