Social Security: " Welfare program", entitlement, insurance or... what ?

[steve2470]

I have been reading a thread which contained statements about Social Security. Let's get all the facts into this thread, please.

Here is the thread I reference: http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x9473341

[ejpoeta]

1. no thread posted.

[steve2470]

2. here it is

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x9473341

[exboyfil]

3. Best described as mostly a participatory

guaranteed income program which is subsidized by higher earners (wage slaves) but not the highest earners (income cap). Almost everyone participates in the U.S., but the lower earners get back far more in benefits than they contribute even adjusting acturially. The subsidization towards lower income workers is further strengthened by the tax on benefits - typically higher income workers will also have higher incomes in retirement. This is a form of means testing for Social Security based on income (not assets though).

Also it is a wealth transfer program in which older individuals have contributed far less into the system than newer workers on a percentage of income basis. Since the withholding rate has held steady since the mid-1980s this is becoming less of the case as older individuals who did the 2-4% withholding thing pass away.

You could argue both the low earners and those who made smaller percentage payments into Social Security are receiving some welfare as a portion of their payment. The 20 somethings making $105K are doing the most subsidization since they have already been told by retirement age to expect 2/3s of the current benefits unless something is changed.

Social Security is also a Disability Insurance program and in that area is the greatest chance for fraud in the system (short of someone packing grandma's body in cellophane in the attic and continuing to cash the checks).

Social Security is a form of Life Insurance for children of those covered. The actual value of this benefit is pretty large when you calculate it.

Social Security is also a form of Life Insurance for a non-working spouse since the spouse receives the payments of the working spouse on the death of the working spouse. It is a form of guaranteed income for the non-working spouse or limited working spouse who gets 1/2 of the main earning spouse's Social Security or his/her own Social Security at retirement - whichever is higher. An important point for non-working spouses - once the kids are 18 you get nothing from Social Security until you reach retirement age. Make sure the earners Life Insurance can cover you through this stage.

Another aspect is both the SSI (paid for out of Social Security) and SSDI (paid for by general revenue) that goes to disabled minor children. Whether you have a quadriplegic or a ADHD diagnosed child - you get the same check as I understand it.


Another interesting thing is the parallel program SSI and SSDI which are run by the Social Security but funded by general revenues and go to those who have not contributed to the system. This is pure welfare.

SSI recipients get about $9K/yr irrespective of whether they worked a day of their lives in the U.S. or contributed to the U.S. system in any way.

[steve2470]

4. excellent post, thank you !! nt

[madokie]

6. Now I see why there is so many kids diagnosed with ADHD

and why parents allow this to be

[Mnemosyne]

7. Many on SSI are women that did pay in, but had shit jobs. n/t

[exboyfil]

8. I think guaranteeing every U.S. citizen over 65

has $9K/yr is a good thing. You do point out the irony of low paid workers though. From one perspective someone who made on inflation adjusted average of $10K/yr is getting a raw deal as much as someone making $105K/yr. The $10K/yr persons final benefit is the same either way because of the SSI to bring them up to $9K/yr.

[sinkingfeeling]

10. You should get some of your facts correct. SSI is not paid for out of SS.

http://www.ssa.gov/ssi/

Supplemental Security Income (SSI) is a Federal income supplement program funded by general tax revenues (not Social Security taxes):


It is designed to help aged, blind, and disabled people, who have little or no income; and

It provides cash to meet basic needs for food, clothing, and shelter.

http://www.ssa.gov/disability/

Social Security Disability Insurance pays benefits to you and certain members of your family if you are "insured," meaning that you worked long enough and paid Social Security taxes.

[exboyfil]

11. Thanks for the correction

I miswrote. I met to say that SSDI was from Social Security and SSI was from the general fund, but I flipped the two when I wrote in my earlier sentence. Later I state that SSI and SSDI are from the general fund. This is true for SSI, but not true for SSDI. What I should have said is that SSI also covers disabled children through the general fund with SSI (really should have its own name like SSI-DI or something).

I am not sure about adult disabled children whose parents were under S.S. Do their payments come from S.S. or the general fund? I am pretty sure that disabled children whose parents are under S.S. come out of the S.S. fund.

[pampango]

5. It certainly not "welfare". Means-testing the benefits would push it in that direction, but

that is resisted by almost everyone. If it becomes viewed as "welfare" rather than something that you earn, it will lose much of its mass support.

Yet it is one of the best anti-poverty, income redistribution programs that the government has. Career low wage earners get a higher percentage of the wages in benefits than do higher earners.

[exboyfil]

9. Income means testing already occurs

through taxation. Question becomes whether you will have asset means testing and whether income means testing will grow.

My own opinion on this is that if means testing becomes too onerous (either income or asset) - I intend to pull the pin at 59 1/2 and draw down my retirement savings. I might even go out earlier. My dad retired at 60, was promptly diagnosed with cancer, and died at 65 after fighting it for almost 4 years. I can live pretty comfortably on the benefits as they are currently defined, and I sure do not intend to work for someone else.

[NI4NI]

12. "Entitlement"?

Although I have always considered it insurance, I believe I am "entitled" to receive a return from some of the 65,000 plus dollars I've personally paid into SS over the years.