The Harsh Reality Of Social Security

timwilliams By timwilliams, 6th Dec 2013 | Follow this author | RSS Feed | Short URL
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Why there is a real need to increase Social Security benefits today

The Harsh Reality Of Social Security

There has been much talk especially from our Republican friends in Washington about curbing the cost of living increases in everyone's Social Security checks. They consistently tout that Social Security was not meant to be ones only source of income when they retire. Little did they realize that the brain child of Social Security cuts are stuck with the mindset of the late 1960's. Back then we had a strong middle class, people consistently worked for the same company for years, and disposable incomes were enough to pay the bills and be able to enjoy the fruit of their labor much more so than today. The realm of reality is a far cry than it was 45 years ago. Pensions for the most part have gone the way of the Dinosaurs. Disposable incomes, well just say that they too have all but vanished. When so many people are working for lower wages and the cost of living has only accelerated leaves little or no income left to save, or spend on things that would generally increase economic growth.

When FDR signed the Social Security Act it was a landmark decision that guaranteed working Americans a means of a steady stream of income after they retired. It was supposed to balance ones income with a pension and investments made along the way during ones working life. For millions of Americans from the late 1930's probably through till around 1980 the majority of retirees benefited from at least 2 streams of income and many more benefited from all three whether it was Social Security, a pension, and those investments that were paying quarterly dividends.

Many baby boomers can remember their parents many of whom worked for the same company for years received a pension. With that pension along with Social Security benefits they could afford retirement in a fashion that one can only dream about by too many of today's retirees. What has happened since is a total evaporation of the economic reality the United states had following World War II. The greatest economic expansion in history propelled a nation to lofty heights and consequently the majority of Americas were the beneficiaries of it all. Today, our economy much of which has been sold out right from under our noses have left so little opportunities to earn higher wages. The harsh reality for too many Americas today especially all of the baby boomers who are retiring all that is left is the measly Social security benefits that have not kept pace with the ever increasing inflationary trends of today. It is the only safety net and provision available that keeps the wolfs at bay.

What happened during the last 45 years that has transformed a whole generation and generations to follow that when they retire to be faced with unprecedented financial hardships? A most sobering question that really needs to be answered. This past fall our most benevolent members of Congress granted Social Security recipients their second cost of living increase for their monthly benefits. The second time since 2009. The fact of the matter is that raise only amounts to a little over $10.00. When factored in the rising cost of everything else with so many relying on their monthly checks just to get by makes the government look like Ebenezer Scrooge. With so many seniors now relying on Food Stamps only to have their Food Stamps reduced by the same amount of money that is in their Social Security increase is actually a step backward. We all know food prices have only increased every quarter. And, we might add those increases are a hell of allot more than the cost of living increases allocated in our Social Security. To have Food Stamps cut their allotments by the same amount just shows how callous and indifferent our most generous members of Congress really are. If that's not bad enough our illustrious "Wizards" in Washington base all these adjustments on false assumptions in relation to the actual cost of living today. It is as though they are stuck back in the sixties when it comes to the Consumer Price Index, which measures inflation.

The CPI looks at a number of different types of goods and services that the Bureau of Labor Statistics thinks {there again relying on very false assumptions} what the average household spends and what goods and services they actually buy. The biggest category in the CPI is housing, which makes up roughly 40% of the index. Food and transportation each contribute a little over 15%. The remaining amount is spread across recreational activities, education, health care, and other goods and services. But there again the cost of all these continue to fluctuate and increase on a daily basis.

What all this means for most retirees is that the majority of retirees often don't fit the CPI profile of so many people who are about to retire of have retired. Many retirees have already paid off their mortgages, and despite still having to cover utility costs, property taxes, maintenance and upkeep, their spending on their housing needs still falls well short of that 40%. Yo make matters worse is the fact declining home prices have only benefited those who didn't own homes prior to 2008 when the sub-prime mortgage crisis hit. Far from getting any benefit, retirees who own their homes have taken massive losses in their finances. Compounding this financial debacle is that medical care, prescription drugs and other health related expenses places an ever-increasing drain on many retirees' finances. Hospital costs have risen at nearly twice the rate of overall inflation in the past 12 months, and over the longer run, health care has seen huge price increases that are straining government programs like Medicare and Medicaid to the breaking point. Yet, medical costs make up only 7% of the CPI -- a far cry from the estimated $230,000-$250,000 that retirees can expect to pay for health-care expenses over the course of their retirement years.

Just when things were already in bad shape our so called "Wizards" of finance in Washington some are looking to reduce cost-of-living increases in Social Security benefits that are linked to inflation. When that so-called "super committee" met two years ago to discuss ways to cut the federal budget, one proposal suggested using what's known as the "chain-weighted" CPI to calculate cost-of-living increases. According to estimates, using the chain-weighted CPI would save $200 billion over 10 years -- $200 billion that would come from lower annual raises for retirees' Social Security benefit checks. All the while the cost of living continues to escalate much faster than the information gathered by our bureaucrats in substantiating what they deem fitting expenditures for any Social Security adjustments. But, for now, that proposal doesn't look like it'll become reality anytime soon. This apparent posturing was just the latest in a series of arguments about whether the CPI overstates or understates inflation. As the federal budget becomes an increasingly important issue, you can expect to see more attempts to use the CPI as a way to rein in spending in an opaque but very detrimental way for retirees.

Now, with all the other talk floating around in Washington about Social Security's eminent demise {the year when there will be no money left in the Social Security account} again our most benevolent legislatures keep lamenting about other contingencies and proposals to keep Social Security solvent. This is to counter the blundering and plundering that has been done to one of the most essential safety nets that our aging population has. Now, what is touted as a key element Washington is proposing that the retirement age from 65 be raised to 70. For those who want to retire early they will have to wait to reach age 65 instead of today early retirement is at 62. That is if these proposals become reality. What they fail to realize is that Social Security as intended depends on wages. This means the more people earning more money the more funding flows into the Social Security Retirement fund. What the United states is facing today is an unacceptable unemployment rate, For those still working their wages have decreased when taking into account the cost of living. The baby boomers who are retiring are feeling the strain of limited and fixed incomes now more then ever. Finally for the past 25 years middle class wage jobs have all but vanished. This is the harsh reality facing the solvency of Social Security.

To increase the age limit from 65 to 70 and for early retirement from 62 to 65 won't even come close to solving this crisis. The solvency of Social Security is but a link in the chain of major flaws that continue to drag the United States economy down. The failure to grasp the ramifications of not implementing a single payer Universal Health Care initiative that eliminates the outdated and fraud riddled Medicare and Medicaid programs we have now continues to not only undermine Social Security but our whole economy as well. This is just part of the solution for reviving Social Security. The big picture for rejuvenating the United States economy to the point where this country has a majority of the population working with middle class wage jobs with a ratio of 15% low income level, a 70% receiving middle class wages, 25% in the high income bracket which leaves a 5% poverty rate can be attained by implementing National Economic Reform. Ten articles of confederation that detail and outline the direction this country must follow.

The idea on how to restore and secure Social Security for generations to come is not a new concept, but to actually achieve the results needed will take bold and decisive action. One that will entail nine other articles all interwoven in such a way that they all work together or they all fail. What has happened to the United States over the course of 40 years is a lesson of how to undermine the majority of United States citizens ability to prosper and to achieve the peace of mind that should be automatic by being an American. Sure, technology has far surpassed the majority of citizens ability on how to use and understand what has been created for the betterment of all. But, in actuality what really transpired is an almost total collapse of our founding principals Liberty, Justice, Morality, and Education. The United States in this period of history is in a pivotal point for the direction this country will undertake for the next century. Do we turn and embrace new, bold and decisive actions that will propel the United States into a beacon of hope other countries will want and strive to emulate or do we continue on this self destructive path toward ambiguity and obscurity?

National Economic Reform' with it's ten articles of confederations is a direct path toward creating that beacon of hope for generations to come. Restoring Social Security is an internal part of securing the future. To start; this country must determine now how to restore, and create employment opportunities with real living wages for all. There are allot of factions in determining how to achieve this objective. First is to ensure that Education Reform { another internal part of National Economic Reform } address the need to educate our youth on the skills and trades that are necessary for the types of employment opportunities that are now and will be the focus of the economic systems here and in other parts of the world. Next, the United States must address our trade agreements of the past and to restructure them so that corporations will be encouraged to employee Americans in factories here in the United State instead of exporting these jobs. Our trade deficit is one of the factors that this country is failing Americans. Restoring our manufacturing base in the United States is crucial for the national security that only comes when the United States has a strong and growing middle class. The biggest hurdle is NAFTA. The United States must now focus on equal trade agreements instead of free trade with higher tariffs of imported goods from certain countries like China, India, and even Mexico. This will aid in the elimination of most of our trade deficit and at the same time restore balance in our economy by more job creation.

To further restore Social Security the need is apparent that this country needs Universal Health Care to offset the high cost of healthcare coverage companies now offer to their employees. To increase wages for all and to contribute more to Social Security funding Universal Heath Care will now free up funds so that companies that deduct health insurance from employees wages will be now additional disposable income.

The more people that are employed with real living wags contribute more toward restoring and securing Social Security for all. In essence the realization and fulfillment of the "Williams Theory Of Economic Evolution." The United States Congress must change the current policy in early retirement so that more people applying for early retirement at age 62 could still work without any income restrictions that now reduces their incomes. This would be a win win situation because these workers will contribute more toward the over-all social security retirement fund while at the same time contribute more toward their own retirement when they actually do retire. .


Social Security, The Economy

Meet the author

author avatar timwilliams
I am a feature writer for The Tampa Bay Examiner and The American chronicle. Earned Ph.D in Economics

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author avatar Fern Mc Costigan
7th Dec 2013 (#)

Interesting post!

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author avatar Randhir Bechoo
7th Dec 2013 (#)

Interesting read.To maintain a standard of living after retirement is becoming more and more difficult.

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