The phrase is meant to evoke fear.
6.2% of our income is swept into the Social Security safety net up to a maximum income of $113,700 with a maximum payable amount of $7,049.40 each calendar year. $50,000/year contribute close to $3,000 per annum so the max is never reached but they always have a 6.2% salary deduction each month. Single earners between $113,700 and $200,000/year quit paying when the max earning is reached and have the rest of the year off. They still pay $7,049.40 but do not pay 6.2% of their income every month. In 2013, those singles earning in excess of $200,000 will pay an additional 0.9%. Medicare taxes are paid on all income at a rate of 1.45%. While a few industries have wiggled out of their obligation, the majority of employers match these funds.
$3,000/year for forty years, doubled through employer contributions, is $240,000 savings for the retirement years. When the funds are doled out at around $20,000/year, seniors are not living the high life, but smart retirement choices make it doable for over ten years using only their own savings. If more was earned, the monthly rate is higher.
Social Security is looking well funded to me and you’re getting what you paid for. Your first question should be ‘why?’ when you hear the pundits howl about this broken system.
Raising fear among today’s youth is a hand-wringing hyper exaggeration that Social Security is unsustainable and will have been wiped out when it’s their turn to collect. Understandably, looking thirty to forty years into the future steeply contrasts the economic struggles young families face in 2013 and 6.2% more in their pockets today looks like a better deal. Put aside this type of irresponsible pandering and believe that the true benefit of knocking Social Security exists for advancement of an undisclosed agenda. The less the young pay into the system, the less corporate America has to match. Only when less is paid into Social Security by all parties does it become unsustainable. From this point, it’s not a stretch to envision privatization of the entire social security structure with the safety net at the mercy of Wall Street investors. Be assured, under business-friendly representation, employer matching funds will instantly disappear. The government will be allowed to serve as the collection and distribution tool of your 6.2% because you will still pay. Big money wants to play with public funds without corporate risk or venture capital investment.
As an alternative to the GOP’s unstated ‘private’ approach, managed distribution in the form of chained CPI is being pushed by the Democrats to bolster a multi-trillion-dollar trust fund claimed to be fully financed until 2037. Changed buying habits cannot be allowed to redefine inflation as a personal choice. Cost is established by the seller. Consumers of all ages buy what their incomes permit. Through a policy of chained CPI, cost-of-living increases are suspended because inflation will no longer occur. But just because SS checks become smaller each year chained CPU operates, deflation does not take place either. The road to less and less is unappealing and will inevitably arrive at nothing. Then the private sector savior arrives and saves Social Security from the incompetence of government. However, Washington sticks around to collect the 6.2% contributions and privatization of your pension has been achieved.
Remember, the Social Security Trust Fund has more than $2 Trillion in its reserves. This untouchable money is driving corporate America crazy.