The Social Security Program was created by the Social Security Act of 1935 to provide for the elderly, and their survivors, as well as for disability insurance benefits – for workers and their families. It was expanded in 1965 to include benefits under the Medicare program.
Unlike Welfare, which is financial assistance given to persons who qualify on the basis of need, Social Security benefits are paid to an individual or his family on the basis of that person’s employment record and prior contributions to the system, as stated in the Free (Legal) Dictionary.
How much money have you and I put into these programs our whole working lives? Well, for the last many years (except this year and last year), both the employer and the employee have put into the federal coffers 6.2% of the employee gross pay for Social Security. For Medicare, each party puts in 1.45%. Add up 6.2 + 6.2 + 1.45 + 1.45 and you get 15.3% of your gross pay was paid as a tax into the FICA program.
So, yes, we all deserve this pension we have paid into.
By the way, for 2011 and 2012, the withholding was reduced, for employees only, to 4.2% for Social Security. This was designed to give workers more spending money. See Social Security Online.
Now, here’s an interesting wrinkle, where the 1%, or maybe even the 10% of the top earners get one more break. It just so happens that social security deductions stop as soon as a person earns $110,100.
This means that rich people don’t have to continue the deduction! Sooooo….. if you are Warren Buffett, or Mitt Romney or Mark Zuckerberg (the Facebook guy), or President Obama, or anyone earning over $110,200 in one year, you don’t have to keep on paying into social security!
No wonder the program is having financial problems. We definitely need a Buffet rule for all tax programs!
Keep tuned for more on these issues in later blogs.