Social Security refers to a set of benefit programs established and run by the federal government. The Social Security program is commonly identified with old age or retirement benefits and with disability benefits. The program was created in 1935 as part of Franklin Roosevelt’s New Deal initiative. Medicare and Medicaid are also social insurance programs established and administered by the federal government, but they are separate from Social Security. Social Security is a “pay-as-you-go” entitlement program. This means that current tax revenue is used to support current beneficiaries. In other words, there are no assets set aside to fund future benefit payments. When combined with demographic trends (i.e. an aging society), the pay-as-you-go funding approach is a feature that brings into question the sustainability of Social Security. Currently, Social Security is funded largely through payroll or “FICA” taxes which are a blend of employee and employer contributions that come from taxes on the wages of workers and the self-employed. Whether you’re employed or are self-employed, Social Security taxes amount to 10.4% of earnings, with the applicable earnings capped by a ceiling that is adjusted every year. The earliest age to get retirement benefits is 62, but the longer you wait, the higher the benefits. The average Social Security benefit in January 2012 is $1,229 per month. Social Security benefits are inflation-adjusted with increases pegged to the consumer price index (CPI). Social Security is the sole source of retirement income for 22 percent of beneficiaries, and the program is the majority (greater than 50 percent) source of retirement income for 66 percent of beneficiaries.
Submitted by tom on
$202 trillion (yes, trillion with a "t") according to Boston University economist Laurence Kotlikoff.
This includes the Social Security, Medicare and Medicaid liabilities that the federal government considers "unofficial" (aka unaccounted for) at the moment.
Thanks for reaching-out.
It is generally very difficult if not impossible to provide a simple yes/no answer to this type of question without having much more detail regarding your situation and needs. That said, here are some things to think about:
Submitted by tom on
In a recent interview, U.S. House Minority Leader John Boehner suggests that raising the Social Security retirement age to 70 will help avoid a collapse in the entitlement system.
Submitted by tom on
For those who actually have the stomach for it, the following are rates of return one can expect on their Social Security contributions:
