Social Security is one of the three “rails” of American politics, meaning politicians JUST DON’T MESS WITH IT. Whether you like it or not, it’s a huge program that has a major impact on both the leadership of the nation and normal folks’ daily lives. But how much do we know about it? It’s time to dig in.
Here are Five Fast Facts on Social Security:
- 🤏 The Beginning - The Social Security Board was created way back in 1935 when FDR was president. It went through some changes over the years (including being renamed to Social Security Administration in 1946), but the current iteration was set in 1995 under President Clinton. The funding comes from taxing Americans’ Paychecks. The first payment was to a guy in Cleveland who retired the day after the program began. He had five cents withheld from his final paycheck and received a lump sum payout of $0.17. No word on if he spent it all in one place, but we’re guessing he did.
- 💁 The Purpose - The program was a response to the Great Depression, to provide a safety net to retirees or unemployed folks, or for a lump sum upon death. Today, around 49 million retirees receive monthly benefits averaging about $1500 each, there are another 9 million spouses or children of retirees receiving benefits, and there are 9 million disabled workers and their dependents receiving benefits. For those keeping track at home, that’s about 20% of the country. You’re all welcome.
- 🌎 What’s The Ratio? Nowadays, it takes an average of 11 employee Paychecks to fund one monthly benefit payout. It varies from state to state, with Mississippi being the lowest taxation rate (meaning it takes 15 Paychecks) and Hawaii being the highest taxation rate (8.5 Paychecks).
- 📈 How Much Does It Cost? The costs grew quickly - in 1940 the total payout was $35 million, in 1950 $961 million, and in 1990 $248 billion. In 2022, the total cost was $1.2 trillion. Can we say unsustainable growth…?
- 😲😱 What’s The Outlook? It ain’t good. Without some major changes, the whole thing runs out of money in less than a decade, and benefits start getting cut.
🔥Bottom line: As we’ve discussed before, Social Security is a lovely idea that simply can’t last in its current form. We are not far from a catastrophic failure of this system, so we need responsible leaders to “man up” (or “woman up”) and get real about it.
What do you think should be done about Social Security?
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