How many private pension plans, annuities or individual retirement accounts can boast that less than one penny of every dollar spent goes to administration? Social Security can. Social Security is the most universal, secure and efficient source of retirement benefits, disability and life insurance in our nation. It keeps Americans out of poverty by providing a basic income after retirement or if they become disabled, plus it supports children whose parents have died or cannot work due to a disability.
What’s more, Social Security benefits contribute to the economy. The AARP reports the benefits are primarily spent in local communities, creating jobs and income. In fact, the report says for every dollar of Social Security benefit paid out, $2 in economic output are generated.
But because our population is aging and there is an imbalance between those who are working and paying into the system and those drawing benefits, the Social Security Trust Fund is on target to run out of money by 2035. This has prompted some legislators to call for cuts in benefits. That is not the solution.
The gap between average yearly benefits and the poverty level is narrowing. In New York State the poverty level for an individual is $12,060 per year, while average Social Security retirement benefits are $17,500 and average SS disability $14,808. Buffalo has the lowest cost of living of the four major cities in upstate New York, but even here cost of living is a far cry from the benefits provided by Social Security. To live in minimal circumstances in Buffalo, an individual needs an annual gross income of $24,370, according to MIT’s living wage calculator. Instead of talking about reducing benefits, we should be finding ways to increase them.
In the next few months, the House of Representatives is expected to pass the 2100 Act to expand Social Security. Their plan is to balance the program over the next 75 years by increasing payroll taxes by 1/10th of 1% each year through 2043, applying the tax to earnings up to $400,000 (currently the cap on income subject to Social Security taxes is $132,000) starting in 2020, and expanding benefits modestly.
The United States cannot be a leader among developed nations if we allow our elderly and less advantaged citizens to fall into poverty. Those of us who are fortunate to earn a healthy wage can well afford to contribute to a program that is such a critical safety net and operates as cost-effectively as Social Security. Voters should require any candidate running for federal office in 2020 to take a stand in favor of stabilizing Social Security and increasing benefits to retirees and the disabled.