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A Universal Social Security Program?

social securityWith Social Security’s finances in the spotlight these days, especially since COVID-19 devasted the U.S. economy, there is no shortage of ideas for how to reform the Social Security System (SS) to restore it to financial solvency. Some proposals have originated in Congress (Social Security 2100 Act) and others have been floated by various “think tanks.” In the latter case, some independent “outside-the-box” proposals advocate entirely scrapping the existing Social Security Act in favor of a “Universal Flat Benefit” program – essentially a program where all recipients receive the same amount regardless of their lifetime earnings history and contributions. This would, they argue, lift many more Americans out of poverty and would allow for a reduction in the Social Security tax burden on American workers. Proponents argue that lowering SS payroll taxes with a universal benefit program would mean more disposable income available for use, instead, to better save for individual retirement and to bolster the U.S. economy. Lofty goals, but at what penalty?

The universal SS flat-benefit concept has gained traction largely because most Congressional approaches to Social Security’s financial dilemma include raising the payroll tax burden on American workers. Most currently proposed legislation tackles the issue of a steadily increasing number of Social Security beneficiaries by increasing SS revenue via higher taxes to support a larger number of recipients. That approach, flat-benefit proponents say, will eventually become unsustainable.

The current SS payment methodology is already somewhat progressive in that the benefit formula is weighted to provide greater pre-retirement income replacement for lower earning workers. The income replacement rate for low-income workers is about 40%, whereas for high-income workers it is considerably less. Nevertheless, today SS benefits are computed relative to the contributions each person has made to the program. Conversely, a universal flat-benefit program would transform Social Security into more of a socialist program where everyone gets the same benefit amount regardless of their contributions – an idea that flies in the face of America’s most basic principles.

Social Security has now entered its ninth decade of providing benefits to American seniors and their dependents. That alone is testimony to the soundness of the program’s basic tenet – benefits are paid relative to contributions made. That’s a sound principle which today keeps about 22 million Americans out of poverty. So, we must ask – is it smart to replace a program which has been a resounding success for over 80 years, with what is essentially a welfare program? Or is it more prudent to modestly adjust the current program to fit today’s demographic – in effect, “modernize” it?

Reality is that people are now living much longer. Life expectancy has steadily increased over the years and, thus, those collecting Social Security today collect benefits for decades. Yet Social Security’s full retirement age definition has not changed in over 37 years. But simply changing Social Security’s full retirement age won’t alone restore the program to solvency, so other “modernization adjustments” must also be made. Instead of a socialist universal flat-benefit program, let’s consider a viable way to maintain the existing SS structure of “benefits paid relative to contributions made.”

The Association of Mature American Citizens (AMAC) has developed and, over several years, fine-tuned a proposal which will not only restore Social Security to solvency, but do so without raising SS payroll taxes. This proposal, known as the AMAC Social Security Guarantee and Social Security Plus Initiative (www.amac.us/social-security), advocates making several relatively modest adjustments to Social Security’s benefit formulas to achieve solvency without adding to the current tax burden. Proposed adjustments include:

  • Adjusting the full retirement age to recognize that Americans today are living (and collecting benefits) much longer
  • A guaranteed Cost of Living Adjustment (COLA) weighted to favor low-benefit beneficiaries, using a tiered-formula based on household income
  • Adjust the Delayed Retirement Credit formula to align with reductions for claiming benefits before full retirement age
  • Modify the formula for computing the Primary Insurance Amount (PIA) for future high earners to align with the national inflation rate, instead of the Average Wage Index
  • Enhance the current survivor benefit formula to provide a joint-and-survivor annuity concept
  • Divert current retirement account penalties (e.g., early withdrawal of 401(k)) from the General Fund to the Social Security Trust Funds
  • Replace the Windfall Elimination Provision (WEP) with a new, less punitive formula

To address the issue of too many American’s neglecting to save enough for their future retirement, AMAC’s Social Security Guarantee also includes a “SSG-Plus” option, which provides a voluntary special investment mechanism for employees to save for their retirement (and for employers to contribute matching funds). This approach would help ensure that seniors have a sizable “nest egg” as they enter retirement.

To AMAC the choice is clear. We do not favor discarding the Social Security program for a socialistic universal flat-benefit program where everyone gets the same benefit regardless of how much they’ve contributed. Instead, we advocate for modernizing the existing Social Security program without increasing payroll taxes and providing guaranteed Cost of Living Adjustment (COLA) weighted to favor low-benefit beneficiaries, using a tiered-formula based on household income. Moreover, AMAC’s Social Security Plus proposal would provide further benefits in relationship to contributions through its voluntary special investment mechanism for employees to save for their retirement and for employers to contribute funds, as well.

The AMAC Foundation (www.AmacFoundation.org) is the Association’s non-profit organization, dedicated to supporting and educating America’s Seniors.

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Stella Kalfas
22 days ago

1st and foremost, the government needs to put back the funds they took out of SS. Secondly, because seniors are living longer does not mean they are capable of working longer in the same capacity and thus their earnings going down affects the monthly SS received. This also penalizes individuals who were able to save and increase their income – which punishes them for doing so. Why not fight to get the SS funds that were stolen back first, instead of finding a solution to have the Seniors pay the price of that theft.

Catherine Horinek
21 days ago
Reply to  Stella Kalfas

I completely agree!

Last edited 21 days ago by Catherine Horinek
Lee S McQuillen
27 days ago

If the government would pay back to the “trust” fund that which it has “borrowed” over the years, things would probably be looking up with regard to solvency.

Peter
1 month ago

Define household income. Over the years I did without to build a nest egg. Now my income is earned from that investment. Because I did it the right way, do I understand that I will now be penalized. Why bother saving?

Barbara
1 month ago

What if we just took the government out of the equation and had the same amount taken out of our wages but put them in our own special retirement accounts like they do for 401Ks. The government than wouldn’t be in control of it anymore. The more they control the worse it is for everyone.The same for Medicare. Take back control of our money that we all work so hard for.

Lee S McQuillen
27 days ago
Reply to  Barbara

Your idea would make it so they couldn’t “borrow” from the money. They wouldn’t go for it.

oldbat
1 month ago

what needs to happen is that NO non citizens should be allowed to get soc sec, even if they have worked here long enough to qualify. the scotus ruled that ss IS NOT a retirement plan, IT IS A TAX, and it can be taken from us at any time. we currently have who knows how many green card workers/spcl class workers/illegals that have “earned” ss and are getting it. this needs to stop. and yes, they need to pay into it like everyone else, but they should not collect. only work done after becoming a citizen should count towards the requirements.

Lorelei
1 month ago
Reply to  oldbat

Won’t be fair! There are a lot of couples where one of the spouses hasn’t worked a day (for different reasons) but is entitled to partial social security of the other spouse while both spouses are alive. Green card holders, meanwhile, not only can legally work but they also have to pay taxes, like the rest of the Americans. The only option that makes them different from the rest of the Americans is they don’t have the right to vote.

elaine l mohr
1 month ago

I am sick of hearing how Biden is taking everything away from the citizens of America and giving to those who have not worked hard to deserve it and are in our country illegally. American citizens have followed the rules and the radical left kicks every freedom away

Lorelei
1 month ago
Reply to  elaine l mohr

Biden is the one who came up with the bill to tax our social security twice – in 1983 and in 1993.

par404
1 month ago

I would propose to eliminate or make social security an option and let people choose their own savings. If they opt out and do not have the discipline to save -sorry for them or have programs to teach people to save.

Bonkers
1 month ago

KJV Bible Red Letters
KJV Bible. Philippians 4:19
[19]But my God shall supply all your need according to his riches in glory by Christ Jesus.

Denise P
1 month ago

No reform is necessary except… to start investing our SS funds in a group mutual fund so we get triple what we are getting now, if our employers IRA managers can do it, so can the government.

Stop the federal government from stealing from social security; even Obama stated he could do that.
That is OUR hard earned money, and it does not belong to the government.

SS funds should be put in a trust fund that no one can touch. Period.

It does not matter WHEN we retire, are booted out early due to age discrimination and cant get hired elsewhere due to being older, and have to care for elderly parents, or help our children, or work for ourselves, we deserve to use our SS funds as we see fit, and when we need them.

john richmond
1 month ago
Reply to  Denise P

Force the Federal government to replace all the funds “borrowed” from Social Security by reducing the salaries pf ALL of Congress ,force Congress to turn over all their “private ” pension plan moneys to SS. last consolidate ALL Federal pensions into Social Security., reduce Federal employee headcount and use the saved salaries deposited to SS. Knowing full well that Congress will spend every nickel they can get their hands, force Congress to spend only money collected in Taxes with a defined percentage to be devoted to SS, a full balanced budget Amendment to Constitution.

Gloria P. Sterling
1 month ago
Reply to  john richmond

I should add; make Congress pay into SS, also.

elaine l mohr
1 month ago
Reply to  Denise P

i applaud you good idea

Centurion
1 month ago

The real problem with SS that everyone ignores, including AMAC, is that Congress STEALS the SS funds every year and replaces them with worthless IOU’s. Ronald Reagan recognized SS would go insolvent and bumped up the contribution rates and the retirement ages. Instead of leaving it alone congress again started stealing the extra funds. SS can be saved if congress can be forced to put all SS funds in to a trust account that they can not touch. Then force congress to repay all those worthless IOU’s.

GT Patriot
1 month ago

“Universal” ? Any time DC puts a shiny-face name on any bill i.e. “Affordable” , “Economic
Opportunity “, “Equitable”, ” Progressive” you know the scam is on. A group of taxpayers is about
to be screwed to support the “repressed”.

Ginger Lymbery
1 month ago

The best plan available is to take the past and present Congressmen, Senators, SCOTUS and President’s retirements and put them in social security so they can be paid what their employers, We the People, get paid.

PKinney
1 month ago
Reply to  Ginger Lymbery

Right on Ginger, straight to the point, to add term limits across the board, the Pres can only serve 2 terms, as should be with the house and senate. Then do away with all lobbyist and then go from their

Denise P
1 month ago
Reply to  Ginger Lymbery

Bingo! and add all of the other benefits they get to match the average American worker’s including healthcare (same choices we get) and when they leave office, NO more benefits, get them at your next job.
If these criminals had the same benefits the taxpayers had, you would see big changes and better benefits for all happen so fast your head would spin. They steal from the taxpayers routinely and then give our money via welfare freebies to illegals for their vote. This has to stop.

Annabelle
1 month ago

There are fundamental flaws in Amac and other proposals that want to raise the full retirement age and decrease the payout for those that apply early. This is based on the idea that people are living longer and collecting for too many years. No one is acknowledging several important areas:

If you work in corporate world (and many do), they want you out around 55. I know many thrown out even sooner. What is one to do for a living from 55 to 70? There is age bias on many seasoned workers that end up scrambling for consulting/contracting work. So we need to work longer than ever until we attain full social security benefits in a market that looks down on older employees that will use more medical benefits because they have developed chronic health issues over 30+ years from all the stress and sedentary office work.

Those in our 50s are often sandwiched between elderly parents that need our help (including financial) and college age children that need $$ support for the extraordinarily high priced college education that vastly decreases our ability to ‘sock away’ funds for retirement. Unless your kid has some super duper hardship story that the sways the college entrance review committees to provide a great financial award, the ability to save for retirement is significantly reduced during the latter part of our careers just when we need to ramp up the savings.

Financial planners will tell you when deciding to start social security, not only do you consider what other funds you have to live on to see if you can wait until full retirement, you also have to consider your health situation and if you are not expecting to live until 80 or so, it is best to start taking the benefit early. So if you are a hard worker for 30+ years, develop chronic health issues that prompt you to think it may be best to start early, now under these proposals, you will be penalized. These proposals do not factor in that everyone has different circumstances.

I don’t know what the answer is to shore up social security but I am not in agreement with the Amac proposal (nor the current one I heard coming from the new administration).

Edward McCloskey
1 month ago
Reply to  Annabelle

Even Amac’s “solution” is socialist. By that I mean penalizing those who contribute the most and rewarding those that contribute the least. That is socialism/communism in a nutshell!

Linda L Vega
1 month ago

totally aggree, you lost me at adjusting ss payment according to income. Those that have worked hard, saved their money, invested in their employee 401k, and payed into ss shouldn’t be penalized by a lower monthly amt from ss. My husband and I sacraficed and saved to enjoy ourselves in retirement, stayed in the same home for over 45 years. Maybe even leave some hard earned money to our children and grandkids. We think lowering our ss because we saved and sacraficed is wrong.

John S.
1 month ago
Reply to  Annabelle

If businesses are going to be responsible first and foremost to their shareholders (which is the law) then they have to do what is going to produce the highest stock prices and dividends. Keeping high-salaried workers on the payroll past their peak performance years is simply not good business from that standpoint. Better to get younger people in who don’t cost as much.

The Democrats want to put restrictions on businesses to keep them from doing stuff like this, but we all know that is anti-business. And fattening the government pot to protect people financially is just more socialism (which Social Security already was from the beginning; it was FDR’s idea for goodness sake!).

I agree it’s tough to find an answer.

Lee Wilson
1 month ago

Lo

Harry J Welsh
1 month ago

Is the reason the various Blue State Governors are slow walking the virus vaccine roll out is to help save social security. After all this virus is particularly hard on those over 65. Also opens up estate taxes if you go waiting for the vaccine. To me socialism says you should work and contribute to their plans and once you stop working die shortly thereafter. Socialism is Bull—-, nothing less.

Gunny Joe
1 month ago

Here we go, just what the want-a-be president and his kneepad wearing vice wants, socialist programs. I agree with one statement below, congress put this money back into a lock box not for them to use, and let some one that cares about the people of the United States (that are citizens legal, not illegal) manage the fund. I am 76 years old, I worked till I was 69 just so I could draw a better SS check, now they want to change my check, in short and cleaned up Marine talk, BITE ME! Hell I expect this crew to come after my Marine Corps Retirement also! AMAC your proposal at first look is a good way to go.
The person that call the present SS system, a “Ponzi Scheme”, is correct. back when the 65 year retirement for SS was set, the average life expectation was 63, (fooled the dems on that one), when I retired from the Marine Corps the average number of retirement checks sent before the death of the Marine was 13, that is one check per month. Grace of God and good genes.

Jim
1 month ago
Reply to  Gunny Joe

Maybe they could repeal the law that Clinton/Gore ran through whereby they could tax Social Security. The Senate vote was 50-50 and Al Gore broke the tie and now they get a little bit of your
social security check every month and that’s money you paid in, that had already been taxed once when you earned it.

Shiouling Huang
1 month ago

This is another “socialist” idea. Social Security is our money that was forced to saved to government’s account for each one’s retirement, not for the welfare program, we have paid taxes for the welfare. Social Security needs to be separated from welfare period !!

Art A
1 month ago

HOW MANY WAYS CAN YOU REDISTRIBUTE WEALTH,HARD WORK, AND SUCCESS? THE ANSWER IS MANY MANY MANY WAYS. SS MAY NEED SOME TWEEKS AND PROPER ALLOCATION OF FUNDS. SS IS NOT BROKEN! STOP THIS INSANITY!! SS IS A GREAT POOL OF $$$$$ FOR THE GOVERNMENT AND THEY HAVE THEIR FINGERS DEEPLY IN IT. MAGA.

Steve
1 month ago

Social Sucurity is a giant Ponzi Scheme; it is a Direct Tax to be used as the government sees fit. If I saved the same amount used to pay SS, I would retire rich.

George Mason
1 month ago

First Social Security was not among the enumerated powers given to the federal government. In fac the supreme court decided that the law was unconstitutional as it was not among the powers granted to the federal government. The federal government then changed it to a tax which was included in the constitution. Hence, your social security payments are nothing more than another income tax and therefore an important revenue for our federal government. The fact that it is a tax is why “our” federal government are using the funds for other purposes. There is not investment account holding your social security payments. Should you die without any dependents or a spouse your estate is not send a check equal to any remaining funds in your account.

Second few if any would invest in the low yielding Social Security program given a free drop.

I would rather have placed my Social Security payments into my 401k Account. The payout would have been far greater than what I am getting from Social Security.

PaulE
1 month ago
Reply to  George Mason

Finally someone else with a clear and correct understanding of what Social Security is and how inferior the real rate of return is on the money ultimately distributed to the recipients of the program is. The same amount of money collected from each individual over a 35 to 40 year time span, if instead invested in just about any sort of prudently managed investment account, would end up generating a monthly retirement check of at least 2X to 3X of what you get from Social Security. The reason being that Social Security invests solely in US Treasury bonds and notes, which are consistently some of the lowest yielding investments out there.

It’s great for the federal government because they have a steady stream of captive buyers for the the government’s ever-growing debt (the U.S. taxpayers paying the FICA tax), but the actual taxpayers end up getting the short end of the stick when in comes time to draw SS benefits. Especially under the formulas used to calculate benefits, which further tilts the advantage towards the federal government being able to retain more money. All in all a very poorly designed retirement supplement program. Of course that was the secondary purpose of the program. The primary purpose of Social Security was being a new tax revenue stream that FDR could get the public to buy into under the guise of helping the elderly poor. On that basis, the program has been a resounding success.

oldbat
1 month ago
Reply to  George Mason

scotus has also ruled that ss can be pulled at any time. it is not a retirement program. it is a tax.

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