Look At The Benefits Social Security example essay topic

Page 1 of 5 A Severe Burden on Working Men and Women In the wake of the September eleventh attacks, America is faced with a long-term war against terrorism. The American people have embraced themselves for a war for an indefinite period of time against an unfamiliar enemy. America has become united and partisanship has been placed aside. Those issues that our political leaders grumbled about before the attacks are no longer on the forefront; however, in due time those issues will resurface and be dealt with by way of traditional partisan politics. Among those issues is the issue of Social Security. In more ways than we commonly realize, the current Social Security system is a harmful system that is not consistent with the customs and traditions of the American republic.

In 1932, Franklin D. Roosevelt replaced Herbert Hoover for President of the United States. Roosevelt assumed the highest office in the land during a time when the American people were in dire need of leadership. The United States was in the midst of the Great Depression and flamboyant political leaders like Huey P. Long were trying to transform the face of America from a free enterprise republic to a kind of communist regime. Roosevelt had a different idea. His focus was to stay with the traditional practices of a free enterprise republic while creating government subsidized programs to benefit those citizens in need.

These government programs were put into law by congress through Roosevelt's New Deal legislation. Roosevelt's New Deal consisted of many changes in American policy, of those changes the Social Security Act was signed into law. The Social Security Act created a federal old-age insurance system which provided a modest monthly payment for Americans aged sixty-five and older. It also provided for unemployment compensation as well as governmental support for the handicapped and for single mothers with dependent children. The Social Security Act initially was not intended to be a system of welfare; it was intended to function as a forced savings plan, forcing workers to pay into the system during their working years and receive modest payments in their retirement years. The Social Security Act began with noble intentions; however, through the years the Social Security Administration has converted into a huge bureaucratic welfare system where working men and women pay into the fund and can expect little to no return in their retirement years.

President George W. Bush said, "The American people are better off Page 2 of 5 hoarding their money in mattresses than paying Social Security, by hoarding they will get a better return on their investment". Proponents of social security insurance believe that in today's complex society it is extremely difficult for families to "take care of their own" in hard times. Proponents believe that a government subsidy for those who are unable to provide for themselves is absolutely necessary for a society such as ours to function. The problem is today's Social Security insurance serves the interests of those who aren't working and burdens those men and women who spend the majority of their lives as working, middle-class Americans. Yes, an insurance to benefit those who are unable to take care of themselves is necessary in our complex society. However, our political leaders should consider the interests of the men and women who make up the working, middle-class; these are the people who most consider the backbone of the American free-enterprise system.

A publication from the Social Security Administration gives readers an overview of the basic facts of Social Security benefits. The benefits include survivor's benefits, which are paid to a deceased worker's family. According to the SSA, "The value of Social Security survivors benefits for a young, average wage earner who dies and leaves a spouse and two children is equivalent to a $374,000 life insurance policy". The SSA goes on to say that this coverage pays the widow with two children monthly installments of $1,696 per month.

For the SSA to compare their benefits to the private industry is absurd. Take me for example, I am a twenty-five-year-old male who is insured through 1st Colony Life with two hundred thousand dollars worth of life insurance. I pay two hundred and fifty dollars per year in premiums. This premium is guaranteed to remain at this rate for the next thirty years. On the other hand, I earn approximately $35,000 per year; I pay an average of $220 a month in Social Security taxes. That comes out to nearly $4,000 per year in "premiums".

How dare the Social Security Administration compare themselves to a life insurance company! Another benefit offered by the Social Security Administration is disability protection. According to the SSA: Studies show that a 20-year-old worker has about a 3-in-10 chance of becoming disabled before reaching retirement age. Few workers have disability insurance. But nearly all workers do have Page 3 of 5 Social Security disability protection, which is equivalent to a $223,000 disability policy for an average income earner with a spouse and two children. The SSA's "Basic Facts" pamphlet goes on to explain how one is deemed disabled.

It must be determined that the worker can not perform the work he or she did before or adjust to other work for at least twelve months. Once the benefits begin they continue for as long as the worker can not work. The disabled worker and his or her eligible family member receive monthly checks from that point on. Many believe this is the most abused program within the SSA. According to John Doe, a self-employed entrepreneur, "The disability benefit program provides justifiable needs for many citizens and should remain in some form. However, the apparent fraud and obvious abuse of this program not only drains the system, but tarnishes the system's credibility and ultimately punishes the needy people who truly do qualify".

Many people can testify to knowing at least one person who is more than able to perform a multitude of physical tasks; however, that person somehow qualified for Social Security. That person represents the enormous number of Americans abusing the system. Finally, the "Basic Facts" book speaks of the primary function of Social Security, the monthly retirement benefits. The book states that those born after 1960 will be paid full retirement benefits at the age of 67. The current age is 65, for those born before 1938. Let's take a look at the benefits Social Security offers the working, middle-class, husband and wife.

The Social Security Administration considers $31,900 an "average" wage earner and $76,200 a "maximum" wage earner. I currently make anywhere between $30,000 to $35,000 depending on overtime. My wife makes approximately $25,000 per year. The SSA allows married workers to collect retirement benefits based on either their income or their spouse's income, whichever is higher. Depending on overtime, I pay an average of $220 per month in social security taxes, my wife pays an average of $120 per month. Both of our employers match that payment, 7.65% each.

First of all, let's go ahead and toss my wife's retirement benefits! According to the current policies of the SSA, a husband and wife have the "option" to receive benefits based on the highest of the two wage earners. Therefore when my wife and I reach the age of 67 (hopefully it doesn't go up) we will only receive retirement benefits based on my income rather than both of us receiving benefits based on our individual income; another government disadvantage to being married. Okay, just to keep it simple let's Page 4 of 5 add this monthly tax based on today's dollars and today's benefits, not factoring in possible pay raises and inflation. Keep in mind that the SSA receives monies from both the employee and the employer, for my wife and I SSA receives an average of $680 per month, $8,160 per year. If my wife and I work until we are sixty-seven and contribute this amount for the next forty-two years, we will give $342,720 to social security.

In order for my wife and / or I to receive all of our money back at least one of us must reach the age of 85; any age after that is free money right? Let's take the exact same amount of money and invest it in an extremely conservative mutual fund and see what happens. At nine percent interest per year compounded monthly (. 75%), our yearly Social Security "investment" over the course of forty-two years would be nearly four million dollars.

Not comfortable investing your money, let's try a bank account. Putting away $8,160 per year in an average savings account gathering three percent interest per year will yield $685,408. Any financial advisor will testify to nine percent being an extremely conservative figure to project future earnings on investments. Many would argue that the figures I have used are based on both employee and employer contributions; the monies the employer contributes on my behalf to SSA do not burden me.

I beg to differ; if firms were not required to pay a portion of its employees's SA tax, firms could use that money to compensate their employees in some form. Moreover, basic economic principles state that when the government places a tax on a "firm", the "firm" will consequently raise the prices on its goods and / or services to compensate for the extra tax. Therefore, this tax burden on the firm eventually finds its way back to the consumer, which are usually the working, middle-class men and women. With all of this evidence it is easy for the reader to conclude that Social Security needs a severe overhaul. Yes, Social Security protects my wife and I in the event of either of us becoming disabled. Also, with a combination of one's pension and savings, it can be a beneficial part of one's retirement income.

However, the problem is, these modest benefits come at a tremendous burden and cost. One can easily use the money he or she pays for Social Security and purchase disability and life insurance; that person would have thousands of dollars a year left over to invest in his or her retirement fund. As I attempted to show earlier, any conservative investment would yield millions over a forty-year term. It is time for our political leaders to serve the interests of the millions of men and women who are considered the backbone of the American free-enterprise system, the middle-class, working, man and woman.

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Bibliography

President Bush, George W. All Things Considered. MPR News Radio, 2001.
Doe, John. Personal interview. 27 Dec 2001.
Social Security Administration. Basic Facts. SSA Publication No. 05-10080. Jan 2001.