Vital Program

The Social Security Act was signed into law August 14, 1935 and the first payouts began January 1937. The first payout was a lump sum of $.17. In 1940, the benefits were first issued monthly.

Medicare became law July 30, 1965 and the first sign ups were accepted July 1, 1966.

Until 1951, earners paid 1% toward the program on the first $3,000 of earnings. In 1979, it was 6.05% (both Social Security and Medicare) on the first $17,700 of earnings.

Now, earners pay out 7.65% on the first $102,000 earnings of which 1.45% is Medicare without earnings limit. All wages are taxed 1.45% for Medicare.

Remember, employers match this withholding and the self employed pay both halves.

Knowing that Medicare will go bust before the end of the next decade, I wondered about Social Security.

According to Consumer Reports, 2/3 of Social Security recipients over 65 rely on it for 1/2 of their income. For 22% married and 42% single recipients over 65, their Social Security checks are 90% of their retirement income.

With the Baby Boomers retiring and living longer, the latest studies are confusing. I think the program will have to be boosted with higher rates or extended maximum earnings. Possibly denying those with fixed retirement programs, a redistribution of wealth. Or is that socialism? Maybe the entire program is socialistic.

We know that they now tax some Social Security benefits. Taxes on already taxed $. Is that double taxation? Maybe benefits will be taxed more as a solution.

Politically it (SSA) is a hot potato. Privatizing suggestions are shot down but the reality is the program is equal to an annuitized $225,000 policy which would pay out the average of $1,045 monthly with increases based on inflation and continued benefits to spouses.

The truth is the fix will be painful.

'til later