AMAC Blog

Blog , Finance

A Universal Social Security Program?

Posted on Friday, January 15, 2021
|
by Russell Gloor, AMAC Certified Social Security Advisor
|
43 Comments
|
Print

social securityWith Social Security’s finances in the spotlight these days, especially since COVID-19 devasted the U.S. economy, there is no shortage of ideas for how to reform the Social Security System (SS) to restore it to financial solvency. Some proposals have originated in Congress (Social Security 2100 Act) and others have been floated by various “think tanks.” In the latter case, some independent “outside-the-box” proposals advocate entirely scrapping the existing Social Security Act in favor of a “Universal Flat Benefit” program – essentially a program where all recipients receive the same amount regardless of their lifetime earnings history and contributions. This would, they argue, lift many more Americans out of poverty and would allow for a reduction in the Social Security tax burden on American workers. Proponents argue that lowering SS payroll taxes with a universal benefit program would mean more disposable income available for use, instead, to better save for individual retirement and to bolster the U.S. economy. Lofty goals, but at what penalty?

The universal SS flat-benefit concept has gained traction largely because most Congressional approaches to Social Security’s financial dilemma include raising the payroll tax burden on American workers. Most currently proposed legislation tackles the issue of a steadily increasing number of Social Security beneficiaries by increasing SS revenue via higher taxes to support a larger number of recipients. That approach, flat-benefit proponents say, will eventually become unsustainable.

The current SS payment methodology is already somewhat progressive in that the benefit formula is weighted to provide greater pre-retirement income replacement for lower earning workers. The income replacement rate for low-income workers is about 40%, whereas for high-income workers it is considerably less. Nevertheless, today SS benefits are computed relative to the contributions each person has made to the program. Conversely, a universal flat-benefit program would transform Social Security into more of a socialist program where everyone gets the same benefit amount regardless of their contributions – an idea that flies in the face of America’s most basic principles.

Social Security has now entered its ninth decade of providing benefits to American seniors and their dependents. That alone is testimony to the soundness of the program’s basic tenet – benefits are paid relative to contributions made. That’s a sound principle which today keeps about 22 million Americans out of poverty. So, we must ask – is it smart to replace a program which has been a resounding success for over 80 years, with what is essentially a welfare program? Or is it more prudent to modestly adjust the current program to fit today’s demographic – in effect, “modernize” it?

Reality is that people are now living much longer. Life expectancy has steadily increased over the years and, thus, those collecting Social Security today collect benefits for decades. Yet Social Security’s full retirement age definition has not changed in over 37 years. But simply changing Social Security’s full retirement age won’t alone restore the program to solvency, so other “modernization adjustments” must also be made. Instead of a socialist universal flat-benefit program, let’s consider a viable way to maintain the existing SS structure of “benefits paid relative to contributions made.”

The Association of Mature American Citizens (AMAC) has developed and, over several years, fine-tuned a proposal which will not only restore Social Security to solvency, but do so without raising SS payroll taxes. This proposal, known as the AMAC Social Security Guarantee and Social Security Plus Initiative (www.amac.us/social-security), advocates making several relatively modest adjustments to Social Security’s benefit formulas to achieve solvency without adding to the current tax burden. Proposed adjustments include:

  • Adjusting the full retirement age to recognize that Americans today are living (and collecting benefits) much longer
  • A guaranteed Cost of Living Adjustment (COLA) weighted to favor low-benefit beneficiaries, using a tiered-formula based on household income
  • Adjust the Delayed Retirement Credit formula to align with reductions for claiming benefits before full retirement age
  • Modify the formula for computing the Primary Insurance Amount (PIA) for future high earners to align with the national inflation rate, instead of the Average Wage Index
  • Enhance the current survivor benefit formula to provide a joint-and-survivor annuity concept
  • Divert current retirement account penalties (e.g., early withdrawal of 401(k)) from the General Fund to the Social Security Trust Funds
  • Replace the Windfall Elimination Provision (WEP) with a new, less punitive formula

To address the issue of too many American’s neglecting to save enough for their future retirement, AMAC’s Social Security Guarantee also includes a “SSG-Plus” option, which provides a voluntary special investment mechanism for employees to save for their retirement (and for employers to contribute matching funds). This approach would help ensure that seniors have a sizable “nest egg” as they enter retirement.

To AMAC the choice is clear. We do not favor discarding the Social Security program for a socialistic universal flat-benefit program where everyone gets the same benefit regardless of how much they’ve contributed. Instead, we advocate for modernizing the existing Social Security program without increasing payroll taxes and providing guaranteed Cost of Living Adjustment (COLA) weighted to favor low-benefit beneficiaries, using a tiered-formula based on household income. Moreover, AMAC’s Social Security Plus proposal would provide further benefits in relationship to contributions through its voluntary special investment mechanism for employees to save for their retirement and for employers to contribute funds, as well.

The AMAC Foundation (www.AmacFoundation.org) is the Association’s non-profit organization, dedicated to supporting and educating America’s Seniors.

Share this article:
Subscribe
Notify of
guest
43 Comments
Most Voted
Newest Oldest
Inline Feedbacks
View all comments
elaine l mohr
elaine l mohr
3 years ago

I am sick of hearing how Biden is taking everything away from the citizens of America and giving to those who have not worked hard to deserve it and are in our country illegally. American citizens have followed the rules and the radical left kicks every freedom away

Shiouling Huang
Shiouling Huang
3 years ago

This is another “socialist” idea. Social Security is our money that was forced to saved to government’s account for each one’s retirement, not for the welfare program, we have paid taxes for the welfare. Social Security needs to be separated from welfare period !!

Art A
Art A
3 years ago

HOW MANY WAYS CAN YOU REDISTRIBUTE WEALTH,HARD WORK, AND SUCCESS? THE ANSWER IS MANY MANY MANY WAYS. SS MAY NEED SOME TWEEKS AND PROPER ALLOCATION OF FUNDS. SS IS NOT BROKEN! STOP THIS INSANITY!! SS IS A GREAT POOL OF $$$$$ FOR THE GOVERNMENT AND THEY HAVE THEIR FINGERS DEEPLY IN IT. MAGA.

Steve
Steve
3 years ago

Social Sucurity is a giant Ponzi Scheme; it is a Direct Tax to be used as the government sees fit. If I saved the same amount used to pay SS, I would retire rich.

Janet
Janet
3 years ago

While I don’t disagree completely with the proposals you are making, I think I am not alone in believing that Social Security would not be in any danger if funds had not been stolen by the government to pay for the Vietnam War…a war that was costly and never really accomplished anything other than to kill many who would now be in their 70’s and to leave many with drug addiction and PSD. The government not only “borrowed” this money, but never even paid interest on it which would have helped to build back the fund. It amazes me how it’s OK to send money to countries that hate us and do everything that they can to undermine us or for sexual identity studies in Pakistan and other Pork Barrel crap. The money stolen from Medicare to fund Obamacare should also be returned to us as we paid into it starting in 1965 when the program came to be. To charge us for these things when we are working and then take them away is an atrocity! I am also outraged that Social Security Benefits are being given to illegals as are Medicare and even Medicaid benefits.

Pam Smith
Editor
3 years ago

Hello,

AMAC is aware that your comments are not being posted to our site. Our technical team is working on the issue and hope to resolve it shortly. We apologize for any inconvenience.

DrProduct
DrProduct
5 months ago

Many Americans do NOT live long enough to draw SS, yet they and their employer paid the taxes for 40+ years. Couple that with cessation of all aid to illegals and also no foreign aid to countries that hate us, and SS and Medicare could be swimming in funds.

Commieobamie
Commieobamie
1 year ago

Screw off. This proposal is assinine. I disapprove. And I HATE Communism!

Madison
Madison
3 years ago

Hello

Stella Kalfas
Stella Kalfas
3 years ago

1st and foremost, the government needs to put back the funds they took out of SS. Secondly, because seniors are living longer does not mean they are capable of working longer in the same capacity and thus their earnings going down affects the monthly SS received. This also penalizes individuals who were able to save and increase their income – which punishes them for doing so. Why not fight to get the SS funds that were stolen back first, instead of finding a solution to have the Seniors pay the price of that theft.

Lee S McQuillen
Lee S McQuillen
3 years ago

If the government would pay back to the “trust” fund that which it has “borrowed” over the years, things would probably be looking up with regard to solvency.

Peter
Peter
3 years ago

Define household income. Over the years I did without to build a nest egg. Now my income is earned from that investment. Because I did it the right way, do I understand that I will now be penalized. Why bother saving?

Barbara
Barbara
3 years ago

What if we just took the government out of the equation and had the same amount taken out of our wages but put them in our own special retirement accounts like they do for 401Ks. The government than wouldn’t be in control of it anymore. The more they control the worse it is for everyone.The same for Medicare. Take back control of our money that we all work so hard for.

oldbat
oldbat
3 years ago

what needs to happen is that NO non citizens should be allowed to get soc sec, even if they have worked here long enough to qualify. the scotus ruled that ss IS NOT a retirement plan, IT IS A TAX, and it can be taken from us at any time. we currently have who knows how many green card workers/spcl class workers/illegals that have “earned” ss and are getting it. this needs to stop. and yes, they need to pay into it like everyone else, but they should not collect. only work done after becoming a citizen should count towards the requirements.

par404
par404
3 years ago

I would propose to eliminate or make social security an option and let people choose their own savings. If they opt out and do not have the discipline to save -sorry for them or have programs to teach people to save.

Bonkers
Bonkers
3 years ago

KJV Bible Red Letters
KJV Bible. Philippians 4:19
[19]But my God shall supply all your need according to his riches in glory by Christ Jesus.

Denise P
Denise P
3 years ago

No reform is necessary except… to start investing our SS funds in a group mutual fund so we get triple what we are getting now, if our employers IRA managers can do it, so can the government.

Stop the federal government from stealing from social security; even Obama stated he could do that.
That is OUR hard earned money, and it does not belong to the government.

SS funds should be put in a trust fund that no one can touch. Period.

It does not matter WHEN we retire, are booted out early due to age discrimination and cant get hired elsewhere due to being older, and have to care for elderly parents, or help our children, or work for ourselves, we deserve to use our SS funds as we see fit, and when we need them.

Centurion
Centurion
3 years ago

The real problem with SS that everyone ignores, including AMAC, is that Congress STEALS the SS funds every year and replaces them with worthless IOU’s. Ronald Reagan recognized SS would go insolvent and bumped up the contribution rates and the retirement ages. Instead of leaving it alone congress again started stealing the extra funds. SS can be saved if congress can be forced to put all SS funds in to a trust account that they can not touch. Then force congress to repay all those worthless IOU’s.

GT Patriot
GT Patriot
3 years ago

“Universal” ? Any time DC puts a shiny-face name on any bill i.e. “Affordable” , “Economic
Opportunity “, “Equitable”, ” Progressive” you know the scam is on. A group of taxpayers is about
to be screwed to support the “repressed”.

Ginger Lymbery
Ginger Lymbery
3 years ago

The best plan available is to take the past and present Congressmen, Senators, SCOTUS and President’s retirements and put them in social security so they can be paid what their employers, We the People, get paid.

Annabelle
Annabelle
3 years ago

There are fundamental flaws in Amac and other proposals that want to raise the full retirement age and decrease the payout for those that apply early. This is based on the idea that people are living longer and collecting for too many years. No one is acknowledging several important areas:

If you work in corporate world (and many do), they want you out around 55. I know many thrown out even sooner. What is one to do for a living from 55 to 70? There is age bias on many seasoned workers that end up scrambling for consulting/contracting work. So we need to work longer than ever until we attain full social security benefits in a market that looks down on older employees that will use more medical benefits because they have developed chronic health issues over 30+ years from all the stress and sedentary office work.

Those in our 50s are often sandwiched between elderly parents that need our help (including financial) and college age children that need $$ support for the extraordinarily high priced college education that vastly decreases our ability to ‘sock away’ funds for retirement. Unless your kid has some super duper hardship story that the sways the college entrance review committees to provide a great financial award, the ability to save for retirement is significantly reduced during the latter part of our careers just when we need to ramp up the savings.

Financial planners will tell you when deciding to start social security, not only do you consider what other funds you have to live on to see if you can wait until full retirement, you also have to consider your health situation and if you are not expecting to live until 80 or so, it is best to start taking the benefit early. So if you are a hard worker for 30+ years, develop chronic health issues that prompt you to think it may be best to start early, now under these proposals, you will be penalized. These proposals do not factor in that everyone has different circumstances.

I don’t know what the answer is to shore up social security but I am not in agreement with the Amac proposal (nor the current one I heard coming from the new administration).

Lee Wilson
Lee Wilson
3 years ago

Lo

Harry J Welsh
Harry J Welsh
3 years ago

Is the reason the various Blue State Governors are slow walking the virus vaccine roll out is to help save social security. After all this virus is particularly hard on those over 65. Also opens up estate taxes if you go waiting for the vaccine. To me socialism says you should work and contribute to their plans and once you stop working die shortly thereafter. Socialism is Bull—-, nothing less.

Gunny Joe
Gunny Joe
3 years ago

Here we go, just what the want-a-be president and his kneepad wearing vice wants, socialist programs. I agree with one statement below, congress put this money back into a lock box not for them to use, and let some one that cares about the people of the United States (that are citizens legal, not illegal) manage the fund. I am 76 years old, I worked till I was 69 just so I could draw a better SS check, now they want to change my check, in short and cleaned up Marine talk, BITE ME! Hell I expect this crew to come after my Marine Corps Retirement also! AMAC your proposal at first look is a good way to go.
The person that call the present SS system, a “Ponzi Scheme”, is correct. back when the 65 year retirement for SS was set, the average life expectation was 63, (fooled the dems on that one), when I retired from the Marine Corps the average number of retirement checks sent before the death of the Marine was 13, that is one check per month. Grace of God and good genes.

George Mason
George Mason
3 years ago

First Social Security was not among the enumerated powers given to the federal government. In fac the supreme court decided that the law was unconstitutional as it was not among the powers granted to the federal government. The federal government then changed it to a tax which was included in the constitution. Hence, your social security payments are nothing more than another income tax and therefore an important revenue for our federal government. The fact that it is a tax is why “our” federal government are using the funds for other purposes. There is not investment account holding your social security payments. Should you die without any dependents or a spouse your estate is not send a check equal to any remaining funds in your account.

Second few if any would invest in the low yielding Social Security program given a free drop.

I would rather have placed my Social Security payments into my 401k Account. The payout would have been far greater than what I am getting from Social Security.

Ed J
Ed J
3 years ago

The Social Security program is not perfect, but it works and has worked for over 80 years. Why try to fix (i.e., structurally change) something that is fundamentally NOT BROKEN? Does Social Security need some reform? Of course it does. The necessary reforms that are required will ensure financial solvency well into the future without any so-called Universal Flat Benefit nonsense entering into the equation.

Join Now!

Money-Saving Benefits News, Podcasts, & Magazine A Strong Voice on Capitol Hill

All Membership Packages Include Your Spouse for FREE!

1 YEAR MEMBERSHIP

3 YEAR MEMBERSHIP

5 YEAR MEMBERSHIP

LIFETIME MEMBERSHIP

Grilled Lemon Garlic Shrimp
tasty cheddar-ranch burgers
eye health - exam
Ways to save money on clothing

Stay informed! Subscribe to our Daily Newsletter.

"*" indicates required fields

43
0
Would love your thoughts, please comment.x
()
x

Subscribe to AMAC Daily News and Games