Welfare Warriors

spring 2005

MW voice FEATURE

Letters to the  Editor

War

Editor's Tidbits

Mothers news from around the world

victories

  Spring 2005

Social Security-or the Stock Market Casino?

What Is Social Security? 

On your paycheck, look for FICA. This is one tax taken out of each paycheck. (It is 6% of total pay.) That 6% is doubled by the employer and put into the Social Security Trust Fund. This fund is used to pay all retirement and disability payments every year. 52 million Americans of all ages will receive this cash support in 2005.

Retirement: To qualify for Social Security you must have paid FICA for 40 quarters (10 years). You can collect retiree benefits at 65 (being gradually raised to age 67) or at 62. If you retire at 62, your check will be a lower amount for life. Your spouse or minor children also receive a check (smaller than yours).

 Disability: To qualify for Social Security Disability you must have paid FICA for 20 quarters (5 years). A legal spouse or minor dependents also receive a check, but it is less than half.  Seven million people with disabilities and their dependents receive his cash support.

Death: When you die any minor children and legal spouse receive Social Security Survivors benefits if you paid FICA 5 years.

In both death and disability, all minors share the one smaller check. Ex: If there are 3 children, each receives one third of the check. But one child would receive it all.

How Much Does Social Security Pay?

Unfortunately, payments are based on the amount of income earned. White men  on average collect the most. People of color and white women collect less. (Editor’s Note: A life of low-paid work and high unemployment continues to economically deprive us—even after retirement or disability.  Mothers suffer the most because of reduced years, and low pay, in the workforce-- and no pay for motherwork.)

Benefits are adjusted yearly based on the increase in the cost of living. The average benefit for retirees in 2005 is $955 a month.

Folks (mostly women) whose check is less than SSI, can receive a second check from SSI to supplement the difference. (She must have less than $2500 in assets to qualify.)

A woman can occasionally collect off her husband’s higher account. If the husband is dead, the wife or ex-wife may choose to receive his check if it is higher than hers. The divorced wife must have been married 10 or more years.

How Would Bush & Big Business Change Social Security?

Social Security began in 1935 to insure US workers a basic level of income throughout their lifetime. In the 1950s over 30% of elderly Americans lived out their final years in poverty. Today that figure is 10% thanks to Social Security.

            Bush folks falsely claim Social Security is now “going broke.” That’s not true. Full benefits can be paid until 2042 if the system continues just as it is now. Minor changes are needed to assure Social Security will continue as it is after 2042.

Bush buddies and big business want some of our current FICA taxes to be placed in a “private account.” Then they would invest our money in the stock market! There would be NO guarantee of how much we would receive on retirement as is the case now. 

 (Ed. Note: The Stock Market is like a high-priced lottery or “gambling for the upper classes.”  Remember Enron, World Bank, S&L’s et al?.) 

Minor Changes That Would Assure Social Security’s Future Stability

1. Raise the cap on the amount of income that is taxable. Currently only $90,000 of monthly earnings are subject to FICA taxes. Raising that cap to $140,000 so wealthier workers pay a fairer FICA would help guarantee the future of the Trust Fund. (Editor: Since we low-wage workers have to pay FICA on ALL of our income, why in the world should the rich not pay on ALL of their income? Why cap it at $140,000?)

2. FICA taxes could be raised by less than 1% from the current rate of 6.2%. This would guarantee full benefits until 2077.

 3. Other adjustments are also being considered. The retirement age when Social Security will be paid could rise higher. (Editor: This is just another way to increase the work day and work hours of Americans. Most low-income workers are exhausted by 60- 65 years and need to reduce hours to part-time or retire. No European country’s people would tolerate their government  adding work hours to the elderly. Neither should we.)

True or False?

§          Social Security is going bust

§          The Social Security “crisis” is now.

§          Social Security is “headed toward an iceberg”.

§          By 2018 Social Security will run out of money.

§          For younger workers Social Security is a “fiction”.

The above are quotes either from President Bush himself or White House officials who are intent on changing the Social Security system from guaranteed payments for people in their old age or who are disabled, into a system where people will have some of their money in a “private account” that will be invested in the stock market, with benefits dependent on how well the stock market does or what kind of investments are made.

Responses to the above statements

“Social Security is going bust”—There is $1.5 trillion in the Social Security Trust Fund at the present time and payments being put into Social Security by workers now cover all payments being paid out now, so that the Trust Fund is not being tapped and continues to grow.

“The Social Security ‘crisis’ is now—There is no crisis now or in the foreseeable future.  Some adjustments will be needed to preserve the system as it is now, just as adjustments have been made periodically since Social Security began 65 years ago.  Minor changes will preserve the program for the future, and it doesn’t have to be completely changed to survive.

“Social Security is headed toward an iceberg”—That’s nonsense.  The real “iceberg” will be when retirees in future years realize how much less they are getting than if the system stayed as is.  Or it will be when future generations are saddled with the trillion dollars in debt the President’s plan will cost the federal government.  Either taxes will have to be raised or crucial programs cut or eliminated in future years as a result of the huge amount the government will have to put in place—adding to the already mushrooming $1.3 trillion in federal debt.

“By 2018 Social Security will run out of money”—In 2018 workers’ contributions being paid into Social Security will no longer cover all payments being made to retirees and the Trust Fund will have to be tapped in order to make a portion of those payments.  (By then the Trust Fund will have grown from the current $1.5 trillion).  Even if no changes are made to assure the system remains stable, government’s actuaries predict the program will be able to pay full benefits until at least 2042 and 60% of benefits after that.

“For younger workers Social Security is a fiction”—There is no reason for a worker aged 30 to doubt that Social Security will be there for him/her when the time for retirement arrives—as long as the changes needed are made gradually and consistently.  Far more risky is to have much of a person’s Social Security taxes invested in private accounts based on stock market investments—which might work out to be more beneficial than the Social Security for some—but at what risk that this will not be the case.