Social Security was created by FDR in 1935 as a part of the New Deal plan. This program was created to assist aging workers in the post-depression era economy. After many revisions, the original Act has been expanded to include not only just Retirement, but also, Survivors, Disability Insurance benefits, SSI, unemployment, temporary assistance for needy families (TANF), medicare, state medicaid programs, children’s health insurance (CHIP) and the Patient Protection and Affordable Care Act.
All of these programs are funded from Federal Insurance Contributions Act tax (FICA) taxes taken out of your paycheck. Some groups do not pay into this general fund, but have opted to fund private pension plans for their members. Some teacher’s unions and state or railroad employees fall into this group. Even if FICA taxes are not taken, medicaid and medicare taxes are still taken out, even from these groups.
The 2011 annual report by SSA’s Board of Trustees shows that in 2010, 54 million people were receiving Social Security benefits while 157 million people were paying into the fund.
Of the 54 million receiving benefits:
44 million were receiving retirement benefits; and
10 million were receiving one of the two types of disability benefits.
In order to make sure the program remains solvent, the SSA has made two major changes to how retirement benefits are paid:
The age you must reach to receive your full retirement benefit has and will continue to increase in order to compensate for longer life spans; and
The % of your earnings that you will realize in retirement benefits has decreased.*
Throughout a worker’s career, the Social Security Administration keeps track of his or her earnings. The amount of the monthly benefit to which the worker is entitled once they reach retirement age depends upon that earnings record and upon the age at which the retiree chooses to begin receiving benefits.
People have been murmuring that SSA is bankrupt for many years now. To the contrary; in 2010 alone there was a $2.6 Trillion budget surplus. It’s estimated that there will be a net increase of nearly $69 billion more in 2011. SSA has taken many measures to prevent, or at least delay, the program going bankrupt because so many Americans rely on it.
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