One of the misconceptions about Social Security is that it's "your" money that "you paid into" in the same way that the money in your bank account or 401(k) is yours.
Another is that it's not an "entitlement". let's start with "not an entitlement".
People who are anticipating receiving social security benefits often like to draw a distinction between their benefits and what they disparagingly call "welfare" benefits. Some of them don't even like the term "benefits". And there is a distinction. Benefits such as SNAP, or TANF, are strictly need-based, while social security benefits are based on lifetime wages. Both are termed "entitlements". "Entitlement" is a term of art that simply means that you are entitled to the benefit if you meet the requirements. The benefits are written into law and are cannot be defunded if the current Congress doesn't like them. Future Congresses can reduce benefits or change requirements, and have done so several times over the years.
The idea that because you "paid into" social security leads some people to believe that any benefits that are less than the amount of FICA taxes that you have paid over your lifetime has been stolen from you. people wonder aloud "where that money went". This misconception arises from the belief that each person has an account, where the money you paid in is tracked over your working life and when you retire, is paid out from that account. It's true that they amount that you receive as social security benefits upon retirement derives from a formula based on your highest earning years, which is related to the amount you paid in social security taxes, but is not identical to it. Social Security has always been a pay as you go system. Current retirees' benefits are paid from current wage earners' payroll taxes. The amount that current retirees "paid in" has long ago been used to pay for a previous generation's benefits. As far as recouping what you've paid in payroll taxes, an extremely long-lived person could conceivably receive more in benefits than they paid in taxes over their working life, while someone who died before retirement age would receive nothing (although a surviving spouse could receive benefits equal to what the deceased would have received). The person who died early doesn't have a surplus of unused money and the centenarian doesn't stop receiving benefits when what they "paid in" runs out.
You may pat yourself on the back that your social security benefit was earned (which it was in part) which makes you better than a SNAP or TANF recipient, but it's still a "benefit" and it's still an "entitlement".
No comments:
Post a Comment