Economic Benefits and Future Outlook of Social Security

The Economic Benefits and Future

Outlook of Social Security

Social security must change for the future challenges about to be faced. The social security administration has been here for almost 70 years. It is here to provide for retirement, disability, and survivor's insurance. About 7.5 million people get monthly survivor benefits, and more than six million get disability. There are about 45 million people who receive retirement, survivors and disability benefits. For an average wage person with a family, social security survivor benefits are equivalent to a $354,000 life insurance policy or a $233,000 disability insurance policy. Also, a 35-year-old man who earns $40,000 a year with a wife and kid would get $1,900 a month if disabled. If he died, his family would get $2,400 in survival benefits.

Social security also offers medicaid. This is insurance for low income families. Medicaid is the largest source of funding for medical and health related services for America's poor. Each state establishes its own eligibility standards, determines the type, amount, and duration of service. They also state the rate of payment for services and administer their own program. Just because a person is eligible for Medicaid in one state, it doesn't mean they are eligible in another state.

The social security system is made so there is a link as to how workers and employers pay into the system over their working years and how much they will get back in benefits. If you make a lot of money, than you will get a larger benefit amount than the workers who do not make as much. But, the benefit formula is set up so that a person making lower wages will get a higher percentage of their pre-retirement earnings. There are nine in 10 American retirees who receive social security. For about 2/3 of the elders today, social security is their major source of income. For 1/3 of our elders, social security is their only income. There is only 11% of American seniors who live in poverty. Without social security there would be about Ð... of our elderly living in poverty. People can retire normally at the age of 62, or wait until the full age of 65 and receive full benefits. But, starting this year, the age will gradually start to increase until it reaches 67 for people born in 1960 or later. The reason for this is because people are living longer, healthier lives than before. When the social security program started in 1935, a 65-year-old American had an average life expectancy of 12 Ð... more years after retirement. Today the life expectancy is 17 Ð... years and rising. Beginning in about 2008 and about 30 years, there will be about 79 million baby boomers retiring. This means there will be twice as many elderly as what there is today. When this happens there is not going to be enough funds in social security to pay everyone. Many people think that their social security tax contributions are held in an interest-bearing account for their future retirement. Actually-not true. Social security taxes that are paid by today's workers and employers go to pay benefits for today's retirees. Social security is taking in more taxes now than what is being paid out. Then what's left over is credited to social security's trust fund. There is about $850 billion in the trust fund and they are expected to grow to more than $4 trillion in 20 years. But benefit payments will start to exceed taxes paid in 2014, and the trust funds will be very low in 2034. At that time, social security will be able to pay about 3/4 of the benefits if they don't change anything.

There are some potential changes that we could make in order to