Why Social Security Is Not Enough

The severe economic crisis known as the Great Depression was so overwhelming to the US that it drained every possible means of financial aid for the unemployed, aging, widowed, orphaned and disabled.  In order to overcome the newly created obstacles resulting from a mass outbreak of poverty (and to help steer clear from it ever happening again), President Franklin D. Roosevelt appointed the Committee on Economic Security.  His goal was to create a national program that could establish a financial backup for the unemployed and the aging, plus enable each individual state to provide a better range of welfare benefits.  With all of this in mind, the committee went to work and came up with the 1935 Social Security Act, which also established cash relief for the above individual’s dependent children, the blind, and other needy folks. All was paid for with a simple payroll tax.

Title II of the Act launched a national plan to provide a form of economic security to the working class of America. This “Old-Age” insurance provided benefits for those 65 and older and who earned retirement benefits through jobs covered in the system. This payroll tax benefit would pay a base amount (about $3,000 annually).  The law stated that the amount of benefit received was directly related to the amount of a worker’s total wages covered by the program, but then shifted to give a greater benefit to the average low-wage earner.  Social Security was never meant to be a sole source of income, but a supplement, picking the beneficiary up when times were down.

Since then, survivor and family benefits have been added in, each taking a little nibble into the paychecks of the average American.  The average American female is now living to age 84, with men coming in a close second at 82. Just 20 years ago, the average life expectancy was 72 for the ladies and 70 for the guys. Turn of the 20th century saw folks living to the ripe old age of 47. Medical advances are definitely keeping us alive longer.

Back in the day when Social Security began, there were 16 workers contributing to each Social Security recipient.  In 2006, it’ 3.2 workers to each recipient.  In 2008 (when the first of the baby boomers are set to retire), it looks like it’s going to be a 2 to 1 ratio. 

If anyone had a crystal ball, or a magic 8-ball that really worked, we could ask a simple question about social security and its current reform and get a straight answer.  But this isn’t the case.  No one can be exactly sure what’s going to happen.  All that we know is that everyone born before 1950 is completely safe and his or her benefits won’t be effected at all.  The entire system, if left alone until 2040, would be okay, but then on January 2, 2041, everyone’s check would be 30% less.  So the reform is inevitable.

I myself was born in 1968.  Every year, I receive my Social Security statement in the mail informing me of what my monthly retirement benefit will be if I retire when I’m 67 (in 2035)- $968. if I wait until I’m 72 (in 2040)I’ll get $1,172 per month.  If there is no reform, I will get 30% less than $1,172, which is $940.42. In order to afford to eat in the year 2040 on my $940.42 per month income, I would have to sell my house (not just for the money, there’s no public transportation here), sell my car (I wouldn’t need it anyway), and live with my daughter and her cat.  And I’m allergic to cats, so it would be a mess. All because I thought Social Security would be enough.

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