Issue: Social Security


Every month 72-year-old Mary Born has to stretch her Social Security check.

“It’s never enough,” said Born of Syracuse. “Every month I run out of money before the month is over.”

Born is one of almost 56 million people in the United States who rely on Social Security benefits. In Onondaga County that’s about 91,750 Social Security beneficiaries, according to AARP.

But Social Security — one of the nation’s most popular government programs — is facing a money crunch. For now, it has a surplus. But that is shrinking at a record pace, with more Baby Boomers retiring to draw benefits and less taxes going into the fund to pay the benefits. On March 23, the government’s latest report on Social Security predicted that the surplus would run out in 2033 — or three years earlier than last year’s prediction. After that, the report says, Social Security would be able to pay 75 percent of its promised benefits.

And that has made Social Security into a critical issue for elected officials.

Congress will step in and do something. That is certain.  The question is, what will they  do to solve the problem,” said John Palmer, former dean of the Maxwell School at Syracuse University and a former government-appointed trustee overseeing the financial health of Social Security and Medicare.

Social Security works like this:  Workers pay 4.2 percent of their income, directly out of their paycheck, into Social Security. Today that is about 159 million people paying into the system. And employers pays 6.2 percent of workers’ income into Social Security every time they write a check to their employees.  Self-employed workers pay 10.4 percent.

But only a portion of a person’s income is taxed. Now only $110,000 of the worker’s income is taxed for Social Security. People can begin drawing partial Social Security benefits as early as age 62. Full benefits come to most Baby Boomers at age 66.

Social Security is 80 years old and wildly popular. It was created from one of America’s worst economic nightmares, the Great Depression of the 1930s. In 1935 the Social Security Act was signed into law by President Franklin Roosevelt as part of the New Deal. At that time, millions of people were still out of work, and there was a major concern for the elderly or retired people who had lost everything.  Social Security was designed as a social insurance program, providing some economic security to people.

At the time, the Social Security Act was a major political move by FDR and the Democrats who controlled Congress, said Edward Berkowitz, a history and political science professor at George Washington University and author of 15 books on Social Security. “The Social Security Act was a very big piece of legislation,” said Berkowitz.

Social Security is one of two programs that every American is entitled to, regardless of income.  The other program is Medicare, the tax-supported health insurance for those 65 and older.

Some Social Security statistics:

  • About 36.9 million people are getting  $43.7 billion  in Social Security retirement benefits.
  • Social Security replaces about 40 percent of what an individual was earning while still workng, according to the  Social Security Administration.
  • The average monthly benefit for a retired recipient is $1,230.
    For 60 percent of recipients, Social Security is over half of their of income.
  • For 30 percent of recipients, Social Security is almost 90 percent of their income, according to the National Academy of Social Insurance.

Now 2033 is the projected year that the Social Security surplus in its trust fund will be used up, according to the 2012 Social Security and Medicare Board of Trustees.  Once the surplus is gone, Social Security will be have to rely on the money coming in from the payroll tax and it will pay 75 percent of the benefits that are supposed to be paid out, according to the Social Security and Medicare Board of Trustees.

To solve Social Security’s problems, here are some of the major proposals:

  • Raise Social Security Taxes. 

Now 10.4 percent of an individual’ s income is paid into Social Security every time that employee is paid.  Self- employed people also pay 10.4 percent of their income.  One proposed solution is raising the amount of taxes people pay into Social Security.  But some groups argue that raising taxes without cutting spending would do nothing to help the Social Security problem. Financing the problem just by raising taxes would require doubling the tax rate for all income brackets over the next 30 years, according to conservative The Heritage Foundation.

  • Remove the cap on how much income can be taxed.

Now people do not pay Social Security taxes on any earnings above $110,000 a year.  If the cap on taxable income was removed, all income would be taxed. For example, someone who makes $1 million a year would then pay Social Security taxes on the entire $1 million, not just the first $110,000. Removing the cap on how much income could be taxed would generate more revenue into Social Security.

  • Raise the full retirement age.

The full retirement age for most Baby Boomers is is 65.  People can start collecting Social Security at age 62, but they only receive 75 percent of their benefits. To keep people working longer and continue to pay into Social Security, one proposed idea is to raise the full retirement age. Members of Congress and proponents of Social Security have also argued raising the full retirement age to 70.

For today’s young people, the advice is: Save.

“For young people, it’s important to not solely rely on Social Security for retirement,” said Palmer, the former Maxwell dean and Social Security trustee Palmer.

For people like Mary Born who collects Social Security every month, it is something she couldn’t live without. She retired at age 70, after a decade working for Wal-Mart and holding down other jobs in grocery stores and clothing stores. Now she is looking past her own Social Security checks and worries about her grandchildren.

“Although I still struggle I know Social Security will be there for me,” said Born.  “It’s my grandchildren I worry about.”

(Amanda Watkins is a graduate student in broadcast and digital journalism.)



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