Bernie Sanders was no fluke, his appeal to the youth of
Generation Y and to some extent Gen Xers is marked by real evidence showing how
their futures have been muted by financial decisions made by Congress. The
President of the nation, theoretically, is elected by us, although recent
elections have shown the arcane electoral vote, meant to secure the democracy
when many voters were illiterate, has called this into question. It turns out
the electoral college is just another version of the “old boys club”. This
article examines the contract for Social Security which the United
States has made with its working class and what that means for the future of your children and grandchildren, in other words, those whom will be paying the
tab.
Social Security
Social Security Taxes
Paid by your Grandparents versus Workers of Today
Year
|
1940
|
1977
|
2017
|
Payroll tax rate is based on wage income and is split evenly
between the employer and the employee
|
1% capped at $3,000; Medicare did not exist then
|
5.85% of wages, capped at $16,500; Does not include the
Medicare tax
|
12.4% of wages, capped at $127,200; Does not include the
Medicare tax, which is separate
|
When Social Security was enacted, it was meant as a pension
for those whom would otherwise be destitute. Retirement age, at which a
beneficiary could start to draw benefits was age 65, when the law was enacted
on August 14, 1935, by President Franklin Roosevelt. [2] Life
expectancy at the time was 62.9 years, so as you can see, only the lucky ones
received any benefit. Fast forward to 2017 and life expectancy is dependent on
where you live, and other factors, some women will live past 86. But the mean
life expectancy for all people living in the U.S. is 79 years.[3]
This ranks the U.S. 49th in the world, below all countries with
national health plans and at the bottom of all industrialized countries. South Korea, Jordan, and Hong King residents
all live longer than Americans living in the U.S.
Currently, residents whom have met the minimal ten years of
contributions under include-able wages are eligible to start drawing Social Security benefits
as early as 62, with a reduction, or age 66 ½, depending on their birthdate. The
government has an incentive, of 8% per year in increased benefits to delay
until age 70.
Income Comparison
Year
|
1940
|
1977
|
2017
|
Mean income is the earnings amount by which an equal
number of workers are above and below this value
|
$1,368, with an unemployment rate of 18.26% and no
unemployment benefits[4]
|
$12,224, with an unemployment rate of 7.5%, with
unemployment benefits
|
Though the unemployment rate is certainly low in 2017, it
was just a few years ago when the nation’s banking system collapsed due to junk
bond deals packaging subpar mortgages as investments, and provided to people
who could not afford them. This fraud was conducted by all levels of banks (Lehman
Brothers) and the insurance industry (AIG), many of whom went bankrupt, but not
until thousands of American homeowners lost everything first.
Real Purchasing Power
Adjusted for Inflation
Year
|
1940
|
1977
|
2017
|
Purchasing Power-to maintain the same value this is how
much you would need
|
$1
|
$4.33
|
$17.47
|
Earnings needed to maintain equivalent value of mean wage
in 1940
|
$1,368
|
$5,921.49
|
$23,893.49
|
Though gross wages have increased over the years, real
purchasing power has not kept up, as this table shows. Americans are only
making a little over twice the 1940 per worker mean wage, when you adjust for
inflation. The mean wage for all working Americans, which isn’t the average,
but the midpoint, with an equal number of workers falling below the standard
and above it, is currently $44,980 annually. So, for 77 years, this is not a
lot of progress for workers, mainly because they have fallen behind since the
1970’s. Rising productivity of American workers has not resulted in a
commensurate rise in wages for most workers, so the Republican trickle-down
theory hasn’t worked. Real rise in wages, adjusted for inflation has been
stagnant since 1980, the Reagan era.
Change Social
Security to a Fairer More Secure System
Currently, a worker in the United States must accumulate
forty quarters or ten years with earnings of at least $1,260 a quarter or $420
a month, to be eligible to apply for full social security benefits, depending
on their age. Wow, what a deal, all you must do is work for a week each
quarter, based on the current U.S. wage and you will have a pension! We can all
think of our aunties and grandmas who took advantage of this benefit, by
working part-time low-wage jobs, not because they needed to, but for spending
money. I can’t think of any other part-time low wage job that comes with a
lifetime pension.
Change #1 Social
Security Benefits should be based on fulltime earnings for at least 10 years,
not part-time. Working part-time does not guarantee you a pension.
Change #2 Social
Security should pay more to workers who work longer, for example, workers who
work unceasingly for 40 or 50 years, should get a larger benefit than those who
work only 10 or 20 years, it is the time value of money. This would change the
incentive from “do your bit to get minimum benefits’, to contributing longer
for a proportionally greater earned reward.
Though currently, Social Security offers a sizeable benefit increase to
those who wait until maximum retirement age of 70, it does not look at the
length of service.
Spousal benefit provisions under Social Security allow full
benefits to inure to persons who marry multiple times, ala Donald Trump. Though
the worker’s tax contribution to the social security fund was capped,
apparently the benefits which may be paid out are not. For example, a spouse,
either male or female can elect to claim 50% of the partner’s social security
benefits. Essentially, this means the value of the Social Security payout has increased
by 50%, without paying additional taxes. And here is the real pot sweetener, anyone
who has been married for ten years and has not remarried before age 60, gets
this extra windfall election. The ex-wife can claim a benefit of 50% of her
husband’s social security benefits, years after the divorce, but this doesn’t reduce
his take, it is just a bonus to her from the federal government. And, the
current wife (male or female) is still eligible to claim her share of the
spouse’s social security pay out as well.
Change #3 You are
welcome to marry as many times as you can stand, but the government is under no
obligation to support your multiple wives/husbands. The total spousal benefit
needs to be revised and social security benefits paid to ex-betrotheds should
come out of a limited benefit based on the working spouse’s contributions. In
other words, if $300,000 is allocated for spousal benefits, that amount must be
allocated between all the former “love-of-my-life’s,” not increased
exponentially because of salacious decisions.
Survivor benefits can be collected by widows or widowers as
early as age 60 and this means, if your spouse has died and was collecting
Social Security or was eligible to collect, you can elect to collect full
benefits, based on your spouse’s social security. Later, you can decide to
switch to your own benefit, if it would pay more money.
Change #4 This
seems like gambling against the house and holding the aces; once you start
drawing your social security benefits, you don’t get a do-over. If you select
your half of his benefits at age 60, that is what you get.
Survivor benefits for children, are only payable for
unmarried children until age 18 or 19, if they are still in high school.
Children of a disabled or deceased social security participant are eligible to
receive benefits if the parent had paid enough into the system, which we
discussed, is a mere ten years of earnings. Since it sucks to lose a parent, or
to have a disabled one, let’s leave this as is.
Social security taxes have doubled in the last forty years
and are not keeping up with the benefits which will be paid out to baby
boomers, whom are now starting to enjoy their unreduced benefits. Since the
younger generation will most assuredly be expected to pay higher taxes for Social
Security and of course, Medicare, we need to shore up their future. It is time
to have a national pension or Individual retirement account for those under age
45. Designate part of what they contribute to Social Security to their own
private account, ideally 50%, but I will leave that up to U.S. Treasury and Social
Security Administration to discern. The
money contributed to Social Security, would not be able to be borrowed against
and hence, safe from creditors, could not be used for medical care, and would
not be accessible until age 62.
Change #5 Let Gen
Xers and Generation Y start their own government protected individual
retirement accounts. At least they will have some money for their future and
they won’t have to feel so bad about paying those extra taxes for boomer
benefits.
It is time for older Americans to wake up to the debt we
have left our youth, who will be paying for our bad decisions for a lifetime.
If I hear one more senior citizen, enjoying their social security checks and Medicare
complain we can’t have socialism, I am going to remove your dentures. And this
is the healthpolicymaven signing off encouraging you not to sign blanket releases
when you are admitted to a hospital, please add the line, “I agree to pay for services
of in-network providers,” as recommended by Dr. Elizabeth Rosenthal in her
book, How Healthcare Became Big Business and How We Can Take It Back.”[7]
