Our Social Security system is a very good, strong system. But if left to run its course our retirement system will become as strained and expensive as it has in recent history.
In other words, don’t be surprised when the “S” in Social Security means the same as a “C,” and when Social Security payments start to “roll over” into future years.
The “D” and other debt instruments are still “debt”. At least until Congress and the Treasury Department negotiate a debt reduction deal.
On the other hand, consider that Social Security payments are the “income” portion of your retirement income, and that a majority of these payments are “negative.” That’s the difference between how much retirement income you receive, and what you start with.
For example, a 75-year-old retiring with a Social Security “adjusted” benefit that adds up to a total of only $1,120 a week could have an additional $741 to distribute to those benefits next year, based on current payments. That’s because the “adjusted” benefit is only used when your annual salary reaches the highest of the six basic inflation-adjusted categories, or even reaches zero. That means, while you are getting a certain type of income in retirement, if you are just paying a higher rate of income-tax, then you are getting income which will go directly to your retirement assets, instead of being spent as income-tax payments. And since pension benefits from your workplace pension plan will probably not be “reinvested” into your assets, that will not be an income you will take advantage of, either.
If you receive a higher payout than you started out with, then the only thing your pension plan can be used for is to reimburse you for its portion of the higher paycheck. Which means that, of course, you don’t have any retirement assets to invest in, and you would get less of a pay-out in your retirement, or be forced to spend more money on retirement-related luxuries.
So, the solution is not to give the government more money. The solution is to take away the benefit you have currently, because you don’t want future benefit payments to be negative (more on that in the next section).
The Social Security system is not just a “franchise”, a status quo, or “an entitlement program,” as I was told to do in my college civics class, it is a human right, built on the understanding that all people deserve to live the life that they, and their families, chose to live. And those choices are far from easy.
Social Security is still the most popular program in the United States and one of the largest entitlements anywhere, and I strongly agree with this statement.