When the issue of cutting America’s two largest and most broken social welfare programs — Social Security and Medicare — was broached during the recent debt ceiling debate, most Americans raised a considerable stink about it. Because of that, reform was never really tabled. It would have been political suicide for any representative or senator that dare force much-needed transformation of how we observe the golden years and peoples’ responsibility to prepare for it.
That’s because almost everyone is under the assumption that it’s “their money;” they paid into the system and it’s coming back to them. Under that belief system, these aren’t entitlement programs. Maybe that’s a way that seniors and soon-to-be retirees kid themselves into believing they’re not collecting welfare from the government. More likely, though, it shows how we’ve been misled.
In high school we were taught that President Roosevelt created Social Security to give us — as the name implies — security in our retirement years. The government would take some of our money and set it aside so that we could have access to it when we needed it for food, shelter, clothing and utilities during old age. We were told that President Johnson took that same route when his administration launched Medicare, taking and saving our money for our health coverage once we, or our providers, left the workforce for good.
That message of alleged self-preservation continues throughout our adult lives as we are inundated with propaganda ranging from public service announcements to television ads to regular Social Security status reports.
It’s imperative that this be understood: Seniors and workers are only half right. For the most part, they did pay into the system. But, it’s not their money coming back to them; it’s everyone else’s. Social Security and Medicare are entitlement programs and it’s foolhardy to think otherwise. From the start, those who were employed (and therefore seeing the respective taxes deducted from their checks) paid for the seniors.
Look no further than Ida May Fuller as the prefect example of this pyramid scheme in operation. She was the first person to receive monthly SSI payments. She worked for three years under the Social Security program, which first began collecting taxes in 1937. She paid a total of $24.75 into the system. Mrs. Fuller received her first check at age 65 in 1940. She subsequently lived to be 100, collecting $22,889 in the process — almost a thousandfold of what she had put into it.
Medicare showed a similar immediacy of disbursements without the alleged requisite financial investment: It was signed into law July 30, 1965, and the first beneficiaries were able to sign-up for the program July 1, 1966. It definitely wasn’t “their money” coming back to them.
We see this in effect so vividly today. The average annual Social Security benefit is now $14,000, and the typical Medicare recipient costs the government $12,000 per year. That means a normal retiree costs taxpayers $26,000 per year. Now, imagine that he or she lives another two decades to the ripe old age of 85, a realistic expectation. That brings the total cost to $520,000. If he or she lives as long as Mrs. Fuller was fortunate enough to, the total cost will be $910,00.
In either case, the assumption that a retiree had contributed that much to those programs is completely implausible. For many individuals, it is not even possible that they paid that much in total federal taxes (Social Security, Medicare, excise and income taxes) over their working careers.
It’s obvious that neither system — or, more importantly, our nation — can survive like this, especially when one looks at the long-term implications. Medicare is facing $37.8 trillion in unfunded obligations while Social Security is saddled with $21.4 trillion of the same. We have to change these programs significantly before we dig ourselves a deeper, or more sudden grave.
First, though, we have to get over the lie that we’ve been living; that these programs are our investment in our future. They aren’t. We’re funding welfare programs for the aged, while, especially for generations X and Y, endangering our future. Such can be expected when placing too much reliance on government and not in self.
Through mandated participation in retirement programs the government is basically implying we are too ignorant to plan for our own retirement needs. Are we really, or is it the government that’s most ignorant, putting our not only our golden years, but our working years in peril?