Social Security program. The wrier explores what the program is and what problems it faces. In addition, the writer explains how the services work and what role social workers play in the program. The writer then wraps it up with a discussion about changes that are needed and what the writer would like to see implemented.
Each month the social security office prepares and mails out millions of social security checks to those who are eligible. Many people believe that social security is a program only designed to assist the elderly who have retired but it has several other purposes and programs that assist those who are eligible (Facts about Social Security benefits http://www.epinet.org/content.cfm/issueguide_socialsecurityfacts).
For one to explore and analyze the program, one first needs to understand the program completely.
Several of President Bush’s ideas also seem to be feasible methods to improve the current system as well.
“When Social Security was initiated 70 years ago, 40 workers paid into the system to support each retiree. As life expectancy rose and more people retired, the ratio diminished. In 1950, it was 16 workers paying for each retiree’s benefits. As baby boomers age, the ratio is now 3.3-to-1, and by 2050 it is projected at 2-to-1. Clearly, we’re on a collision course, and it’s as irresponsible to minimize the problem as it is to overblow it. Though the average checks now total about $14,000 a year, they comprise half the income for two-thirds of the country’s 36 million seniors.
Currently, wage-earners fund Social Security with a 12.4% payroll tax. Half is paid by employees, half by employers. Early versions of Bush’s reforms suggested that workers be allowed to divert up to 4% of their payroll taxes into controlled private retirement accounts likely to return more than the 2% annual yield of Social Security contributions. The notion has a nice “ownership” ring to it, but two obstacles have run it aground. First, the reduced workers-to-retirees ratio suggests that Social Security revenues can ill-afford a 4% diversion. Second, such a program would require the government to borrow trillions to fund its initial stages. Increasingly, it appears that a deficit-wary populace won’t stand for that much increased debt (Reutman, 2005).”
Since 1935, Social Security has been providing benefits to millions of Americans nationwide. The full name for the department is Old-Age, Survivors, and Disability Insurance (OASDI). The program was developed as an insurance program that was developed to provide benefits to workers and their families once the worker retired, became disabled or died.
It operates on an earned benefit program. An earned benefit program only allows those who work and pay taxes to collect benefits from its coffers once they are eligible.
Currently 13% of the nation’s population is over retirement age (Leighninger
“At the end of December 2003, Social Security provided monthly benefits to 47 million beneficiaries (or one in every 6 Americans). Social Security paid a total of $471 billion to retired workers, disabled workers, and to the surviving family members of deceased workers in 2001 (SSA 2004 Trustees Report). In 2002, Social Security beneficiaries included about 3 million children under the age of 18(Facts about Social Security benefits http://www.epinet.org/content.cfm/issueguide_socialsecurityfacts).”
One of the strengths behind the system is that the benefits are guaranteed to the beneficiaries. “Because Social Security is not an investment scheme but rather a social insurance program, its benefits will continue to be paid as long as a beneficiary depends on them (Facts about Social Security benefits http://www.epinet.org/content.cfm/issueguide_socialsecurityfacts).”
The stock market does not influence the system, now does the luck of individual investors. The social security benefits are promised in a similar manner that the United States government protects the dollar. It is guaranteed with federal funds to pay out to each and every beneficiary each month.
The main program offered through the Social Security office is the retirement benefit. Workers who have worked and paid taxes are eligible to draw from one of four benefit programs in Social Security.
retirement, early retirement, disability, survivorship benefits.
“Workers are entitled to retirement benefits if they have contributed to Social Security for at least 10 years, and if they have reached the normal retirement age, which is currently 65 (and is set to increase to 67 for workers born after 1959) (Facts about Social Security benefits http://www.epinet.org/content.cfm/issueguide_socialsecurityfacts).”
If a worker has contributed to the program for 10 years or more they are allowed to collect early retirement benefits if they want to. The current age for early retirement is 62, though there is debate whether or not that age should be raised. If one chooses to take early retirement benefits, they will receive a 20% reduction in their monthly check from what they would have received had they waited until they were 65 years old.
“Both full and early retirement benefits were paid to 29.2 million retired workers in 2002. Of these, 71% or 20.8 million retirees received a reduced benefit payment because they chose the early retirement option. Average monthly retirement benefits for all workers receiving retirement benefits were $895 in 2002, or about $10,700 per year. In comparison, workers who had retired early received on average $830 per month (Facts about Social Security benefits http://www.epinet.org/content.cfm/issueguide_socialsecurityfacts).”
Social Security also pays benefits to workers who become retired. The disability does not have to be related to their job. It can be an illness or any disability that completely prevents them from working.
Another benefit payable by Social Security is to families of workers who die. As long as the deceased person worked an average of one quarter each year after turning 21 years old the family is eligible to collect benefits upon the worker’s death (Facts about Social Security benefits http://www.epinet.org/content.cfm/issueguide_socialsecurityfacts).
For the majority of elderly people in this country Social Security is the major income for them.
Figure 2 compares data on 65-and-older households from the SSA with data on all household incomes from the Census Bureau, showing the percentage of households that fall within certain income bands. Twenty-one percent of 65-and-over households earn less than $10,000 in total money income annually, compared to 9% of all households. On the upper-end of the distribution, only 15% of 65-and-older households earn more than $50,000, compared to 44% of all households.
“Social Security replaces the source of income a worker has lost due to retirement or disability, or the income a family has lost due to the worker’s death. To ensure that Social Security benefits are adequate for every worker who is insured, Social Security — like any other insurance — pays disproportionately more benefits to those who need them most. Workers with low lifetime earnings receive relatively higher benefits (in relation to their lifetime earnings) than workers with high lifetime earnings. The retirement benefit received by a low earner is smaller in absolute terms, but larger as share of earnings, than the benefits received by high earning workers. For example, typical low-wage workers will receive annual benefits that are more than half as large (57%) as their average yearly earnings. Benefits for high-wage workers are larger but on average just 38% of their annual earnings. This progressive benefit structure boosts the retirement incomes of low- and middle-wage workers (Facts about Social Security benefits http://www.epinet.org/content.cfm/issueguide_socialsecurityfacts).”
Concern about the funds running out of the program, the government moved in 1983 to provide funds that would take care of the baby boomer ages who would come up for retirement. Since this special trust fund was set up there has been more money taken in than put out.
“Because income is currently exceeding expenditures, Social Security is building up a trust fund. Total income to Social Security was $632 billion in 2003. Its expenditures came to $479 billion, $471 billion of which was benefit payments. Consequently, Social Security managed to increase its trust fund by $153 billion in 2003. As a result, Social Security held a total of $1,531 billion in assets at the end of 2003. If Social Security faces a shortfall in income, the trust fund assets can be used to pay for the additional benefits (Facts about Social Security benefits http://www.epinet.org/content.cfm/issueguide_socialsecurityfacts).”
SOCIAL WORKER ROLE
The social worker also has a role when it comes to social security. There are several levels or tasks in which the social worker needs to be involved. For those who are collecting disability payments a social worker may need to oversee the beneficiary to be sure it is being spent to benefit that person.
Often times a social worker becomes involved with social security because of the children he or she works with. The Department of Children’s Services handles many types of family issues. When a social worker is assigned to the family and discovers a possible eligibility for one of the family members to collect social security the social worker is responsible for contacting the proper officials and assisting with getting the applications and other paperwork filled out.
The social worker addresses the family need and when he or she runs into an eligible person for social security, whether the person is elderly, disabled or a survivor, the social worker is bound by duty to follow through on it and help get it resolved.
Once the benefits are determined and begun the social worker oversees its use and its increases as they are received.
The social worker can be the only liaison between the beneficiary and the social security office.
Social workers are sometimes reluctant to work with the elderly and all that it entails (Leighninger pg 599). It is important for those who do work with the elderly to be educated in how to assist their clients when it comes to social security benefits.
Recently the American public has become quite concerned about the future of social security. Politicians have used it as a platform for votes and financial analysts have argued the pros and cons of the social security system.
Recently the idea has been proposed by politicians, including the president, to allow people to choose whether or not to participate in the social security system. According to them, and the experts who are against social security, the funds are at risk and there will come a time when retiring people will not be able to live on what it pays. They have suggested that an alternative should be the right to not participate in social security. Instead the workers can choose to participate in a private investment program in which they choose where to invest their required pay percentage toward retirement.
“According to the 2001 report of the Social Security system’s board of trustees, by 2016, just 15 years from now, the Social Security system will begin to run a deficit (Tanner, 2001).
In theory, Social Security is supposed to continue paying benefits after 2016 by drawing on the Social Security Trust Fund. But one of Washington’s dirty little secrets is that there really isn’t a trust fund. The government spent that money long ago to finance general government spending and hide the true size of the federal budget deficit. The trust fund now consists only of promises that at some time in the future the government will replace that money, which can only be accomplished by collecting more taxes or issuing even more debt (Tanner, 2001).”
One suggestion to reduce the burden on the office and funds of social security has been to privatize it.
“A shift to a private system, with hundreds of billions of dollars being invested in individual retirement accounts each year, would likely produce a large net increase in national savings, depending on how the government financed the transition. This would increase national investment, productivity, wages, jobs and economic growth. Replacing the payroll tax with private retirement contributions would also improve economic growth, because the required contributions would be lower and those contributions would be seen as part of a worker’s direct compensation, stimulating more employment and output (Tanner, 2001).”
Some experts believe that a private system would provide the most relief for low income workers. According to those who support a private retirement system the low income workers would receive two to three times the benefits that are currently promised by social security.
“The higher returns and benefits of a private, invested system would be most important to low-income families, as they are in greater need of the extra funds. The funds saved in the individual retirement accounts, which could be left to the children of the poor, would also greatly help families break out of the cycle of poverty. Similarly, the improved economic growth, higher wages and increased jobs that would result from privatization would be most important to the poor.
Because privatizing Social Security would turn every worker into a stockowner, the old, senseless division between labor and capital would erode. The socialist dream of the nation’s workers owning its businesses and industries would be effectively achieved. At the same time, as the nation’s workers became capitalists, support for free-market, pro-growth economic policies would increase in all sectors of society (Tanner, 2001) . ”
There are several changes that can be implemented to try and save the system from collapse and improve its delivery.
Those who are collecting for the death of a parent, are often times receiving more money each month than was being paid out for child support before the parent died. If a parent was paying child support, and then becomes deceased the social security payments are in place of the child support. It would behoove the system to only pay out what was being paid in child support payments instead of basing it on the current social security guidelines. A child who was receiving $500 a month in child support should not suddenly be given a monthly check of $1,200 or more. He or she should instead continue to receive the $500 a month in child support that was being provided before that parent passed away.
This one change can save many millions of dollars each year and those funds can be reserved to help pay for the aging population that will collect benefits longer than ever before.
“A simple solution would be to raise the payroll tax from 12.4%. Experts have suggested that an immediate 2% increase would make projected revenue shortfalls go away. But White House Communications Director Dan Bartlett, in a recent Face The Nation appearance, said of Bush: “He says the only thing that’s off the table is raising the rate.” After all, this is a president famous for cutting taxes.
But here’s where things get interesting. The payroll tax is currently capped at $90,000. People earning more than that pay no more payroll taxes. Raising the payroll tax “cap” for the 10% of Americans who earn more than $90,000 would go a long way toward funding the Social Security shortfall. Bartlett indicated on Face The Nation that Bush may consider raising the amount of income that is taxed. It is a solution that is popular with Democrats, but for that very reason it may be politically impossible (Reutman, 2005).”
Raising taxes is a viable solution but to get the public to agree there will need to be certain things offered in exchange.
Better programs and more social work involvement may help make it more palatable to the public.
While there are many who are in favor of privatization of the program the actual move to do so will be extremely burdensome to the government and private companies. The companies will have to keep track of who is investing where, and how much they are putting in to those investments. Any time an employee wants to change where the retirement funding is being invested it will have to be worked out and tracked as well. The cost and time for private companies to comply with private plans will be significant.
In addition there will be problems with employees who find ways to get out of investing, and then they will get disabled or retired and have to depend on the welfare rolls to help them survive because they won’t have any retirement funds saved for use.
The best solution to the social security question is to stay with the current program but put improvements in place so that it does not threaten to go under as the baby boomers continue to retire and draw out the funds.
Social security has been in place for 70 years. When it was first developed, the nation’s population was much smaller than it is today, and the life expectancy was lower. The current status of the program needs to be evaluated and reworked, though the basic framework should remain the same.
Facts about Social Security benefits http://www.epinet.org/content.cfm/issueguide_socialsecurityfacts
Five Reasons to Privatize Social Security.
On Wall Street; 8/1/2001; Tanner, Michael
Social Work, Social Welfare, and American Society, sixth edition, by Philip R. Popple adn Leslie Leighninger 2005