Did you hear? It’s National Social Security Month. That’s right—the Social Security Administration chose the month of April to “celebrate” Social Security and “educate the public about who we are, why we exist, and the programs and services available to help them Secure Today and Tomorrow.”
Since we’re supposed to spend this month “celebrating” Social Security, we figured we could do a little educating of our own. Here’s five things you need to know about the program the SSA probably won’t be too eager to “educate the public” about.
1. Congress Hides the True Cost of Social Security.
If you take a look at your pay stub you’ll see a line that says “Social Security Employee Tax.” The tax is 6.2 percent of your paycheck, but that’s only half the payroll taxes that come from your wages. The other 6.2 percent comes out of your employer’s budget for salary and wages. Employers have to pass that hidden tax onto their employees in the form of lower wages, which means the average American doesn’t know how much they’re truly paying in Social Security taxes. Anyone who is self-employed, like those earning an income in the sharing economy, sees the full burden of the tax.
2. Social Security is a Dinosaur.
You probably don’t heat your home with a coal furnace, use an operator to place a phone call, or gather around the radio every evening for the latest adventures of the Lone Ranger. So why are Americans still counting on a government program created in the 1930s?
When Social Security was established in 1935, the average life expectancy was 62, one quarter of the workforce had jobs in the agriculture industry, and just 24 percent of women were in the labor force. The world has changed pretty radically since then, but Social Security has remained largely the same. The program is outdated and inefficient, and doesn’t meet the needs of today’s world.
3. The Social Security Trust Fund is Headed Off a Cliff.
Social Security is in terrible shape. In 2010, the trust fund began taking in less in tax revenue annually than it is scheduled to pay to retirees. To make up the difference, the trust fund receives interest payments from general revenues, adding billions to the deficit and taking money away from other services. A report by the nonpartisan Congressional Budget Office released last month said the trust fund will be insolvent by 2030 and the government will be forced to cut services or raise taxes. Social Security is the largest government program. If it becomes insolvent, our already sky-high debt could balloon out of control.
4. Social Security Isn’t Functioning Like Originally Intended
Back when Social Security was originally sold to the American people, the program was supposed to function as a safety net. Today, everyone gets a Social Security check, including wealthy retirees who don’t need taxpayer assistance. If lawmakers want to protect Social Security, they need to reform the program to ensure it will be there for those who need it most.
5. Millennials Don’t Trust Social Security, and They Don’t Need It.
Unsurprisingly, 94 percent of millennials don’t think they’ll receive the same level of benefits current retirees enjoy. The good news is we’re taking matters into our own hands. The average millennial starts saving for their future at age 22, 5 years earlier than Generation X, and 13 years earlier than Baby Boomers. Of course, our ability to save is hampered by that 12.4 percent payroll tax and the billions of dollars of national debt created by a program few of us account for when making financial plans. Further, Millennials are far more likely than other generations to earn their income from wages, so the payroll tax disproportionately affects us.
Reforming Social Security shouldn’t mean changing the program for current beneficiaries. Many depend on their Social Security check to make ends meet, and we shouldn’t change the rules they counted on. But it’s time to bring Social Security into the 21st century. Lawmakers should implement reforms that expand financial freedom for us and future generations and make Social Security more affordable, transparent, and modern.
Think it’s time to fix Social Security? Sign our petition demanding lawmakers implement real reforms.