Social Security
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Issues about the state of social security have come to light in the past few years. Social security is the largest government program in the world and helps provide social insurance for several million people. It is primarily concerned with retirement benefits, but other programs include spouse, disability, and survivor benefits. The main focus of the social security program is to provide a source of income for retired Americans. The idea behind it is for workers to pay into the fund as a worker and then reap the benefits of what they paid in when they retire. The Social Security Administration keeps track of every persons earnings throughout their life and takes this into account when determining the amount of monetary benefits. The normal retirement age is based on the retirees year of birth and is when a person obtains the full benefits from social security. A person can still obtain reduced benefits at an earlier age, starting at age 62. Other parts of social security include disability benefits, spouses benefits, and survivors benefits. These three programs do not cost as much to taxpayers, but are just as important or more than the retirement benefits.
Social security has a long history in our country. The Social Security Act of 1935 started the program as part of President Roosevelts New Deal. The program was first intended to help the retired and unemployed during the Great Depression. Social security was funded by a payroll tax on current workers wages, half of it as a direct payroll tax and the other half from the employer. As the program evolved, benefits were extended to the disabled and others mentioned previously. The payroll tax rate was increased to compensate for these new benefits and expansion of the program. It started off as 2.0% of an employees first $3000 made. This percentage later grew to 6.0% in 1961. A few years after this increase, Medicare was added to the social security program by President Lyndon B. Johnsons “Great Society” program. Medicare is a health insurance fund designed for the elderly and disabled in the United States. As the program has expanded, the number of people who receive benefits from it have increased as well. In the first year citizens received benefits, there were only about 53,000 that got any money. Since then there are now approximately 48 million Americans receiving some form of social security.
Beginning in the 1980s, concerns were brought up about the financial state of social security in the long run. The generation of “Baby Boomers” was the primary cause of attention. When this group retires, there would be more people receiving benefits than ever before. President Ronald Reagan tried to counteract this by increasing the payroll tax, increasing the full retirement age, and making up to half of social security payments taxable income. The Social Security system started to gain a large surplus as a result of these changes. Congress invested the surplus created into U.S. government bonds under control of the Social Security trust fund and not calculating into the national debt, creating the illusion of more money at hand and masking the fiscal problems plaguing us today. The social security system pays out approximately $492 billion and more people are entering instead of leaving because of modern medicine that allows people to live longer. The working generation would have to pay more taxes to