I find it sad, and somewhat worrisome, that so many young people think Social Security will not be there for them when they're ready to retire. What they don't understand is they had better hope it is -- because if not, it's doubtful that the vast majority of them would ever be able to stop working.
The Republicans want to kill Social Security or privatize it (in other words, they want to invest all that money in the stock market, not exactly a great idea given what's happened to that in the last decade). They keep saying we have to cut Social Security to balance the budget, yet they don't want to increase taxes on the wealthy, even the capital gains tax, which is now only 15%. Many people who are wealthy make most of that wealth from capital gains, by the way, so their income is taxed at a much lower rate than the pay of most Americans.
As we know, the income disparity between the middle class and the wealthy has gotten wider and wider as time has gone on, and yet the Republicans continue to shelter them. Notice that they no longer refer to the wealthy as "the wealthy" or "the rich" - there must have been a memo that went out to all Republican lawmakers to now refer to them as the "job creators." Really! I know, it's hysterical. The wealthy are doing better than ever, so if they're the "job creators," why is unemployment over 9% again?
But back to Social Security. Only the first $106,800 of income is taxed for Social Security. So whether you make $106,800 or $20 million, you will pay the same amount of Social Security tax. Does this make sense to anyone? 70% of Americans agree there should be no income limit on these taxes. In September of this year a bill was introduced by Senator Bernie Sanders (I-VT) to remove this cap, but as yet it has not been brought up for a vote. That's probably because Senate Majority Leader Harry Reed knows it won't pass the Republican-led House.
How many of you out there work for a company with a traditional retirement plan (known as a "defined benefit" plan), the kind your parents and grandparents had? Probably not many of you, because these kinds of plans have been disappearing. Some companies replaced them with what is called "defined contribution" plans, where you have an account with your name on it and the company can decide how much, if anything, it wants to contribute to that account each year. These accounts are almost always very poor replacements for defined benefit plans (trust me, they didn't do this out of the goodness of their hearts). Recently companies have been ditching those as well, and relying on 401(k)s, if they give the employees anything. In my mind 401(k)s are very dangerous as it relies on the employees to be able to make the kind of financial decisions that most people just do not have the knowledge or background to make. Not only that, but it is very unlikely that most people, unless they make a huge salary, would be able to come close to saving enough money for retirement through a 401(k), even one with a company matching contribution.
With real estate losing value, people losing jobs, and the loss of traditional retirement plans, Social Security simply MUST be saved, or we will have generations of people who either cannot retire at all, or who will retire in very poor financial shape.
In addition, the loss of Social Security or the increase in the Social Security retirement age will mean a rise in unemployment, but the Republicans don't mention that. Why will this affect unemployment? The longer people have to work to receive their Social Security or to save for retirement due to the loss of other retirement income, the more young people will be frozen out of the jobs where they would have replaced the older worker who retired.
By the way, when the Republicans talk about raising the Social Security retirement age, guess what - they already have. They don't tell you this, either. But look on the Social Security website (www.ssa.gov) and you will see that the age for full Social Security benefits is 65 only for those people who were born in 1937 or earlier. It goes up after that, until it reaches 67 for people born in 1960 or later. So if you are now 51 years old, you will not be able to retire with a full benefit until age 67. You may say, that's OK, I'll take a partial benefit and retire at 65 anyway... but for each year you retire early you will sacrifice about 8% of your benefit for the rest of your life. So in that case, your benefit would be about 16% less than it would be if you retired at 67.
Make sure you understand the implications of any changes your lawmakers want to make to Social Security before voting. And if you're a young person, don't think of Social Security as something only for your parents and grandparents. If you ever want to be able to retire, you had better work now to make sure it will be there for you.
