Social Security Myths

Since Social Security affect millions of people, especially the elderly, it has become quite a sensitive issue and is frequently debated over from both sides. There are those that believe Social Security to be a system destined to fail while there are those that defend it and believe that it is a valuable social insurance program designed to help the elderly as well as the disabled and the beneficiaries or survivors of a worker who might have died suddenly. The continuing debate on Social Security has led to many myths that have circulated and tend to make people believe it as fact. Here are some of those myths:

 

Social Security is not a good deal.

There are many people that believe that it is unwise to contribute a portion of their income towards Social Security. People believe that they would benefit more from using their own earnings if given what they contributed to Social Security. It is not true that one’s Social Security contributions would be useless. In fact, it would greatly help in compensating for income needed for retired people.

Social Security is a good deal in that they also provide a better rate of return than some of the conventional private investment programs may provide. People with low to moderate incomes usually will receive a higher annual rate of return as compared to what government bonds would typically provide. And unlike Individual Retirement Accounts and 401(k)’s, Social Security benefits are not subjected to market fluctuations but instead provide benefits that increase with inflation. That, in itself, makes it a good enough deal.

 

Social Security is in a crisis and may not be sustained to provide benefits for everyone.

Many people have become concerned that the Social Security program may eventually not be able to give the benefits to the succeeding generations because they believe that it can’t be sustained. People believe that the program may be nearing bankruptcy and is in a crisis. This might be due to the reports that in 1997, the program’s trust funds may last only until 2029.

But lately, due to stronger than expected economic growth, the program’s trustees have projected that, on a worst case scenario, the Social Security fund may be able to provide benefits in full until 2053, after which 70 percent of those benefits may be provided. That will show that the program is not on a verge of a crisis since the health of the economy has improved projections.

 

Privatization of Social Security would benefit today’s younger workers.

There have been talks of privatizing the program, saying that it would benefit the younger workers. This would be the opposite since it would be the younger workers who would bear the brunt of the change and the associated burden that comes with it. Transforming the program would make it harder for younger workers to bear since it would mean some additional debt burden that they will face along with the impact of not maintaining the current guaranteed benefit levels.

 

 

Posted by Ardent Editor on Mar 5 2008 in Social Security

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