Aug. 14, 1935: President Franklin Roosevelt signed the Social Security Act, which guaranteed an income for the unemployed and retirees. Social Security was initially created to combat unemployment, but now functions as a safety net for retirees and the disabled. It has remained relatively unchanged for 75 years. Social Security is funded mostly through payroll taxes called Federal Insurance Contributions Act tax FICA.When FDR launched Social Security, the United States was mired in the Great Depression, and poverty rates among senior citizens were estimated to be over 50 percent. Social Security was attacked by FDR’s critics, who called it “socialism.”
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Consider this headline from a recent survey of retirees: “Many Regret Decision to Take Social Security Early.”
Sounds ominous, right? Well, the problem is that the title isn’t entirely supported by the survey’s actual results, which found that only 38% of respondents “say they wish they would have waited” longer before taking benefits. According to this, in other words, somewhere along the lines of 62% of respondents, or a large majority, evidently don’t regret the decision.And why should you?
As Motley Fool contributor John Maxfield explains in the following video, the Social Security Administration has designed the benefit formula to pay the same amount of total benefits over the life of a typical person irrespective of when they elect to take them. Additionally, as John goes on to discuss, taking benefits sooner rather than later can facilitate an earlier retirement, which allows retirees to escape the physical and psychological wear and tear associated with many jobs.
The source of this article is “Motley Fool”. I readily admit that they are on my daily read list. They, like me, have a somewhat contrarian philosophy. Maybe that is what draws me to them. I don’t know why the topic of the article isn’t talked about much. Since I know that many of my readers are approaching or are in retirement, I thought I would talk about this again.
The fact is if you have a relatively normal or shorter life line in your genealogy then it makes good sense to take Social Security early. As the article mentions SSA has a formula that basically gives you the same overall amount independent of when you take it. I think the calculated age at death is currently 78. If you die before this age you will come out ahead if you take social security early. If you live longer than you may come out ahead if you wait.
The other thing that even this source article doesn’t mention is that if you take it early and are able to invest the money profitably you will bank even more. Now I know in the age of almost zero percent bond rates and very fluctuating markets investing anything for a substantial profit takes work and some risk but even a small return will allow you to come out ahead.
In my case I look at the family tree and I see parents, grand parents, and great grand parents dying before the 78 year mark so I took it early and like usual I am not looking back on that decision. I am among those 62% who don’t regret that early decision. It allowed me to bank about an additional $75,000 that is still growing today six years later. If I live to be an old ornery fool of ninety I would have been better to wait but at ninety I probably won’t even be able to appreciate that fact. 🙂
I have been kind of watching the preliminaries for this latest “super committee” forming in Washington to come to some sort of budget deal and I am not impressed. On the one hand my Republican friends often scream that Medicare doesn’t pay enough for the services rendered. That doctors are dropping out of the system due to not making enough money. And then comes the first salvo of this latest round of budgeting. The first thing the GOP comes up with is cuts to Medicare??
I know that many on that side of the aisle are for a total defunding of Medicare and instead just giving seniors a small voucher and then put them out into the private insurance system to fend for themselves. So, maybe this all makes sense from a higher level than I realize. Cut Medicare so that it becomes so underfunded that no doctor will accept patients from that system. David Stockman who was Reagan’s budget director called that “Starving the beast”. That is continue to cut taxes (income) until the government is drowning in deficits. In that regard the GOP has been somewhat successful lately.
I am still on the fence as to whether the GOP will go the way of the Whig party. If they actually do attempt to “privatize” Social Security I think there will be enough of us seniors to insure that they disappear from the landscape. Those Tea Party folks just don’t seem to want anyone to have affordable healthcare; that is except those in the 1%. Their latest hit against the Affordable Care Act is that with so many new people being able to see a doctor that some physician groups are saying they must limit their patient contact to no more than 15 minutes to keep up with the case loads. They say that is proof that Obamacare will wreck our healthcare in this country. It never seems to occur to them that they need to try to figure out a way to increase our doctors and nurses to meet the load. Maybe a good start would be to help medical students with the bone crushing debt many have when they finally become practicing doctors. These Tea Party folks are just “anti-” to the bone.
But getting back to the budgeting process, We have not actually had a budget from the folks in Washington in over five years. This year both the House and the Senate created bills but then failed to come together for the reconciliation process because the House GOP speaker would not allow it to happen. With that in mind I don’t see much hope for this latest committee to accomplish much.
I must admit that I spent over an hour yesterday watching the president’s news conference. Boy, does that guy like to talk. But being a former college professor that shouldn’t be surprising. I will admit that I bought into much of his logic about holding our nation hostage for political gain. Are my Republican friends actually considering that option??
But the thing that spurred this post was a Republican 1st term house member that was on CNN immediately after the conference was over. Wolf Blitzer basically let the guy hang himself with his own words. Guess who this yahoo represented? No, not Texas but Florida. Now I don’t know what part of Florida he represented but he did give me an idea that might go a long way in reducing the deficits. He said, and I am paraphrasing since I didn’t record the conversation, “Well for goodness sakes every dollar we take in taxes goes out to various welfare programs and we must borrow more to fund everything else”. He then went on to include Social Security, Medicare, Medicaid and a few other as examples.
This got me to thinking that all these Tea Party yahoos are always screaming that they can not give up their principles in negotiations with the “liberals”. If that is true then I propose that the Tea Party set down a pledge that all their members will not accept any Social Security payments, will go out on their own for the healthcare needs, and never accept any money from the other “entitlements”. If their principles are so powerful then that should be a pledge that they all will gladly take. I don’t want to hear them say such things as “well I paid into the Social Security system all my working life” because their arguments are that Social Security is nothing more than welfare when all incoming money is spent on present recipients.
If the seniors of Florida truly believe that Social Security and Medicare are welfare programs then surely they will line up to take the pledge and promptly return this month’s check?. I wonder how many would actually do that? Dollars to donuts, not many if any at all I expect… I have given this same argument to some of my senior friends and not one has taken me up on it….
Every month, 14 million people now get a disability check from the government.
The federal government spends more money each year on cash payments for disabled former workers than it spends on food stamps and welfare combined. […]
[And] story of these programs — who goes on them, and why, and what happens after that — is, to a large extent, the story of the U.S. economy. It’s the story not only of an aging workforce, but also of a hidden, increasingly expensive safety net.
I hate these kinds of reports. Even if they are based on facts they usually sensationalize the stories with a very slanted viewpoint. I certainly agree that we should go after those who game the SSI system with an adamant zeal. They should be caught and punished for gaming the system.
But the problem is that these stories are fodder for those who want to deny benefits where they are actually needed. In other words they want to throw out the baby with the bath water.
Not surprising there were over seven-hundred comments attached to the article from which the quote above came. Most were screamer who talked about lazy people scamming the system. Many were very vitriol in their words. I usually intentionally avoid the comments now as they are almost always an extreme view by those who hate people who are not like them. But one did shine through. Here it is:
I am a registered nurse and I collect SSID. I was severly injured, and flown away in the helicopter to the ICU where I used to work and put on a ventilator with my head smashed in and multiple fractures. Now I am no longer able to work so I get to collect my social security early. I hear this alot about welfare moochers. It makes me feel bad about living on money I actually paid into the system. Please don’t think this is always about welfare moochers like some kind of knee jerk response.
All this being said I’m not sure that SSI, or disability payments for things like disabled kids should even be in the Social Security system? It seems to dilute the original purpose of the fund and give fodder to those who, like Congressman Ryan and that conservative bunch, as reasons to “privatize” (read eliminate) it.