The idea for this blog is to get a feeling for how Social
Security works, how much money people receive from Social Security, an analysis
of its effectiveness, figuring out if it ends up hurting or helping the US
citizens.
There
are two types of Social Security Insurance programs: “Old-age and Survivors
Insurance” and “Disability Insurance.” There are currently 10.8 million
Americans on “Disability Insurance,” or 3.3% of the U.S. population. There are
currently 49.8 million Americans on “Old-age and Survivors Insurance,” 15.3% of
the U.S. population.
What
is the purpose of Social Security Insurance?
The
basic purpose of SSI is to assure a minimum level of income to people who are
aged, blind, or disabled and who have limited income and resources (Social Security Administration)
The question I’ll be asking in this blog is whether having Social Security programs, specifically OAS leads to a populace unprepared for the financial implications of retirement. As such, for
this blog, I’ll focus on OAS because it is the major source of income for 90%
of individuals over 65.
One qualifies for Old-age and Survivors Insurance if:
- Insured for benefits
- Enough credits from earnings (1 credit for each $670 in earnings)
- It takes about 40 credits to qualify
- One can earn a maximum of 4 credits per year
NOTE: If you make money above a certain threshold, your benefits can be completely withheld.
There
are currently 49.8 million Americans on “Old-age and Survivors Insurance,” 15.3%
of the U.S. population. The average monthly payout from OASI is $1,348 per
month. This is around $16,000 per year. About 50% of individuals are married between ages 65 and death. This means the income strictly from OASI for half of the population over 65 is $16,000 and the other half is $32,000. For individuals and partners - these numbers are above the poverty line. I think this is qualifies as a "minimum level of income" - the SSA is meeting its purpose, despite its incredible vagueness. $1 could be a minimum income level.
The real question of this blog is whether having SS leads to a population unprepared for the financial implications of retirement. SS may create an illusion that retirement is easy and attainable without any preparations, the idea that SS is a safety net. From my research I have determined that this illusion has not yet been explored by qualified scholars.
My intuition would tell me that if the safety net of Social security, Americans would begin to make more financially sound decisions and become more responsible with their money. Perhaps people would begin investing and saving at a young age for the long term, rather than beginning to save and invest at the ripe age of 40. I would be interested in seeing if this intuition is correct or incorrect.
My intuition would tell me that if the safety net of Social security, Americans would begin to make more financially sound decisions and become more responsible with their money. Perhaps people would begin investing and saving at a young age for the long term, rather than beginning to save and invest at the ripe age of 40. I would be interested in seeing if this intuition is correct or incorrect.
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