Social Security Benefits could be a Thing of the Past

In my youth, my father worked hard every day and looked forward to receiving his Social Security benefits when his time was due.  When he finally began collecting, combined with a modest pension from General Motors where he worked for over 40 years, he was able to comfortably support himself and his family.  By the time I reached mid-life crisis, my father passed on at the age of 80, just a few short years before GM went bust and his pension and additional health care would have gone up in smoke.  Needless to say, my father was one of the lucky ones because both his social security and pension checks cleared up to the end.

Now that I’m old enough to apply for retirement benefits, my expectations of actually collecting until the end are fading fast.  The bargain with the government of working hard and paying in so you will be paid in the future doesn’t correlate with the current economic data I’ve seen.  The chart below shows how much money is actually coming in versus how much money is going out, a wake-up call for anyone my age.  It shows that the needy and disabled, along with those who have given up on work, get paid first so social security has effectively been gutted already. 

The system is failing because Social Security Disability and the other programs for those young enough to work who have chosen not to, provides money to tens of millions of people looking for a government handout.  Like all government programs for the needy, social security disability started out as a small government program originally designed to help workers who were seriously injured on the job or had some other legitimate reason to collect a government check and then a Medicare card two years later.  Today the program has absolutely exploded and 10.6 million workers are hiding out on it.  This means, approximately one out of five social security checks are going to a disabled worker.  So if you’re expecting to collect social security anytime soon, you’ll need to take a look at the numbers below prior to meeting with your estate planner: 

Latest Rates of Income and Expenditure

(In Billions of dollars)

                                                                                                                        Revenues    Paid Out

Social Security Revenues (taxes) paid by you the Worker           510                 

Social Security Benefits paid to Honest Retired Workers            520

Social Security Benefits paid to Disabled Workers                       130

Medicare Payments to Disabled Workers                                       90

Supplemental Security Income for the Poor                                   33

Medicaid for the Poor Disabled                                                      110

Food Stamps for 47 Million People                                                82

Extended Unemployment Benefits                                                  90

(Paid to workers for a few years before many file for disability)                         

TOTAL:    510   1,055 trillion

Please notice that the hundreds of billions spent on government programs to house or educate the poor (because this article is not about being “poor”) is not even added in.  The focus of this article is on those who could be working, should be working, and the impact on the cost of paying them not to workWhatever happened to earning a benefit?  Today, all you need to do is be depressed and tired of looking for work to get full benefits.

Up until the turn of the century, social security took in far more each year in tax payments than it paid out.  Indeed, so much more was taken in that Americans could actually afford big foreign wars!  When you add the honestly-retired together with and the self-declared needy, the Federal Government is shelling out more than two dollars for every dollar collected (the other half has to be borrowed). There just isn’t enough money to take care of both those who claim to be needy, and those who worked, paid tax, and stuck with the bargain.

The inevitable is about to happen. In a few short years, the rules for collecting Social Security will be changed from one of entitlement because you paid in and earned benefits, to one of pure need.  If you have other resources available, you may have to exhaust them first and then prove poverty before collecting.  Going forward, if you work, you are going to be required to pay Social Security tax knowing full well that if you save and invest for your retirement, your Social Security will be cut or eliminated. 

The moral to this story is America has lost its fiscal moral foundation.  Today, it pays to be needy and it certainly doesn’t pay to be hard working and thrifty! Knowing that those who are depressed and disabled get to receive Social Security before those who suck it up and go to work every day makes me more than a little depressed. Whoever said life was fair?