Thursday, January 7, 2016

Social Security….not for everyone

Social Security is with us for the long haul.

I think it’s a vital foundation element of a reasonably secure society. I think high-income earners should pay a lot more in Social Security taxes (we should raise the maximum for taxable earnings). I think the full-benefit retirement age should be raised.

One of the reasons for the parlous state of Social Security finances is that people are living a lot longer than any politician or policy maker could have imagined in 1935.

The average life expectancy of folks being born now is about 79 years. Thus, the average newborn can expect to collect Social Security benefits for quite a few years under current law.

In 1935, when the Social Security Act was signed into law, the average life expectancy for newborns was about 61 years.

The act provided for benefits to be paid starting at age 65. Thus, the average person born that year wouldn’t live long enough to collect anything.

Think about that.

The official assumption was that a majority of the folks who lived all their lives with an anticipation of Social Security benefits would never get a dime.

The increase in longevity in the last 80 years has been spectacularly greater than any scientist or statistician or politician imagined during much of that time.

Another footnote in Social Security history:

Ida May Fuller of Ludlow, VT, received the first monthly benefit on January 31, 1940. During her work career she paid a total of $24.75 in Social Security taxes. She died when she was 100 years old after collecting total benefits of $22,888.92.

Think yin and yang.

Copyright © Richard Carl Subber 2016 All rights reserved.

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