By Michael Schindler
There are times I get emails from readers that cause me to pause for a moment – and the one I’m about to share did exactly that. Being over 40, I don’t count on Social Security as my retirement plan and I made that known to a few; I’m sure I also stated that Social Security is one entitlement I’d be fine letting go, since I could make a better return elsewhere. My question to you is, “In light of Congress talking about eliminating military pensions and others talking about eliminating Social Security, is this individual’s rant just that — a rant — or is he on to something?” You decide.
“Remember, not only did you contribute to Social Security but your employer did too. It totaled 15 percent of your income before taxes. If you averaged only $30K over your working life, that’s close to $220,500. If you calculate the future value of $4,500 per year (yours & your employer’s contribution) at a simple 5% (less than what the govt. pays on the money that it borrows), after 49 years of working (that was me) you’d have $892,919.98. If you took out only 3 percent per year, you’d receive $26,787.60 per year and it would last better than 30 years (until you’re 95 if you retire at age 65) and that’s with no interest paid on that final amount on deposit! If you bought an annuity and it paid 4 percent per year, you’d have a lifetime income of $2,976.40 per month. The folks in Washington have pulled off a bigger Ponzi scheme than Bernie Madhoff ever had.
Entitlement my ass, I paid cash for my Social Security insurance!!!! Just because they borrowed the money, doesn’t make my benefits some kind of charity or handout!! Congressional benefits, aka. free healthcare, outrageous retirement packages, 67 paid holidays, three weeks paid vacation, unlimited paid sick days, now that’s welfare, and they have the nerve to call my social security retirement entitlements?
We’re “broke” and can’t help our own Seniors, Veterans, Orphans, Homeless etc.!
In the last months we have provided aid to Haiti, Chile, and Turkey. And now Pakistan……home of bin Laden. Literally, BILLIONS of DOLLARS!!!Our retired seniors living on a ‘fixed income’ receive no aid nor do they get any breaks while our government and religious organizations pour Hundreds of Billions of $$$$$$’s and Tons of Food to Foreign Countries!”
So. This individual knows where he stands. Do you?
Michael Schindler, Navy veteran, and president of Edmonds-based Operation Military Family, is a guest writer for several national publications, author of the book “Operation Military Family” and “The Military Wire” blog. He is also a popular keynote and workshop speaker who reaches thousands of service members and their families every year through workshops and seminars that include “How to Battle-Ready Your Relationship” or “What Your Mother-in-Law Didn’t Tell You.” He received the 2010 Outstanding Patriotic Service Award from the Washington State Department of Veterans Affairs.
I believe the individual who emailed you has some very valid concerns about the federal budget and benefits process. However, the concern with Social Security is different, in that the reason that it will go bust is due to demographics, not budgeting, or even from the shady “borrowing” that Congress has pulled off in the past.
The federal budget mess has nothing to do with Social Security. Using examples of budgetary folly to support an argument for benefits is misleading, or at least illogical. And the author may want to fact check the “billions of dollars in food aid” statement a bit – it’s far smaller than he asserts. Also, food aid is actually a back-door way to support American farmers by purchasing their food and food products. Not exactly a handout to foreign nations as we give food, not money, in most cases.
Retirement age is obsolete. We continue to cling to the age of 65 as some sort of built-in age for retirement benefits. We must remember that this age was selected during the time of FDR, and even then, it was borrowed from a German system dating back to Otto von Bismark! Times have changed, and life expectancy has certainly improved since the 1880s.
Demographics have changed. We now have a bubble of seniors who contributed to the program, who will likely live longer than ever, and not enough workers to support them. The system was designed for a steady or growing population. Add to that the fact that this generation of workers will NOT see an improvement in wages or standard of living, these declining or stagnant wages will add up to fewer Social Security contributions to support the bubble of seniors. So the withholdings will not support the rate of payment due to demographics.
Then there’s the concept of interest on earnings. The writer’s bold assumption of 5% returns betrays his lack of understanding of Social Security funding – there is no mechanism to earn such outlandish returns with Social Security funds. And if the writer HAD earned 5%, he’d have to deduct about 1/3 of that in taxes, significantly reducing his compounded return.
The Social Security System concept is a good one – to ensure that seniors that have worked all of their lives don’t find themselves suddenly with nothing when they reach retirement age. The numbers have to balance, though, and the current system’s structure will not, and can not, support a Baby Boom generation of retirees on the low wage reality and lower worker population of today.
Blame it on low birth rates reducing the worker population, blame it on medical advances extending lifespan, blame it on Wal-Mart shoppers for crushing the US middle class if you like. But you can’t just get grumpy and assert that you should get your benefits when the math doesn’t work.
We must come up with constructive changes that enable the system to work into the future, and that will mean either a large increase in withholding % for our workers, and/or a reduction of benefits. My opinion: reduced or no benefits for people who exceed a high income threshhold, raise the age at which benefits are received, and review the method of “COLA” increase calculations vs. reality.
Todd – great comments and suggestion. The challenge is the PR wrapped around this issue. This is a hot potato issue.
In all reality, prying the government fingers off Social Security is likely not going to happen – and there are reasons to see that this program survives – much like public health care. If there is no safety net and many fall into poverty, we have other issues to contend with.
social security was never intended as an investment to make folks rich. It was intended, and has alsways, been a safety net to keep folks out of the dole. The $
$1200 per mo;nth maximum has kept many of our elderly folks to be self sufficient, and to not be overly dependent on their younger families. Similarly for folks who are physically or mentally handicapped and unable to earn their living. There used to be “poor farms” and other Dickension remedies as a last resort–most of us don’t want to see them again.
He is on to something. He should run for office here in Edmonds!