Many ask if Social Security adds to Federal Debt. As retirement age approaches, seniors are becoming increasingly worried about their finances. In the past few years, social security has been a hot topic in the political world. The current secretary of energy, Rick Perry and Senator Ted Cruz have referred to social security as a Ponzi scheme. Senate Majority Leader Mitch McConnell has been falsely stating that the federal debt is because of social security. To protect your financial future, understanding social security and how it works in the United States Government is vital.
Social Security Truth
The social security initiative, in 1935, was intended to protect people 65 or over for retirement. As the country was still reeling from a stock market crash and the great depression, President Roosevelt added legislation. This not only assisted retirement age individuals but also the disabled.
The social security tax was added to the individual’s paycheck as a safety net. Every abled body working person paid into the social security fund. This, by law, was a separate entity. The United States budget could not take or allocate social security funds to any other department.
Perry and Cruz’s Ponzi scheme statement is completely false
Throughout the years, there have been major amendment changes to the original act. These have included death benefits, survivor benefits, and yearly cost-of-living increases. Each decade allowed different types of workers to be included in the social security fund. By 1990 all citizens who have paid into social security and are eligible can receive benefits. Perry and Cruz’s Ponzi scheme statement is completely false. A Ponzi scheme is when an investor in a business or some other funds is paid quickly by newer investors. This is a lie because every working individual pays into the fund. Then when their time comes to begin collecting benefits, the money is there for them.
Does Social Security Add to Federal Debt?
When Senate Majority Leader Mitch McConnell falsely stated that social security needs to be gutted because that is why we have outstanding federal debt, this alarmed people. McConnell either bold-faced lied or does not understand how the social security system works. Either one is detrimental to the United States.
The social security fund has gained a surplus of money
Each year, starting in 1983, the social security fund has gained a surplus of money. The surplus ends in 2020, as the money received is less than the payout. As it stands now, the social security trust fund has enough money to pay qualified individuals until 2035. While that seems like a short amount of time, some policymakers are working towards gaining a surplus once again. If the money does run out without a policy in place, social security will not stop. However, qualified individuals will see a smaller check, only 80% of promised benefits.
Peace of mind
The working class of today must look into their finances, as the social security policy may have an impact on how their retirement is determined. You, for now, can relax and enjoy their retirement with peace of mind that they will have enough money to live on.