Wednesday, September 2, 2015

Social Security - Entitlement or Welfare

Op-ed: Social Security is not an entitlement!  Actually it is.  Strong words circle the issue of social security as an undeserved government handout.  Republican leadership favors raising the age of eligibility and reducing benefits. Democratic policymakers neglect the fact that social security is not federally funded but is paid for by employers and employees.  From the taxpayer's perspective, once you're eligible, your benefit is generally based on how much you and your employer have paid into the program.  The longer you work and the more you pay in, the bigger your monthly check.

SS is not an impressive return on investment when compared to other options, but it is somewhat secure. And mandatory. The government takes money which we should be saving for the future, and they've implied they'll give it back when we need it, more or less.  It doesn't actually work that way, but that's the idea.

That said, social security is in fact an entitlement, and the problem is word usage.  Social Security is an entitlement in the literal and legal sense of the term. Social Security is Title II of the Social Security Act, and other programs (like Medicare) make up the other titles of the law. So that's where the root word "title" comes from.  It's perhaps much like my home to which I hold title and for which I pay taxes, etc.

Once you meet all the qualifications for Social Security benefits (work credits, age, etc.) then you are eligible. When you apply and get approved, you are legally entitled to those benefits.

Over decades of employment and subsequent retirement, our SS payments return perhaps the equivalent of a good savings account.  Not impressive, but more secure than the marketplace.  Had the mandatory amount instead been used to purchase CDs or savings bonds, the return would be somewhat higher.

It is, however, a paid-for benefit.   Most would gladly take a lump-sum return of payments plus interest.

Note the GOP (big business) offered solution moves everyone to the 401-k world, leaves the risk in the hands of the corporate world, and removes the employer's contribution.  It's a simple but troubling solution that offers little in the way of 'security'.