Social Insurance is a system where people are insuring themselves through payroll or other taxes. Because of retirement, job loss, and disability. It replaces a portion of income by replacing a portion of lost earnings.
Social Insurance Trust Funds are maintained by the Treasury Department. OASI pays for retirement and survivor benefits and DI pays for benefits to people with disabilities. The financing for these programs is automatically adjusted each year to meet the expected costs. The government actually spends the money paid to social insurance and issues the U.S. government Treasury Bonds to people. The problem with this is the government is unsure how they will pay the money back to the US Treasury when they become due. The government will either have to raise taxes or cut spending on other government programs or borrow the money.
What is Social Security?
When workers and employers pay for those who have retired, are ill or have lost their jobs. Social Security benefits are paid by today's workers. Benefits are based on the beneficiaries earning vs. the current funding amount. Also the age at retirement and the amount earned while they was working.
Social Security is one of the nations most successful anti poverty programs. It provides a decent life for retires so that the children do not have to worry about them not being taken care of. Social Security began to have problems in the mid 1970's there was a decrease in funds and a deficit in the reserves.
Privatization
Privatization is when workers create their own personal accounts and save some of their payroll taxes for retirement. If privatization occurred the taxes would not need to raised and benefits for all retirees would be guaranteed. Workers would have the right to their retirement saving account and would be able to pass it down to their children. But some people argue that doing this will cause politicians to cut benefits in the future.
Solutions
The Recovery Act proposed provides a one time payment of $250 to retirees, disabled and veterans and SSI recipients. Obama plans to preserve SSI and says he will make it easier for Americans to save for retirement. He also opposes the privatization .
What Do I Think
I think privatization is a great idea. It gives everyone the chance to save their own money without social security being taken out of their taxes. People can save as much money as they want to for retirement and it is guaranteed to be their when they get ready to retire and it wouldn't be a age limit on it either. And it also transferable to other people if it is not all used. Why should you have money taken out of your hard earned money for retirement if your not even guaranteed it when you actually get ready to retire. I think this is unfair to those who contribute including myself. What are the younger people today going to do later on down the line when the government dont have any money to pay back the US Treasury. We are going to suffer because they are going to make us pay back something that we havent even used yet and may not even a get a chance to use it.
The diagram below shows how the government are paying out more money to beneficiaries than we are currently paying in taxes. Thus causing a major problem with time.
2 comments:
I dont agree with about privatizing social security. Yes it is true that both private and public social secuirty have benefits and failures. But if we priviatize social security what will happen to those living in poverty who cannot afford to save their own money for retirement benefits. These people will have nothing to rely on.
I agree with DayAnna to a certain extent. It would be a good idea to privatize Social Security for well educated individuals that have knowledgeable background of investing, but for the people who are not sensible(Money Wise) enough to invest there money into there own Social Security would fall to the waste side. Increasing crime rates and shorting life expectancy for impoverish senior citizens that would not have enough money to afford standard health benefits that they receive already.
Post a Comment