Top 5 Social Security Myths
MoveOn has put together a great resource on Social Security and the pervasive myths and misinformation that keeps getting passed on as fact.
Myth: Social Security is going broke.
Reality: There is no Social Security crisis. By 2023, Social Security will have a $4.3 trillion surplus (yes, trillion with a ‘T’). It can pay out all scheduled benefits for the next quarter-century with no changes whatsoever.1 After 2037, it’ll still be able to pay out 75% of scheduled benefits–and again, that’s without any changes. The program started preparing for the Baby Boomers retirement decades ago. Anyone who insists Social Security is broke probably wants to break it themselves.
Myth: We have to raise the retirement age because people are living longer.
Reality: This is a red-herring to trick you into agreeing to benefit cuts. Retirees are living about the same amount of time as they were in the 1930s. The reason average life expectancy is higher is mostly because many fewer people die as children than did 70 years ago. What’s more, what gains there have been are distributed very unevenly–since 1972, life expectancy increased by 6.5 years for workers in the top half of the income brackets, but by less than 2 years for those in the bottom half. But those intent on cutting Social Security love this argument because raising the retirement age is the same as an across-the-board benefit cut.
Myth: Benefit cuts are the only way to fix Social Security.
Reality: Social Security doesn’t need to be fixed. But if we want to strengthen it, here’s a better way: Make the rich pay their fair share. If the very rich paid taxes on all of their income, Social Security would be sustainable for decades to come. Right now, high earners only pay Social Security taxes on the first $106,000 of their income. But conservatives insist benefit cuts are the only way because they want to protect the super-rich from paying their fair share.
Myth: The Social Security Trust Fund has been raided and is full of IOUs
Reality: Not even close to true. The Social Security Trust Fund isn’t full of IOUs, it’s full of U.S. Treasury Bonds. And those bonds are backed by the full faith and credit of the United States. The reason Social Security holds only treasury bonds is the same reason many Americans do: The federal government has never missed a single interest payment on its debts. President Bush wanted to put Social Security funds in the stock market–which would have been disastrous–but luckily, he failed. So the trillions of dollars in the Social Security Trust Fund, which are separate from the regular budget, are as safe as can be.
Myth: Social Security adds to the deficit
Reality: It’s not just wrong — it’s impossible! By law, Social Security funds are separate from the budget, and it must pay its own way. That means that Social Security can’t add one penny to the deficit.
I think the one that surprised me the most is the one about retirement age. Yes, people didn’t live as long on average as they do now but a person who reach age 65 had an equal chance to live 7 years more as they do today.
Put these facts in your head. They’ll come in handy when you start hearing the deficit peacocks talk about who must sacrifice. The easiest sacrifice if for the rich to give up their exemption, but the sacrifice you always hear about is cutting the benefits for the middle class. I wonder why that is?
Tags: MoveOn, Social Security
I disagree with the wording “President Bush wanted to put Social Security funds in the stock market–which would have been disastrous–but luckily, he failed.”
I prefer ‘which would have been disastrous–but fortunately, due to the hard work of liberals, he failed and we avoided a major catastrophe for our society (let’s face it, he already had enough catastrophes under his watch).’
Good recap of Bush’s privatization plans.
If only zombie lies could be killed by truth.
Bush’s plans were voluntary not mandatory.
The bonds held by SS can’t be traded in any capacity so they carry no value at all and the IOU amount is not guaranteed either hence no trust fund. The taxpayer, excuse me the rich taxpayers in this country will have to cover the difference.
The liberal clowns keep talking about a surplus under Clinton which never existed because they counted the accounting only surplus from SS. The surplus never existed. These funds are intermingled by accounting all the time and do not exist in any shape or form.
Screw SS, the entire public employee pension scheme is worse, much worse.
“Bush’s plans were voluntary not mandatory.”
Subprime loans were voluntary not mandatory. How did that work out?
Madoff’s investment services were voluntary not mandatory. How did that work out?
Putting a redundant blow-out preventer systems on the BP oil well in the Gulf was voluntary not mandatory. How did that work out?
“The bonds held by SS can’t be traded in any capacity so they carry no value at all”
A ready market is not a requirement for value.
How about if we direct your mother’s future Social Security checks to me? As the future stream of checks to your mother can’t be traded in any capacity, so she won’t be giving up any value at all. Hey, I take it back–I’m liking your logic–you’ve convinced me (as long as you send me those checks, of course).
Oh UI–while I don’t dispute many of your SS myths, I am compelled to lay out some realities that you’ve not considered in your “all is well”, maybe even cavalier attitude of those of us (yes, including you) trust in a fully funded, infinitum funding stream. Believe me, I do this from a financial/health background, and not of what I’m sure I’ll be accosted as a GOP person. So sit back.
FULL DISCLAIMER–I LOVE Social Security. I personally don’t care who thinks they could have done better “investing elsewhere”, and opting out. I say “no way”, because in this cry-baby country of ours–your opt out that fails, then leaves this country picking up the tab for support of your surviving a**.
So that being said–
1) Always remember SS was to be a “bridge” of survival income–not your only source. Americans have forgotten to save, and nest egg, and sugar bowl it.
2) When SS was initiated, the average retired worker only collected between 13-17 months–before death.
3) Women (for the most part part), who were of a “stay at home” generation, collected FULLY off their husband’s earnings, even though they may have never worked a day in their life. FINALLY, this has changed, but ONLY in the last while, when now ALL OF US have to have so many posted quarters to collect UNLESS—-AND THIS IS HUGE
4) If you fall under a designated disability, like renal failure and a growing list of ailments, you are entitled to fully collect early–unlike the days of yore, when it was clearly an age calculation. Lobbying is going on all the time for different disease entities to be included as a “certifiable” reason to be permitted collection of early Social Security benefits. So watch out for this to be the “hidden” expense.
5) While I would agree, I wouldn’t feed into the “it’s going broke, and the sky is falling” mantra, I would say, our increased longevity is heavily burdening the big pay-out to all those golden years, retirees are racking up. I can’t begin to tell you the number of people I personally know, who have been retired as LONG as they were in a work force with a steady job–and are in incredible health.
So yea–I think there is a credible threat to sustaining SS at the retirement levels, that my parents were at–and I think the price we have to pay as a responsible nation, enjoying an increased healthier life expectancy is to delay ripe age of benefit. It stinks, but the living part has been good.
Anyway, that’s my 2 cents–whether it’s 1937 or 2017!!!