Social Security Retirement versus Individual Retirement
May 19, 2011
Dr. Bill Sheeren
Axia College of University of Phoenix
Social Security retirement benefits should not be considered a lucrative source of income during retirement because of decreasing monthly benefit payments, increased eligibility age and increases to daily living expenses. Many people are not familiar with the current and projected changes to the social security program, nor are they familiar with the benefits of creating individual retirement accounts.
The economy and the governments financial status is changing and therefore causing negative effects on the social security program and those individuals who receive social security retirement benefits. While social security benefits continue an overall decrease of net funds retained by the recipient and the eligibility age for social security benefits continues to increase, social security retirement benefits is not a viable source of income during an individual’s retirement years. Social security retirement funds do not offer enough monetary support to sustain comfortable living while paying for daily expenses and leaving enough funds for additional expenses as they may occur. The federal government is in a major financial deficit; the President, along with members of Congress, is looking at ways of cutting federal spending to reduce the country’s financial debt. One of the federal budget cuts considered is the social security program along with the Medicare program, which offers medical insurance support to those individuals who receive social security retirement benefits. Budget cuts will have negative effects on the social security program and those individuals who receive social security retirement benefits. The earnings eligibility for social security retirement benefits has also changed over recent years. Under the older eligibility requirements, a person was required to work and pay a certain amount of funds into the social security program over four quarters per year for 10 years in order to qualify for benefits; hence the term “earning your 40 quarters”. This initial eligibility still exists however one must continue to pay into the social security system to keep the eligible benefit amount from decreasing. If a person stops paying into the social security system, his or her benefit amount decreases over time.
The eligibility age limit, for full social security retirement benefits, has also changed. At one time the eligibility was 62 years of age, now the eligibility age is 67. The notion is on the table with Congress and the President, to raise the eligibility age to 70, according to a report from CNN congressional producer Ted Barrett dated April 13, 2011. Even though individuals will be able to claim benefits at age 62, benefits received will be at a reduced amount.
Social security retirement recipients are due to receive a 0.9% cost of living increase to their monthly benefit checks for the fiscal year (FY) 2012, as stated in the Social Security Administration (SSA) FY 2012 Budget Justification page 41; however this pay increase is not enough to compensate the cost increases for services and goods. According to the Social Security Administrations supplemental security income analysis of changes for fiscal year 2012, listed on page 40 SSA FY 2012 Budget Justification, the social security administration is requesting more than $4.5 billion less from the federal government than what it did in FY 2011. This is due in part to the social security program cutting two of the monthly payment benefits. For fiscal year 2012 the social security administration will only offer 11 monthly benefit payments instead of the 13 monthly benefit payments that it offered in fiscal year 2011.
Social security retirement does not offer enough monetary support to cover daily living expenses while providing extra funds for additional expenditures or...
References: Ted Barrett, CNN Congressional Producer. April 13, 2011. GOP Senators Propose Raising Age for Social Security Benefits. Retrieved April 13, 2011 from http://politicalticker.blogs.cnn.com/2011/04/13/gop-senators-propose-raising-age-for-social-security-benefits/?iref=allsearch
Social Security Income Program (n.d.). SSA FY 2012 Budget Justification. Retrieved April 13, 2011 from http://www.socialsecurity.gov/budget/2012SSIP.pdf
Thomas A. Garrett and Russell M. Rhine, Federal Reserve Bank of St. Louis. March/April 2005. Social Security versus Private Retirement Accounts: A Historical Analysis. Retrieved April 13, 2011 from http://research.stlouisfed.org/publications/review/05/03/part1/GarrettRhine.pdf
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