Every citizen who works pays into Social Security and Medicare. I pay my share to fund my mother’s SS pension and healthcare. (She doesn’t get as much SS as she should because she is a Notch Baby. See explanation at end.*) My son pays to fund my SS pension. His children will pay to fund his SS pension and so it goes. This is how the system is supposed to work.
The Federal Government raids the Social Security Trust Fund on a regular basis to build highways, for infrastructure improvement projects, to provide money for wars in Iraq and Afghanistan, to fund bailouts for irresponsible financial institutions like Goldman Sachs and Citi Bank, to shore up other deficits and more. What is left is a stack of IOU’s with which to pay retirees both current and future. The retirement age was already increased in 1983 to offset a projected SS deficit and yet there still is enough money in the fund for the Feds to continue to borrow. Will SS be able to collect those IOU’s when it runs out of money? I guess we will know in less than 20 years how that scenario plays out.
Consider the personal ramifications of a government cut in Social Security benefits by either reducing the amount paid to retirees by 25% or by increasing the retirement age at which SS benefits are paid (currently the suggestion for increased retirement age is 70). Senior citizens will be working longer. Young and old will be in competition for jobs and services. Sons and daughters will now have to subsidize their parent’s retirement if their mom or dad no longer can work because of health issues or because of lack of employment opportunities. (In today’s economic environment children can turn to their parents for support and with the new health bill can stay on their parent’s insurance plans till age 27.) What happens when parents no longer have health care or employment? That’s where Medicare and SS are supposed to fill in the gaps. If SS and Medicare are cut, parents will have to turn to their children for support. The roles will have reversed. This now becomes a de facto tax increase on workers who will be supplementing their parent's incomes.
And if Social Security is phased out, what will the Feds do when they need to fund another war or bank bailout? Where will they get a ready supply of money that is continually funded by the American people who believe that their contract with the Social Security Administration and the money collected from their paychecks each month will provide some economic security when they retire? IRAs are not safe investments because they depend on Wall Street. If we are to save for our own retirement, where and how do we do it? Employers no longer can afford to give retirement benefits as evidenced by large companies like GM, Chrysler and Ford. GMs biggest expense was funding retirement and health care.
I planned for my retirement and SS had to be part of that plan. I am not wealthy and my health is good even though I have had breast cancer. By the time the government put IRAs within reach of ordinary workers, I was in my 40s with limited time to save. Then the market downturn of 1999-2001 stripped my account by 50%. With even less time to save, I then put money into a home and sold that home at the top of the recent real estate balloon market so that I could invest in a more affordable place to live out my remaining years. Then came the 2008 economic crisis in real estate and banking and the bottom fell out of the real estate market. I believed I was being prudent when I bought a slightly distressed home which I remodeled. I have not lost any of the money I originally paid for it but I will have to wait a long time for its value to rise to recoup my remodeling expenses. I have 2 more years till retirement and I know I will have to work beyond that to be able to keep my current standard of living and to be able to continue to save for the day when I can finally retire.
In the interest of full disclosure, I am a member of AARP (http://www.aarp.org/), formerly known as the American Association of Retired Persons, and I donate whenever I can to this organization to lobby the federal government to protect my retirement interests. There are currently about 40 million AARP members, a formidable group.
Life expectancy is increasing and our children who are in their prime earning years now will face these same issues when they retire. No one escapes growing old unless they die young. Not everyone can be wealthy or continually healthy. Unless we want to face a “Brave New World” with “Soylent Green” as a food source we need to fix SS now or face certain shortages and elder poverty in the future. The government can help by making the interest accrued on personal savings tax-free and provide other incentives for investing in our individual futures to ensure we will be able to support ourselves well into old age. Universal health care is a start. I am glad my mother, who is 88 years old, has an income from SS and a small annuity my father set up for her when he served in the USAF. If she didn’t have that income, I know it would adversely impact my siblings and me. We are in our 50s and 60s now and planning for our own economic futures.
*Notch Babies (About.com: US Government Info)
“Far less familiar to most Americans, are a smaller group of people who are now and have been suffering the short comings of changes to the Social Security system for the last 23 years. These are the Notch Babies – persons drawing Social Security born after 1917 but before 1922. The Notch Babies' problem is that since 1977, they have been drawing significantly less in Social Security benefits than persons born either before or after them.
The plight of the Notch Babies started to develop in 1972 when Congress changed the Social Security system to adjust annual benefit increases according to the cost of living. Over the next five years, the cost of living, to say the least, skyrocketed. By 1977, Congress could see that, unless some drastic action was taken, the Social Security Program would be a dead duck by 1981, if not sooner.
As part of their 1977 changes to save Social Security, Congress "grandfathered," or retained the old benefit calculation formulas for persons born between 1911 and 1916, while actually reducing them for persons born after 1917 and before 1922. Thus, the Notch Babies were born and, to this day, they continue to receive an average of 20 percent less in Social Security than persons born in 1917 or 1922.”
