How do we fix social security? That seems to be one of this election year's most important recurring questions. I've heard lots of crazy ideas about it including the republican idea to somehow replace it with a sort of 401k plan. There doesn't seem to be any details about that idea out there that I can find, just something vague about "controlling one's own investments". That doesn't sound bad, but I would like to hear more before we throw out a plan that has worked exceptionally well for something like 77 years.
There seems to be some sort of a fog out there that obscures the real story. I hear all the terrible stories about the social security trust fund. There seems to be an implication that understanding social security, like understanding God is beyond the capability of ordinary man. Well, I agree about God but the fact is that social security is a very simple thing in it's basic form. Get comfortable and listen while I explain this horribly complicated thing:
Workers and employers pay a small payroll tax (generally about 6%) directly into the Social Security Administration's budget. Then the SSA distributes that same money to the old folks and others who receive social security. Prior to the current president, the amount of the tax was adjusted to fit the outgo. That worked for over 70 years. It's really that simple. Social Security was never intended to be some sort of investment program, it was just a case of those with jobs partly supporting old folks. It was never intended to be welfare, the concept was that you paid into it while you worked, and then other folks paid into it after you retired. You earned the right to draw out by paying in to support those who went before you.
Don't believe me? Think it through, it's really that simple. If the system runs short of money then we increase the payroll tax a half of a percent or so. The "trust fund" concept was simply to keep from having to make annual adjustments to the tax rate.
Now do you wonder why the main stream press or the major parties haven't told you all this before? I do.
There seems to be some sort of a fog out there that obscures the real story. I hear all the terrible stories about the social security trust fund. There seems to be an implication that understanding social security, like understanding God is beyond the capability of ordinary man. Well, I agree about God but the fact is that social security is a very simple thing in it's basic form. Get comfortable and listen while I explain this horribly complicated thing:
Workers and employers pay a small payroll tax (generally about 6%) directly into the Social Security Administration's budget. Then the SSA distributes that same money to the old folks and others who receive social security. Prior to the current president, the amount of the tax was adjusted to fit the outgo. That worked for over 70 years. It's really that simple. Social Security was never intended to be some sort of investment program, it was just a case of those with jobs partly supporting old folks. It was never intended to be welfare, the concept was that you paid into it while you worked, and then other folks paid into it after you retired. You earned the right to draw out by paying in to support those who went before you.
Don't believe me? Think it through, it's really that simple. If the system runs short of money then we increase the payroll tax a half of a percent or so. The "trust fund" concept was simply to keep from having to make annual adjustments to the tax rate.
Now do you wonder why the main stream press or the major parties haven't told you all this before? I do.
