Cumulative inflation has made this retirement savings plan essential to maintain. We pay into it and get it all back if we live long enough. Overspending on health care has moved our life expectancy to age 79.
The Social Security System was created in 1935, to allow US citizens to pay 15% of their income to save for retirement with half being paid by their employer and half being paid by the citizen. It was structured to allow citizens to retire at age 65. Since then, eligibility has changed to age 66. It was modified to allow early retirement at age 62 with a lessor amount paid and later retirement at age 70 with a greater amount paid.
Our Social Security tax payments go the US Federal Government and provide cash to Congress to overspend. It was designed at a time when the US Federal Government had a history of high war debt. Now they use it to subsidize States with Grants equal to the size of their State Tax Revenues and engage in spending $1 trillion per year on foreign aid and they call it diplomacy.
Social Security was not set up as a private account to be owned by the participant. When it was enacted in 1935, some companies offered Pension Plans. Now these Pension Plans are limited to government employees and employees of utilities and unionized companies like the UAW automakers. Most other companies have ended their pension plans and now offer 401K Plans to allow employees to invest. Most 401K Plans have an employer match that is vested after 5 years of service. This is designed to help employees protect their savings from inflation.
In 1965, Medicare was added to the Social Security System to serve as a Health Insurance Plan for Retirees, because companies could not afford to keep retirees on their medical plans. In the 1980s, Hospitals were required to treat indigent patients. Hospitals shift these costs to patients who have health insurance. That’s the reason health care costs have doubled every year. Medical treatments have improved and some cures are occurring.
Some employees are allowed to use this 401K balance to accumulate a downpayment on a house. A single-family house is an investment that increases in value with inflation. Your mortgage payments are returned in full if your house increases in value if the owner maintains and upgrades the house. Rent payments are never returned. It’s like throwing money on the ground and burning it. Most people can retire on their Social Security income if their house is paid off.
Now, in 2024, many Social Security recipients are subsidizing family members who are unable to pay their bills. The primary goal of families is generational wealth. Social Security allows families some flexibility for those who have no debts.
Those Social Security recipients were born in the 1940s and enjoyed careers from the 1960s through the 2000s. Many took Social Security at age 65 and continued to work, but moved from full-time to part-time and gradually retired in their 70s. They also had 401K plans and moved them to private plans when they retired.
Data that displays the US population by age group historically shows that each 5-year age group is even at about 20,000 and goes down after age 80. The 2021 data below shows a similar pattern. This is a sign that US Social Security is demographically balanced.
Age Population
0-1 3,564,000
< 5 18,827,000
<15 60,467,000
15-24 43,089,000
25-34 45,495 000
35-44 43.404,000
45-54 40.668,000
55-64 42,803,000
65+ 55,848,000
75+ 22,182,000
85+ 5,976,000
100+ 98,000
Tot
331,894,000
https://en.wikipedia.org/wiki/Demographics_of_the_United_States
The increase in the age 65+ group is brought to you by the baby-boomers. Those who die before age 65 never get their contribution returned. Maintaining the goal of producing intergenerational wealth is not achieved. Those who live past age 80 are grateful for the money left over by those who died before age 65.
When I was asked why I had 6 kids, I said I was just trying to save the Social Security System. My other favorite answer was that God told me He needed more good people.
My wife and I were married at age 21 and had our first child at age 22, and bought our first house at age 23. We had 6 children at age 30. I worked as a musician to supplement our income and my wife was free to be a stay-at-home-mom. When we were 39, the kids were older and my wife entered Dental Hygiene school and graduated at age 42. She got to work in her chosen field for 32 years and got to have her career.
At age 49, I was kidnapped from my corporate personnel manager job to launched a Consulting Practice that I ran for 25 years. I paid 15% to Social Security as a “Sole Proprietor”, filing Schedule C. Our combined incomes allowed us to pay $500,000 over our working life to Social Security and that put our Social Security Benefits on the high side.
Norb Leahy, Dunwoody GA Tea Party Leader
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