Social Security - No Politics Involved

I used to work at Social Security Administration so my ears popped
up when I read it mentioned in a post below.

I am NOT going to discuss the pros or cons of the plan to privatize
some portion of social security.

But I do want to address the issue of social security as
welfare.

It is absolutely correct that our taxes pay for this.

However, there are three elements of the program that have a
“welfare” implication.

1. Benefits - People who’ve earned less over the years get a higher
rate of benefit (not the same as actual dollars) as people who’ve
earned more. An example is a doctor versus a domestic worker. The
formula to determine benefits is very complicated but it includes
your life expectancy, how much you’ve earned, how long
you’ve paid into social security and certain occupations
(such as domestic workers).

That’s one reason why it is so reprehensible if wealthy people
don’t pay social security for domestic employees
(remember nannygate?).

2. SSI – Supplemental Security Income (SSI) which can be paid to
people who’ve never contributed to the social security system
provided they are of a certain age or have certain disabilities.
SSI periodically gets bad press because SSI pays for disabilities
including drug addiction and alcoholism. Although the check goes to
a third-party, it’s often criticized as financing substance abuse.

3. Getting back what you’ve paid in – This is biggest myth, bar none
and the one we heard over and over. The average current retiree has
recouped all contributions made, including those made by the person’s
employer, after only 4 1/2 years of benefits.

Don’t believe it? Do the math using simple numbers such as $30,000
a year for 40-years. Use today’s tax rates – individuals pay 6.2%
for social security and employers pay another 6.2%. The average payment
for a $30,000 salary after 40-years of work today is $910 a month.

Yet, on $30,000 a year, you paid an annual amount of $1,860 and your
employer paid the same amount.

Annual for both of you: $3,720. Annual benefits for you: $10,920.
I know people won’t believe this but do the math. Just because
you’ve paid in for 40-years doesn’t mean your monthly benefit
is paid with your contribution for 40-years.

SSA website – which has tons of information - has a calculator that
you can use to verify this or try other numbers.: http://www.ssa.gov/