If you were hoping that Social Security was going to be part of your retirement plan, think again. As you see your 401(k) struggle and lose money, do you want the Republicans to reduce the benefits you will receive even as you continue to pay into the program every paycheck? After all, Social Security has nothing to do with the annual general budget. It has nothing to do with deficits. For those who do not understand Social Security and company pensions, here is a little education. The rest of you can skip my lesson. Social Security is self funded with premiums paid by you either as self employed or through your paycheck withholding. If you look at your paycheck, there are deductions for Federal Income tax, State income tax (if taxed), FICA (which is your Social Security Premium Payment) and Medicare (which is your Medicare Premium Payment). First the Republicans will reduce benefits and then allow the funds to be given to Wall Street to use in high risk derivatives in hopes you get more money, but most likely will lose more money than under the current annuity system of Social Security. You have to remember that Social Security is the same as the old employer sponsored pension plan. They are both annuity insurance policies. The pension plan purchases a huge policy from an insurance company. Social Security has a trust fund that also purchases annuities from institutional insurance companies. They also loan money to the federal government to pay for all the other government expenses when tax revenue is less than expenses. The government pays the trust fund a minimum of 5% interest on the money they borrow from the trust fund. With both Social Security and a company pension plan, you give them some money every year through your working life and they guarantee you a fixed amount of income when you retire, regardless of what the stock market does. They are insuring your retirement. Social Security is set up the very same way, the U.S. Treasury guarantees the trust fund for Social Security. If you privatize Social Security then you convert it from a guaranteed income annuity plan to a high risk 401(k) plan that is subject to the ups and downs of the stock market and subject to many management and transaction fees that eat up the return you get on your money. There are two things that need to be done to extend the life of Social Security. One increase or remove the income cap on calculating how much you pay into Social Security and two increase the minimum wage which will automatically increase the amount of money being paid into the Social Security trust fund. Both of these acts would extend Social Security over 100 years. A very simple modification that would not reduce the benefits to anyone, current or future.
Posted on: Wed, 07 Jan 2015 18:30:59 +0000
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