Is Social Security good for the "working man"?

Question

The working man dutifully pays his 7% SS tax throughout his lifetime. In return he gets a promise from government to pay a benefit when he is eligible. The "rate of return" on his "investment" will be a paltry figure that in all likelihood won't even keep up with inflation. He has no private property rights in his "investments". If he dies his heirs get a "benefit" decided solely by government bureaucrats and such benefit will come nowhere near what the working man would have earned on even a low risk private investment.

Sound like a good deal?

Perplexed, you are correct, I totally forgot about the other 7%. My only quibble with what you said is that the employer is only the nominal payer of the tax, the employee is the real payor. So the working man actually pays in 14% for nothing more than a promise.

Answer 1

You have just hit on one of the pitfalls of socialism. The benefits of the system are at the sole discretion of the government. Individual control and freedom is lost under any type of social program.
You failed to mention that the employer donates an equal portion of money into the workers account. The idea of a mandatory retire program is based on solid ground. The decision to make this program a federally controlled program was a huge mistake. And the reasons for that go beyond just the return to the individual, as you mentioned.
The Social Security system as it was conceived in the 1930s, was designed as a federal tax program. All tax has a negative effect on the economy. That's why it's called a tax, it burdens the system. In effect, the Social Security tax shrinks the economy by 17% of the cost of labor to produce goods and services. It removes money from private control that would otherwise have been reinvested in the economy and thus grow the economy.
There are figures somewhere as far as the total amount of dollars the government has removed from circulation since the onset of SS. It's an incredible amount of money. Had that money sat in privately controlled retirement accounts instead of placed in government coffers, one can only imagine the wealth the country could have built beyond its current level.

Answer 2

When people work and pay social security and income taxes their earnings are reported to social security. After all that's what social security is all about - giving people credit for their earnings which they pay social security taxes on and when they have enough credits they can become entitled to social security benefits and the benefit amount is determined by how much they earned. The social security # was assigned in the first place as a means of getting people credit for their earnings. When people file their tax returns ANY income is reported to social security if they are on SSI (SSI is the federal welfare program - it isn't a social security benefit because SSI benefits are paid out of general tax revenues not the social security trust fund). The computers are set up to send "alerts" to the local social security office servicing the address of the person who filed the return. Unfortunately there are a lot of people who receive benefits who have no problem with committing fraud. And Social Security is in the business of determining who gets entitled to benefits and paying them in the proper amounts if entitled. They use whatever methods they can to uncover people who do not report income and resources they are required to report. Benefits are either lowered or terminated accordingly. When someone is overpaid because they failed to report changes which either resulted in a lower benefit or no benefit at all that overpayment NEVER goes away until it is repaid. So if they committed fraud when they were in their 20s, social security will receive all federal income tax refunds until it's repaid - or if it's a really, really large overpayment - they will also withhold benefits when that person reaches retirement age and files for retirement benefits at age 62 or whenever. It is up to the claims representative in the local social security office to decide whether or not to refer someone for prosecution of fraud. In my 32 years as a claims rep I only referred about 3 people for prosecution because they went out of their way to hide their income (one formed a corporation and put it in his wife's name) and their overpayments were well over $50,000. Usually it is a matter of terminating benefits and setting up payback on the overpayment.

Answer 3

it is good because it forces people to save into a system that will take care of them and not have to be cared for at the expense of others...it may not be the best, but to throw it out completely would cause a problem for everyone facing retirement...I do support a system that slowly takes its place as long as the government guarantees it, the ones relying on SSI are not harmed, and can't be raided by the government...I am a Democrat and I think we can create a better device for retirement, but be careful which program you support and don't be in a hurry to screw up what we have. I have paid into it for 33 years and have other retirement, but if the younger people have the option of not participating so they aren't hurt, what about people like me who have paid in a substantial amount and then would not get their fair return?

Answer 4

My mother passed away 12 hours before the first of the month and I had to send the whole months S.S. check back. My neighbors and I sent a group letter to our Sen Boxer stating this was an unjust law she voted for and asked that before she voted for it not to. We got a Bush bashing letter back, she did not address our subject of the letter and two weeks later we all got audited by the I.R.S.

Answer 5

social security is the worst scam ever fostered on the American people. The biggest failure of the Bush Administration (so far) is the fact he wasn't able to reform social security. He would be my personal hero if he would have killed the program. However a campaign of fear and dependence has been used to enslave the people who are dependent upon it.

The truth is people need to take responsibility for themselves. If they can't make it on their own its no ones fault but their's and no one should be FORCED to pay their way. There are plenty of charities to take care of people who need it, and leaving it up to the government is the wrong approach.

Answer 6

It's for the idiots who don't save on their own. It was never meant to be the sole source of someone's retirement income. We all need to be saving more toward the inevitable. Most people collect more than they put in so that is return on their dollars contributed.

Answer 7

Before you and I are old enough to collect SS, it will be defunct.

We will never see a shiny penny of the money we put in via what's been taken out of our paychecks.

Utopia sounds like a good deal too.

Answer 8

Just what is your question ? S S is a crappy way to round out your back breaking life.
Do what ever it takes and make the most from investments.

Answer 9

I wish they would let us opt out ...I would gladly give up my benefit if I could take that 7% and invest it the way I want to....but, that will NEVER happen.

Answer 10

If we had no limits on ss tax given income brackets, there would be no problem.