Social Security turned 80 Friday, and it’s an occasion that should be celebrated. The program that provides a safety net of benefits for American workers and their families at retirement or in the event of disability or early deat, was signed into law by President Franklin D. Roosevelt Aug. 14, 1935.
And while the government and politicians like to refer to it as an entitlement program, it is not. Workers pay a Social Security tax, which is deducted from their weekly paycheck, so it’s more of a savings program than an entitlement.
Social Security isn’t just a lifeline for the less advantaged; it’s an increasingly rare source of guaranteed lifetime income for just about everyone. Almost every worker looks forward to their Social Security retirement age and that first check.
Social Security, according to the latest figures released by the government, is the sole source of income for nearly one in four recipients. But as much as it has provided over the years, Social Security is showing its age, or rather, American workers are showing theirs. In 1960, there were more than five workers for every person receiving benefits; that ratio is now fewer than three workers for every beneficiary. With less money coming in and more being paid out, the Social Security’s trust funds, now valued at $2.8 million, are expected to be exhausted in 20 years when there will be only two workers for every retired worker.
According to an Associated Press report this week, after 2035, only enough payroll taxes would be collected to pay 79 percent of benefits, forcing an automatic 21 percent cut for the estimated 90 million Americans forecast to receive Social Security.
Ten years ago, Carter Countians received from the federal government almost $150 million in direct payments for retirement and disability. The number of retirees has since increased as well as the individual payment, making Social Security a bigger source of income locally.
No one wants to see Social Security go away, nor do they want to see cuts in the program.
One of the biggest worries for America’s middle class is what happens when they are workers no longer. Many will reach retirement to find they have saved too little to live comfortably. Some will choose to postpone their retirement; others may not have that option.
For many retirees, Social Security isn’t enough to rely on. The average monthly payment is only about $1,300. For more retirees, Social Security benefits are an essential part of their finances; for a significant percentage, it is their only source of income.
For too long, the Social Security system has been a political football. Political leaders need to create a system that has long-term predictability. People need to know that Social Security will be there when and as they need it.
The need for a strong Social Security system is going to increase in the future. Defined benefit retirement plans are disappearing. Defined contribution plans such as 401(k)s and IRAs have far less certainty and require more knowledge and fiscal discipline than many workers have.
Americans already work longer than they did 40 years ago. Workers in physically demanding jobs should not have to work until they drop or until they are 70 years old before they can retire.
Everyone needs to pay their fair share. Most people don’t know that someone making $300,000 or even $30 million a year pays no more in Social Security taxes than someone earning roughly $107,000. According to the AP report, in 1983, 90 percent of wage and salary income was taxed, but today it’s less than 84 percent. That’s a huge windfall for the rich and a serious shortfall for Social Security.
Currently, the payroll tax of 12.4 percent is capped at $118,500 of a worker’s wages, meaning wages above that line are not taxed. The limits on taxable income were set in a way that allows more and more of the well-off to go untaxed. Removing the cap would make up nearly two-thirds of the shortfall.
It’s time Congress quits protecting the rich and begins looking out for middle-class Americans, whose wages have been stagnant. After all, they are the people who show up at the ballot box on election day.