Santiago Arango Cartagena
Prof. P. Badry
12 November, 2014
How do you plan to plan for the rest of your life? Will you have enough money to live a comfortable life as a retiree by yourself? With a significant other? How will you manage your life without work if you are disabled? Everybody will at some point in time come across these questions in their lifetime, some sooner than others. Unfortunately not everyone is intelligent or cautious enough to invest in their retirement early, or even invest in the market. The majority of the population live life working to pay bills, with a percent discounted for their future (401k, Social Security, anything offered by the employer), and the rest funneled towards birthdays and holidays. All with the hopes of someday staying in a decent home or assisted living facility, maybe even live with their kids families. Yet they want to pull their own monetary weight. Since not everyone is knowledgeable of all the programs, Social Security allows the person to make back the money they paid into the system accompanied with benefits. Unlike bank or firm retirement plans, once you hit your retirement age, the total money paid into the system cannot be pulled out. Month by month, checks come into the mail of the citizen with a check containing the corresponding amount pending on the amount the citizen would pay into Social Security monthly and in total.
Created as part of the New Deal by president FDR during an emergency period to pull the american people out of poverty, many agree that FDR not only planned on the immediate solution for the economy, but also a long lasting security to maintain the general well being of the American public to even after they retire. Analyzed closely, this allowed for the increase in our lifespans (with medicine and technology of course) and opened up the market for people under the retirement age, especially new laborers,
now that one didn't have to work for the duration of life to maintain oneself. Senior citizen could now relax, and the younger ones did not have to work for them (helping the cause for child labor laws a bit more), yet not taking up space that could be filled by a younger group of people. This has been, by far, the most accomplished government program ever drafted, legislated, and passed… right?
Social Security works as a “payasyougo operation.” (ggregory, “The Flaws of
Social Security). This can be interpreted in many different ways. The way I seem to interpret it, looking back at my research, is that any money going into the system is being immediately spent. Then the money one receives is a mix of what Social Security
(SS) profited from investment and tax payers money instantly being sent off to a beneficiary. But wait, should the tax payer’s money not go toward their own savings account? Technically, yes. Departments are run very inefficiently and at a high risk level. What people don’t know is that it was working fantastically fine for the SS. Sure, the money I payed into the system is not the same I'm getting back, but I will get my money’s worth throughout the months and years of my retirement life. It was working so well that the SS had a “beautiful” surplus of around $2.6 trillion. Yes, I wrote trillion with a “t”. With the given amount of money the SS was handling, if a made up problem like
“people are living longer and joining the amount of people retired faster than people are joining the workforce and paying Social Security taxes,” was actually