Take a look at the last paycheck you received and note how much was taken out for Social Security. Now multiply it by all the paychecks you ever expect to receive, and multiply it again for the fact that when you’re making more than minimum wage, you’ll be paying out more for Social Security.
But that’s alright, isn’t it? All the money that you’re paying out will come back to you to sweeten your retirement, won’t it?
By Megan Ritter,
Senior Staff Writer
Take a look at the last paycheck you received and note how much was taken out for Social Security. Now multiply it by all the paychecks you ever expect to receive, and multiply it again for the fact that when you’re making more than minimum wage, you’ll be paying out more for Social Security.
But that’s alright, isn’t it? All the money that you’re paying out will come back to you to sweeten your retirement, won’t it?
Actually, the most optimistic forecasts of the Social Security Administration (SSA) itself, for every dollar that our generation pays into Social Security, we’ll only get about 70 cents back – a loss, on average, of $84,000 per person.
Calling this loss “the most optimistic forecast” isn’t just a nice rhetorical device to make the problem sound worse than it really is. A report released this week by the SSA declares that beginning in the year 2017, Social Security will begin to pay out more money in benefits than it is receiving in taxes.
This is for no more complicated a reason than that the baby boomer generation – our parents – made the choice to have far fewer children than did their parents, so that now, far more of them are poised to retire than there will be young workers – new taxpayers – to replace them.
When the Social Security system was first created in 1933, there were 16 workers paying in for every one person drawing benefits. That ratio of workers to retirees presently stands at two to one, and is falling steadily toward one to two.
The upshot of all this is that for all of its 75-year history, Social Security has run a surplus. In theory, this surplus has been tucked away in a Social Security trust fund to help carry us through a shortfall in the system. In reality, the trust fund contains nothing more than fifty years worth of IOUs from the federal government. It doesn’t matter what president or party is in control – every year since, Congress has raided the trust fund to pay for its pet projects.
This nice optimistic estimate from the SSA, then, is based on the notion that there will be a Social Security trust fund to supplement the system when it faces its first financial shortfall in 2017. Congress, however, can’t seem to stop digging into the trust fund.
A few weeks ago, Senator Jim DeMint of South Carolina introduced an amendment that would protect the trust fund by placing a ban on earmarks, also known as pork-barrel spending – special funding that congressmen direct to their home districts, usually to benefit individuals and often to line the pockets of their biggest campaign contributors.
Naturally, an amendment that would require the Senate to give up their reelection insurance in order to guarantee our generation’s financial security went down in flames.
Both of our Pennsylvania senators, Arlen Specter, a Republican, and Robert Casey Jr., a Democrat, voted against the amendment. You should probably call them and tell them how you feel about that.
Call them and tell them how you feel about the fact even if they remember some financial responsibility and stop raiding the trust fund today, the Social Security system is still broken and will still badly shortchange our generation.
Tell them how you feel about the fact that unless they change their reckless spending habits, when Social Security hits a shortfall in 2017, there won’t be a trust fund to shore it up – which leaves you to lose even more than that already whopping $84,000.
If you’d like to read the next issue of the Setonian, we’ll talk about some of the ways that Social Security can be fixed. Surprise: I don’t want to abolish it.