Social Security is a retirement benefit waiting for you when you reach 62.
When you earn $1,000, your employer takes $62 and sends it to the Federal Government to build up your retirement account. Most people don't know it but your employer has to send an equal amount of $62 to fund your account. So for each $1000 you earn, a total of $124 is set aside for you. Pretty simple huh?.
Since Social Security was started in the late 1930's, $2.5 trillion has been accumulated in excess of what has been paid out. That is the good news. The bad news is the government doesn't have the money. It loaned the $2.5 trillion to itself to pay for Medicare, the war in Iraq and a bridge to nowhere in Nebraska.
So as more and more people retire, the Federal Government in theory is going to have draw from the extra cash it has accumulated over the years. Alas, the money is gone. The easy solution is to increase taxes. You can "bet the farm" that your taxes will go up.
It was announced yesterday that this year applications by new people reaching 62 had increased 23%. People that had planned to work to 65 or 67 or older are taking Social Security earlier because they have lost their jobs or job stress is intolerable.
For this year, people applying for disability has increased 20%. My guess is that people with health problems that under normal circumstances would have "toughed it out" are surrendering to disability payments under Social Security.
In addition, collections for your Social Security fund are down 16% because unemployment is very high and without people earning money, payments to the Social Security fund are reduced.
Let me see! More people want social security. Payments to the Social Security fund are down significantly. There is no true cash reserve for payment of Social Security because the Federal Government spent it all. Tax increases on wages are coming to pay for the increased Social Security liability.
Another government program gone awry? Don' bend over!
Love,
Dad