Burlington High
School
Burlington, Kansas
Teacher: Devra Parker
Social Security
Reform:
What It Means To You and Your Family
By Jeff Clemens
12th grade
Social Security has existed since the day when Franklin Roosevelt was president. In fact, it was he who started social security. The program was originally created to give a little extra fun money for people who retire. However, the program has since evolved into a means of survival for some people. This has created a problem for the program, and the cost of running it goes up every day. Some sort of action has to be taken to fix this problem before social security goes bankrupt and sends millions of Americans into poverty and dismay. Alas, a solution has been presented: President Bush’s plan to privatize social security. However, with that plan in effect, retirement will only become worse for people.
Bush’s plan basically allows people to take some of their money that otherwise would be invested into social security and put it into private accounts. These private accounts, in turn, would draw interest and would supposedly give the investor more money when they reach retirement age. This sounds great, but beneath all this frosting there are huge drawbacks in the “cake.” The most blatant one being insecurity.
People would generally like the idea to personally control their social security for their retirement; it would make them feel like they have more control. However, this extra control doesn’t actually guarantee that their money will be there when they reach retirement age. There is the chance that someone who invests his or her money into a personal account would end up not gaining any interest off of it; rather, the opposite would happen.
The money that is invested into these private accounts could take sharp drops and no returns. In all actuality most of these investors would get 15 to 40 percent less return then with the old system we have now. His proposal is nothing more then a smokescreen to give fewer benefits. This brings up a good question: If benefits climb along with prices, won't future retirees keep ahead in the game? There is one simple answer to this: no. Poor management of their portfolio could give future retirees less money then what they originally put in. Less money then what one put in? Sounds like a bad deal to me.
The next issue that comes up is stock market fluctuations. As we all should know by now, the economy isn’t really going anywhere so investing now would mean one might not make money. However, if the stock market decides to go down during the time you want to retire that could leave us with less money or even no money at all. That is definitely something I wouldn’t want to happen. However, these are just the tip of the iceberg in problems plaguing Bush’s plan.
The plan to reform Social Security right now isn’t really necessary. The problems really start creeping up on us in 2019; 14 years from now. His plan just seems like a way to get rid of government responsibility and, in essence, cut benefits without taking any blame for it. One sad truth about this is that it would essentially cause much larger deficits in the government’s budget due to the high costs of switching the program over to Bush’s proposed plan.
Extending the age limit for retirement would be a great short term fix. With Americans living longer then they used too, why not make the cut off age 70? It would be a great way to make the current system last a little longer to find a new plan. The baby boomers are going to retire soon and that will cause a lot of problems for the whole system. Right now, there are three people to pay social security for a single retired worker. In the future, in the 2040’s, social security will have two people for every one person, something we need to worry about. That would put social security on the brink of bankruptcy. Something will need to be done and we need more time to figure something out that is better for all Americans.
All in all, Bush’s privatization plan is a bad deal for future Americans and people under the current age of 55. Market fluctuations and giving investors more worries about their future really darkens my day. We, the American people, have 14 years to find a better plan then this one; I know that we can do it better than Bush’s pathetic proposal.
Answers To Questions Prompted By The Required Reading
Q1- Explain why some people:
a) claim that there are no social security trust funds
There are several beliefs coming from people on the basis that there is no “Trust Fund” for social security. The program has existed for well over 70 years; it has gone through several changes. One of these changes happened in 1983. This is when the Greenspan Commission came up with a solution to pay for the, soon to retire, baby boomer generation. Their solution to this problem was to Tax the working people more to have more money then what was needed to pay for social security. This would create a trust fund. There was a problem with this plan though; the government wasn’t allowed to save the extra money since federal law states that Social Security has to invest that surplus into treasury bonds. Thus, the government borrows this money out of these treasury bonds for its programs like education and national security. This all in turn points out the blatant fact that there is no trust fund for social security since the government doesn’t save the money made from taxes that are supposed to go to social security.
b) claim that politicians have spent the trust fund money to run the government
As I stated in my answer to the first question: The government borrows the money out treasury bonds, which comes from the Social Security surplus’, in order to pay for their programs like education and national security.
c) claim that the trust fund money is invested
In my first answer I stated that the money from the Social Security surplus is invested into treasury bonds. This is money that the government invests into itself to borrow at later times.
Which of the above do you agree with and why?
Out of all the choices, I agree with choice b. I firmly believe that the government has been taking money out of social security ever since it was created. It is a place where they think that they can get all this extra cash to fund their programs.
Q2- When U.S. Treasury Bonds are sold where does the money go and what is it used for?
The
money goes to the National Treasury and the
US
government to pay for its programs and, in essence, run the government.
Q3- Why do you think that social security is the only source of retirement income for 22% of those over age 65? How would you change that? Please comment if you know an elderly person who is totally dependent on a monthly social security check
I think
the reason that 22% of people over the age of 65 survive on social security is
because of the position that they are in. Their position is one of low income,
no job, and/or no life savings. I would change this by some how making certain
jobs that are for the elderly only, that would also be able to fit their
disabilities if they were to have any. I have a sickly grandmother whose
husband recently died and is unable to work. Therefore, with her position, she
is unable to get a job, and is dependent on Social Security to survive.
Q4- What is the average life expectancy of an American over age 65 today?
The average life for males over the age of 65 today is about 81.6 years and for females it is 84.6 years.
Q5- What is the average social security benefit in your state? Is it more or less than the average benefit of the state with the largest population in the United States?
It is $944 monthly for the average person in Kansas while in California it is $926 a month. So, Kansas has a higher average for social security benefits then the most populated state in the United States, California.
Q6- In 2003 what was the amount of social security income derived from interest earnings? How much from payroll taxes?
In 2003 social security receives an income of $79 billion off of interest earnings and $472.8 billion off of payroll taxes.
Q7- Who can get full retirement benefits even though they continue to earn income after attaining full retirement age and who cannot? In 2004 what was considered “full retirement age”?
A person whose spouse has died can get full retirement benefits even though they continue to earn income after attaining full retirement age.
Q8- Give two examples of “special payments”.
Special payments are payments you receive for work you did before you started getting Social Security benefits. Some examples of special payments include bonus’s, accumulated vacation or sick pay, severance pay, back pay, standby pay, sales commissions and retirement payments or deferred compensation reported on a W-2 for one year, but earned in a previous year. If a person is self-employed an example would be for a farmer, agricultural program payments.
Q9- What benefits does social security provide to people who have not yet reached retirement age?
Spousal Benefits: You can get this if your spouse is at least 62 years old or caring for your child who is under age 16. Children’s Benefits: Your children and even grandchildren who are unmarried and dependent upon you, if you are retired, for their support are eligible for benefits. Divorced Spousal Benefits: When you retire, your divorced spouse is eligible to receive an amount equal to one-half of your PIA, provided the marriage lasted at least 10 years.
Q10- How long does it take a worker under age 24 to be qualified to receive social security benefits?
It
takes at least 10 years from a worker under the age 24 to be qualified to
receive social security benefits.
Q11- Do you think the social security system needs to be reformed now? Support your answer with facts.
At this
moment in time Social security could last for about another 40 years. So the
need to reform it right now is not very necessary. Bush’s solution to this
problem wouldn’t fix social security; it would just take the responsibility of
the government off of it and give it to the people; hence the phrase,
privatizing social security. Privatizing social security helps only the
government and not the people. The people have to take their benefits into their
own hands and that can create a dangerous problem for them. They are to take the
money of which they would invest into social security and invest it into private
accounts which will or will not gain any headway. If I were to invest $2000
right now into a private account, I wouldn’t be guaranteed that that money will
be there when I retire; the It also doesn’t need to be reformed now because
there is no real solution to the problem yet. We have 40 years to figure
something better out
Q12- Suppose you are a young working person. If you could opt out of the social security system and invest the portion of your pay that would otherwise be invested for you, would you choose to do so? Why or why not?
No! I would not be guaranteed the money of which I invested to be there when I need it. I would feel much safer with a system that the government regulates that guarantees that I will receive the money of which I invest when it is time that I need it.
http://www.publicdebt.treas.gov/sec/secfaq.htm
1- Very informative--a (slight _X_ or heavy __) pro reform bias
http://www.heritage.org/Press/Commentary/ed111004b.cfm
1- Very informative--a (slight __ or heavy _X_) pro reform bias
http://www.efmoody.com/estate/lifeexpectancy.html
3- Somewhat informative--a (slight _X_ or heavy__) pro reform bias
http://www.ssa.gov/pubs/10063.html
1- Very informative--a (slight _X_ or heavy __) pro reform bias
http://www.elderlawanswers.com/elder_info/elder_article.asp?id=700
1- Very informative--a
(slight _X_ or heavy __) pro reform bias