Table of Contents
Introduction
Social security is a social insurance program that is received by over 61 million people. It includes retirement, survivor, and disability benefits. It’s a pay as you go system that is federally administrated https://www.nasi.org/learn/socialsecurity/overview.
What is the problem?
Social Security was developed from war veterans that needed compensation and benefits for them and their families after service. Fast forward several decades and we have today’s Social Security benefits. Some of the contributing factors that have developed these retirement benefits are economic insecurity, affordable retirement, poor investment, unemployment, and unforeseen life circumstances such as death. These factors are still prevalent in today’s structure of Social Security and will be discussed throughout this paper.
What are the recent debates regarding this problem?
Since Social Security affects the majority of working Americans, there are many lively debates circling the subject matter. Some to report are raising the retirement age to increase one’s capacity to collect the maximum amount possible. Another is in regards to the current administration’s budget cuts to the funding and administration and the negative ramifications in extended processing time.
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One of the more interesting is proposed by Mark Rubio and Ivanka Trump which is the Paid Family Leave debate. It would allow women to access SS benefits during their working career so they can take extended time of for child rearing. In return, they would have to work past the normal retirement age and extend their careers to make up those benefits.
Another debate is to streamline online applications for SS benefits and SSDI in order to process applications faster. A drawback to this debate is that many working Americans who contribute to SS are still are not computer literate which would deter them from applying to their deserved benefits.
Who is affected and how?
Social security benefits are now designed to include retired workers, the disabled, survivors of deceased contributing spouses, and family members of beneficiaries.
Literature Review
There has been a long history of historical events that resulted in adaptations to what is now known as Social Security. The first act was Civil War Pensions that were awarded to veterans after their service. After that the next big event was the Great Depression that due to economic decline, social instability, and elderly who weren’t able to maintain income. These issues led to welfare. This in turn resulted in Old Age insurance. OASI covered those who were also in active duty, the disabled and their family members. https://www.nasi.org/learn/socialsecurity/key-dates
In 1935, Franklin Roosevelt established pensions for American citizens and in 1939 he signed legistlation establishing benefits for survivors and their depenents. In 1956, early retirement was established for women, disability payments for ages 50-64, and payments to divorced wives as well. Several years later in 1961, early retirement was also enacted for men. In 1972, President Nixon initiatied COLA and made COLA automatic each year. A couple years later in 1977, payments to divorced husbands were also instated.
Later Reagan in 1983 signed legislation for taxatation and a gradual increase of obtainging full benefits at 67. In 2000, during the Clinton administation he elminiated the earnings retirement test for people over full-benefit age. The most recent additions were in 2011 with the ‘Payroll Tax Holiday’ which was reduced from 6.2 to 4.2 and in 2015 Congress passed a Bipartisan Budget Act. https://www.ssa.gov/history/briefhistory3.html
Previous Studies
Study 1
First of the five literature reviews spoke about a survey conducted by the US Census Bureau. It received lots of criticism as it indicated that SS benefits were the largest contributors to retirement income for those of 65 years of older. This particular survey received a lot of criticism as it failed to take into account other sources of income. It stated that one half of the population receive at least 50% of their family income and in turn one fourth of the population receive at least 90% of their family income from SS benefits. It received criticism since it assumes that the culture is overrelient of SS benefits.
Study 2
In the second study that was studied, it examined individuals, specifically women, interested in accessing their retirement benefits at an earlier age. Fifty-five percent of women who expected to take them early did in fact were granted and received benefits early.
Study 3
The third article reviewed the 2012 MHA which focused on mexican immigrants, both legals and non legal residents, who of that population, 32% contributed to SS but surprisingly only 5% received benefits. This is as a result of poor education of the system, under the table positions, and legality of residents all became barriers of receiving these cash benefits when deserved. Some limitations were that it mostly focused on male workers. A strong implication that can be drawn is that immigrants significantly contribute but are not benefits in the end and the legislation should be altered to pay the deserving contributors. (Aguila & Vega, 2016).
Study 4
Another article reflected the application process for SSDI. Between one of the ‘most rigid’ screening processes, in influx in applications form the 2008 recession, and an ongoing decreasing federal budget which has resulted in limited federal employees, all result in a 540 day application wait period. (Sutcliffe 2016)
Study 5
Another study regarding SDI dove into a program encouraging beneficiaries to get back into the workforce by creating incentives, improving healthcare access, and decrease their earning limitations. It resulted in about ¼ returned to receive DI benefits and not go back to work.
Study 6
Lastly, from a study based on a broad range of participants, the majority of Americans agreed that would increase SS taxes if it would create stability for themselves, their family, and millions of Americans. (Walker, Reno, and Bethell 2014)
Policy Description and Analysis
Purpose/Goal of the policy (by federal)
The purpose of this policy was set by the Social Security Administration and guided by the Social Security Act of 1935. It includes providing material needs for individuals and families, keeping families together, and allowing children the chance to grow up healthy and secure.
Political Feasibility
Politically speaking, there is general support for social security on all sides and general consensus that system reform is necessary. Of course there are two sides: Conservative and Liberal. Generally Conservatives would prefer to privatize social security and create individual accounts while continuing the flax tax rate. Liberals would like to expand social security, install tax based on income rather than a flat tax, and would like to raise payroll tax for higher earners. Also believe social security should be a protected institute and not allow any reductions or cuts to social security.
Public’s Support of Policy
The general public has similar views in terms of unifired support. They value social security benefits and are willing to pay more if it means it will benefit the society has a whole which correlates with the findinngs in the literatute review. Americans want to ‘gradually eliminate the cap’ and raise the tax rate for both workers and employers to pay more. ‘REPORT: Strengthening Social Security: What Do Americans Want?’ National Academy of Social Insurance. www.nasi.org/research/2013/report-strengthening-social-security-what-do-americans-want.
Implementation: Administrative Feasibility
It is a federally administered programs run through the Social Security Administration. The office that overhears all appeal cases is the Office of hearing Operations that administers the Administrative Law Judges. For the SSA.
Also the social security number plays a large part in SS benefits even though the SSN wasn’t designed to be an identifier.
Coverage
The targeted age group of beneficiaries is workers who have contributed who are 62-70. However, if you receive benefits before the full retirement age which is 65 years old, you only receive 70% of the monthly benefits. It means, delaying the age of retirement will increase the monthly benefit amount.
Benefits
Benefit system is a credit based system that allows workers to collect credits on a quarterly basis based on birth year and amount earned. People can earn up to 4 credits per year but must earn $1,300 to get one credit. One isn’t entitled to receive benefits until said person earns 40 credits. (ssa.gov/planners/credits). Monthly benefits after retirement are based on your highest 35 years of earnings. Spousal benefits are distributed at 50% of the workers full retirement amount. If spousal benefits are under FRA, then 50% in addition to percenetage deduction is based on number of months under FRA.
Funding
Funding is and income transfer program which means that taxes are paid by current employed personal to support the current beneficiaires (Browning, 2008). This structure has been coined as ‘Pay-as-you-go’. Workers pay 6.2% each pay check with their employer matching with an additional 6.2%. Self-employed workers pay the entire 12.4% to participate in SS. The funds are maintained by the trust funds through US Department of Treasury. Average return rate of 2.5% of the tax contributed. This is a regressive tax that has a taxable income cap of $128,400 and Social security tax each year is $7,960 regardless of income. The OASDI, which is disability, incomes are derived from four major sources including payroll taxes or federal taxes, securities expenditures, interest on invested revenues, and payment of benefits.
Conclusion
In conclusion, social security benefits are an exclusive investment system that includes working persons have to be involved in order to receives benefits in the future at retirement age. Overall, persons from all different backgrounds politically, religiously, and ethnically would prefer to contribute more if it would financially ensure benefits that would cover themselves, their families, and millions of Americans.
Implications that been proven is that education is needed surrounding SS benefits and the options that are open to beneficiaries. Many retire early without the knowledge that they could obtain full retirement benefits if they wait for full retirement age. Also there should be mandatory sessions about retirement prepared by HR departments.
