Monday, March 30, 2009

Social Security and The Future of Your Money

In 2001, the U. S. government paid nearly $433 billion in social security. Only four years later, this figure climbed to $523 billion. In December that same year the average benefits payable to a retired worker was $1002/month. Do you think this will still be an option for you when you retire? What is another way to get the government out of this failing policy? Explain your reasoning with sources.

16 comments:

  1. This is something that is going to completely disappear. Thanks to Giggles the Clown in D.C. (Obama)and his increased national deficit this and many other programs will disappear. He'll do the same thing he did with the depression. He'll come out with a list of programs that he will and won't cut. Then later he'll start to "revise" these programs and then he'll do it again and then bam. It's gone. Besides that he's already blown the money I'd get for retirement. So thanks Giggles keep on clowning around over there. Your fare better at it then Bush ever was.

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  2. In 2001, the U. S. government paid nearly $433 billion in social security. Only four years later, this figure climbed to $523 billion. In December that same year the average benefits payable to a retired worker was $1002/month. Do you think this will still be an option for you when you retire? What is another way to get the government out of this failing policy? Explain your reasoning with sources.


    I will be eligible for Social Security in 2053 (or later if they push back the minimum age for collecting). Anyone retiring after 2041 will see a cut by 27% with subsequent cuts each year after that unless drastic changes happen with the program. I feel that this program, or some new iteration of it will still be in existence when I retire. But I believe that the program will be forced to more closely represent the type of program it was originally intended to be a safety net, not a primary way of funding retirement. Today is supplies not only retirement, but survivors and disability benefits. Currently 1 in 3 of the Social Security beneficiaries is not a retiree.

    Retirees were expected to have not only the money from Social Security, but a pension and personal savings to live on. Pensions have become a rarer and rarer occurrence for Americans removing that funding source. Pressures are also felt from the longer ages that retirees are living and the fact that the shrinking number of workers compared to the number of retirees.

    There are a limited number of ways to easy the pain.
    1.Increase payroll taxes
    2.Means test who is eligible for benefits
    3.Decrease benefits



    Sources:
    http://www.ssa.gov/qa.htm
    http://www.ssa.gov/pubs/10055.html
    http://www.newyorklife.com/cda/0,3254,8416,00.html

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  3. I personally do not think that this will be an option. With the economic situation as bad enough as it, the government is losing money every few seconds. Colleges have begun to put students who have applied and been accepted on a waiting list. San Jose State has a long waiting list for applications, and if that was not enough, it is now cutting programs. There are even waiting lists for financial help, EOP (Equal Opportunity Program) which helps give students who have a low income, pay for college, has now been denying potential students who could benefit from this program. With the unemployment rate increasing every day, more and more people are registering as unemployed. This is very bad for the economy as well as the tax payers, because it weakens the money system. Everyone is becoming poorer, and that includes the rich and famous. To make matters worse, president Obama, is throwing money away. He is still bailing out the banks, even the ones still dying. Why would you put someone else's time and effort into something that you know will not end well, it's ridiculous. I agree with Jake when he says that Obama does not seem to be helping the situation. He is only making matters worse, and in his speech he specifically said that the people came first, I do not see this happening. Maybe we we're better off stuck with Bush, at least Bush was predictable.

    Something the government could do to help the situation is to think clearly about their next action. The government seems to do everything impulsively, which is the wrong way to do something that involves billions of dollars. Requirements could be set for applying for social security and unemployment. People who cannot sustain themselves and have no one else in the world they could turn to in their time of need, are the ones who should be applying for this type of financial aid. Examples of these people are: Elderly who are mentally incapacitated, those physically and mentally incapable of functioning well in society without the help of others, and those who are no longer able to work for a reason other than getting laid off.

    "The recession is projected to wipe out annual cost-of-living increases for 50 million Social Security beneficiaries for the next three years, something that hasn't happened since automatic adjustments were adopted in 1975."

    "The Congressional Budget Office says in its latest budget estimates that inflation will dip so low that Social Security recipients will not qualify for annual increases in 2010, or for two years after that. In 2013 through 2019 — when projections are less reliable — CBO estimates annual increases of 2 percent each year, which would be among the lowest."


    http://www.google.com/hostednews/ap/article/ALeqM5gc76xC9BUsTODdQ-_CUXVCAwuTlwD97997E81

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  4. This will definitely not be an option when I retire because the way the economy is right now, it seems like this is out of the question. The government is giving away so much money on stimulus packages and everything that I don't think they will have enough money to even worry about this situation. I agree with Jake about how Obama is using money on nothing and trying to save fallen banks. Why would you waste the nation's money on banks that already died? It’s useless. So he is making the matters even worse. So it looks like this great option won't be available to us and we won't have benefits when we decide to retire unless something dramatic happens.

    Another way to get government out of this failing policy is for the government to think on what they are spending their money on and to not waste it like they haven been the past years. If they haven't wasted it on pointless bailouts and trying to save fallen banks then maybe they will have some money saved up for something big that could turn around the economy in a second but who am I to judge what they spend on. They just need to think clearly on what they spend and maybe we will have this retirement plan set up when I get retired. A long way till then but it is definitely something to think about.

    "The recession is projected to wipe out annual cost-of-living increases for 50 million Social Security beneficiaries for the next three years, something that hasn't happened since automatic adjustments were adopted in 1975. The Congressional Budget Office says in its latest budget estimates that inflation will dip so low that Social Security recipients will not qualify for annual increases in 2010, or for two years after that. In 2013 through 2019 — when projections are less reliable — CBO estimates annual increases of 2 percent each year, which would be among the lowest. Monthly Social Security and Supplemental Security Income benefits for more than 55 million Americans will increase 5.8 percent in 2009, the Social Security Administration announced today. The 5.8 percent increase is the largest since 1982."- Recession hits Social Security increases

    'Monthly Social Security and Supplemental Security Income benefits for more than 55 million Americans will increase 5.8 percent in 2009, the Social Security Administration announced today. The 5.8 percent increase is the largest since 1982".- Social Security

    I hope they get this fixed because everyone who retires wants some kind of plan that they can follow. Also Obama has to start making a difference like what he said in his speech. So far, he didn't do anything so far except make matters worse like Lupita and Jake said.

    Sources:

    http://www.google.com/hostednews/ap/article/ALeqM5gc76xC9BUsTODdQ-_CUXVCAwuTlwD97997E81

    http://www.ssa.gov/pressoffice/pr/2009cola-pr.htm

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  5. With the way the economy has been these last several months, I feel that anything regarding Social Security is uncertain at this point. “With unemployment rising, the payroll tax revenue that finances Social Security benefits for nearly 51 million retirees and other recipients is falling, according to a report from the Congressional Budget Office. As a result, the trust fund's annual surplus is forecast to all but vanish next year -- nearly a decade ahead of schedule -- and deprive the government of billions of dollars it had been counting on to help balance the nation's books.” Articles have been written about Obama being more focused on Social Security than Bush did previously. Obama also said that the White House will say more about the topic in the near future.
    http://www.washingtonpost.com/wp-dyn/content/story/2009/03/31/ST2009033100007.html
    http://blogs.wsj.com/washwire/2009/04/01/obama-budgeteers-to-give-gop-social-security-plan-a-close-look/

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  6. My own understanding of social security makes me think that by the time that I or even my parents need to retire that social security will simply "run out." By 2017, it is said that Social Security will pay out more in benefits than it collects taxes which will lead to more debt for our country. Medicare is probably the most important part of social security and it is also in the worst shape. "Without change, rising costs will drive government spending to unprecedented levels, consume nearly all projected federal revenues, and threaten American's future prosperity," said Treasury Secretatry Henry Paulson. Social Security costs are expected to reach close to $594 billion in 2009, while Medicare is said to reach $438 billion. This year, about 7% of federal income taxes will go to paying social security and medicare benefits but who says that by the time that I need to retire, 7% will be enough?

    http://www.washingtonpost.com/wp-dyn/content/article/2007/04/23/AR2007042301963.html

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  7. The Social Security Act was passed in 1935. Social Security will run out. Starting in 2008 the baby boomer generation began to retire. The baby boomer generation is the largest generation in the history of the United States. As more of the baby boomers retire there are less people contribute to the cash surplus for Social Security. Also benefits cost more than in earlier decades, with more people needing the benefits of Social Security and benefits costing more than before, Social Security will not be able to pay full benefits to everyone. In order to pay full benefits the government, meaning the American taxpayer, will have to pay the rest. By 2040, Social Security and Medicare will take up 60% of the government’s budget. A new system is needed to replace Social Security and Medicare, they don’t pay enough to the people they are supposed to help and not to add to the burden of the American taxpayers.

    http://socialsecurityreform.org/problem/index.cfm

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  8. Nathalie 1 & Sydney 1April 15, 2009 at 5:22 PM

    Social Security is a mandated supplemental retirement system in the US that was established in 1935 as part of Roosevelt's New Deal. It was brought about because of the events of the Great Depression, which took many Americans out of work and left the nation's retired elderly often in poverty. The main point of Social Security is to insure that works whom are retired have some means of survival for the rest of their lives, using the money from their previous pay checks that have compiled over many years time.
    Social Security is funded out of payroll taxes; that is, a certain percentage of a worker's paycheck goes directly into the Social Security fund to help provide benefits to current Social Security recipients. This has in recent years become a bone of contention with some current workers, who complain that the system is unsustainable and that after paying into the system their entire working lives, there will be nothing for them to collect in their own retirement years.

    In todays times numbers are showing that it is unlikely that social security will be around when it is time for me to retire. The number of people that are contributing to the system is decreasing because they need to give more and more of their paychecks each time to support all of the other people in the program. The economy does not have money to dish out freely for unemployed people to survive and money is being spared and cut back from many other areas. Soon there will be little to no money left to give toward social security and instead of people retiring and living an relaxed payed for life, they might be able to quit their daily job and work part time or once in awhile in accordance with the money they earn from the pension plans.

    I feel that eventually, social security will only be a program offered for those who choose to be apart of it. It might be specially designed or more organized for the "members".

    Hopefully the economy takes a turn for the better and we can get everything back in order so money wont have to be cut from necessary programs that we have been implementing in out countries for centuries.


    Sources:

    http://en.wikipedia.org/wiki/Social_Security_(United_States)

    http://www.socsec.org/

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  9. When our generation retires, this option will definitely not be an option. First, Obama is cutting back on a lot of things trying to get this country out of its funk. Last, the retired folk now were part of the Baby Boom, the largest generation EVER. So, most of that retirement money is going towards those people. To get the government out of this failing policy they need to gain some money first, then they can start dealing with their problems. See everything starts with money in everything. If you want to start a new program, you need money. If you want a new policy, you need money. So without money, the country is going to be stuck. Basically, when I'm older and retired these programs would be almost non-existent:

    Means-tested benefits. This is financial assistance provided for those who are unable to cover basic needs, such as food, clothing and housing, due to poverty or lack of income because of unemployment, sickness, disability, or caring for children. While assistance is often in the form of financial payments, those eligible for social welfare can usually access health and educational services free of charge. The amount of support is enough to cover basic needs and eligibility is often subject to a comprehensive and complex assessment of an applicant's social and financial situation. See also, Income Support.

    Non-contributory benefits. Several countries have special schemes, administered with no requirement for contributions and no means test, for people in certain categories of need - for example, veterans of armed forces, people with disabilities and very old people.

    Discretionary benefits. Some schemes are based on the discretion of an official, such as a social worker.

    Universal or categorical benefits, also known as demogrants. These are non-contributory benefits given for whole sections of the population without a test of means or need, such as family allowances or the public pension in New Zealand (known as New Zealand Superannuation).

    http://en.wikipedia.org/wiki/Social_security

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  10. I don't want to cut social security because I want to be able to take in money when I'm retired and can't do anymore work. I do think it will come to an end sooner or later because it keeps adding to our deficit. A solution to social security is to start with a clean slate and all money collect each month will be divided equally to all retired citizens so there will be no debt added to our deficit. If it does get cut, then people will start to riot because the citizen's that have been paying social security all these years will find out that they will not be getting that money back when they grow old.

    http://en.wikipedia.org/wiki/Social_security

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  11. Ariel_Sierra_Ivan1April 24, 2009 at 12:00 PM

    We believe that social security will not be an option when we are older, and need it. Right now it's dwindling to the point of non-existance. It must be provided by the government, and right now the government doesn't have the funds to cover it. Our deficit is in the trillions, and most likely in the future it'll continue to rise. Unemployment benefits, will become nonexistant because the unemployment rate is 12%. In the future it will continue to rise unless jobs magically appear out of no where. We do not have the funds to cover unemployment funds. Its the "single largest social insurance program in the U.S." constituting for a large portion of expentidture. This means that social security is actually a drain on our economy. If we still have it, than its going to dwindle down until our children's generation. They definently will not have social security, when their time to retire arises. 401k are in a bad place right now, danger is going to arise because that's going to be gone soon enough.

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  12. When I retire it will not be an option. Our country just will not have the money for it. Right now the government is spending so much money on problems like bailouts and banks, and cutting beneficial programs. "the program’s annual cash surplus will shrink and then disappear. Then, Social Security will not be able to pay full benefits from its payroll and other tax revenues. It will need to consume ever-growing amounts of general revenue dollars to meet its obligations—money that now pays for everything from environmental programs to highway construction to defense. Eventually, either benefits will have to be slashed or the rest of the government will have to shrink to accommodate Social Security." I agree with Zita, a new sytem is needed to replace Social Security.

    Source:http://www.heritage.org/research/socialsecurity/wm696.cfm

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  13. There is no way when I retire that it will even be an option. The government is spending too much money that is going to waste. They are cutting so many programs that actually make a difference in our lives and now we won't even get the opportunity to carry on with them. The economy is so ridiculous that a lot of things we need or are accomedated to are disappearing rapidly. The end of it is coming fast and everyone needs to prepare for what is to come."Social Security benefits are becoming less adequate for today's and tomorrow's retirees, due to changes already enacted into law, changes in family work patterns and the likelihood of future financial problems. Some of the forces affecting Social Security have already happened; others are more speculative. But the trend is clear."This article is dead on. The pattern is becoming clear to everybody that it is declining and there is no real way of accurately estimating the future investment income. What Obama needs to do is stop trying to help banks that are going to die and actually take some time and come up with a plan that will save us.

    Source: http://www.newyorklife.com/cda/0,3254,14517,00.html

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  14. RobertinoS1,KyleL1April 30, 2009 at 9:15 PM

    Social security is faltering with this falling economy and if this continues we will have no benefits for ourselves when we retire.The reason for Social Security is to insure that workers whom are retired have some means of survival for the rest of their lives, using the money from their previous pay checks that have compiled over many years time.
    at the rate that the government is spending and poorly managing the money that goes into social security we will have none left. changes need to be made by the government because clearly this system does not work with the situation that we are in at the moment

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  15. I don't think this will be an option when I retire because there will be no money left. People are retiring earlier and living longer so they are taking more money than they used to. This system is failing and needs to be changed to fit the changing economy.

    Some people think that benefits should be reduced, or at least their future growth should be slowed. One way of doing this would be to increase the retirement age for full Social Security benefits. They say that Americans are living longer and healthier lives than ever before and that people are spending an increasing number of years in retirement. Critics of the proposal to further raise the retirement age say most America is now choosing to retire early, and that it would be hard for some people to work past the current retirement age because of their health or because their jobs are just too demanding.

    Some people believe that Social Security taxes should be raised so that all future benefits could be paid. They want to increase the current combined payroll tax rate, which is now 12.4 percent. Critics argue that payroll taxes are already very high, having been raised 20 times since the program began, and that many more workers already pay more in payroll taxes than they do in income taxes. And they point out that eventually Social Security taxes would have to be raised by about 50 percent to pay for all benefits owed.

    http://www.ssa.gov/pubs/10055.html#future

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  16. This will most likely not be an option when I retire. The US government is spending way too much on other things such as war and stimulus packages to give away that much for retirement funds.
    Many people think that the Social Security taxes they pay are held in interest-bearing accounts earmarked for their own future retirement needs. The fact is that Social Security is a pay-as-you-go retirement system—the Social Security taxes paid by today’s workers and their employers are used to pay the benefits for today’s retirees and other beneficiaries.

    Social Security is now taking in more money than it pays out in benefits, and the remaining money goes to the program’s trust funds. There are now large “reserves” in the trust funds, but even this money is small compared to future scheduled benefit payments.

    In 2017 benefits owed will be more than taxes collect­ed, and Social Security will need to begin tapping the trust funds to pay benefits. The trust funds will be exhausted in 2041. At that time, Social Security will not be able to meet all of its benefit obligations if no changes are made.

    Unless we stary paying more taxes than we already do, our future is not looking too bright.

    source: http://www.ssa.gov/pubs/10055.html#current

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