The federal government ushered in a slew of progressive programs during the Great Depression with the aim of helping the most downtrodden Americans. Few of these programs have held the progressive banner higher than Social Security.
Social Security was created to ensure that Americans with low lifetime incomes would have an adequate retirement income, so aging Americans would not live in dire poverty. Over the decades, Social Security has clearly helped alleviate grinding poverty for many in old age and has been proven to be highly popular up and down the economic spectrum, says AZ Central in the article “Social Security: Designed to help poor Americans in old age, it’s a relatively good deal for wealthier ones, too.”
In some ways, it can be said that Social Security has failed to live up to the goal of helping the most downtrodden Americans. The debate over the agency’s progressive features, or lack thereof, has been going on for many years.
Some supporters say Social Security is progressive and achieves its goals. One group is the Investment Company Institute, a mutual-fund trade group that says government paid benefits replace a much higher percentage of working-year earnings for lower-paid Americans. This is especially true when you take into consideration the fact that low earners pay less in Social Security payroll taxes during their working lives.
However, there are some factors that make Social Security less progressive than intended. Many people die before they claim any benefits. For this reason, many Americans file earlier than they otherwise would, locking in benefits at a low level. Poor people don’t live as long as wealthier people, so they tend to claim early and not receive benefits for as many years. Since Social Security benefits are based on earnings, lower-earning Americans receive lower benefits.
Other factors impact how much money people receive from their Social Security benefits. One progressive feature: there is a cap on monthly benefits. In 2018, it’s nearly $2,800. That means billionaires won’t receive anything more than a retail clerk, which counts one for the progressive side.
On the other hand, what you receive in benefits is partly based on how much you earned and how much you paid in payroll taxes. That tax rate is 6.2%, whether you are a middle manager or a millionaire. Therefore, the income replacement part of Social Security is progressive. but there are tax and other aspects that make the entire picture somewhat murky.
Here are some pointers for making Social Security part of an economically successful retirement:
Reference: AZ Central (Sep. 16, 2018) “Social Security: Designed to help poor Americans in old age, it’s a relatively good deal for wealthier ones, too”
I heard Cindy’s presentation at a Senior Luncheon at my church, and was very impressed. She helped my daughter and me understand many aspects of elder law. Josh has also been very helpful in my planning to enter an independent living situation . I have told many friends about them.
The very best elder law attorney and staff anyone could ever ask for! I have referred a number of clients to Cindy and she never disappoints. She is kind, caring, and extremely thorough in making sure everything is completed as it should be. I highly recommend Cindy for anyone needing lawyer services; she truly goes above and beyond for every client she helps and has had a huge impact in so many peoples’ lives. Thank you, Cindy and staff, for everything that you do- I’m so glad to know you!
Cindy and the Nelson Elder Care Law team are trustworthy and helpful. They are the experts in elder care law. At Leaf Cremation, we entrust our families to the care of the Nelson team when their services are needed.
Josh Nelson, and his staff, have been amazingly helpful to our family. The ins and outs of nursing homes, the rules and regulations that govern Medicare and Medicaid are daunting and the folks at Nelson Elder Care Law have been informative, responsive, and above all, empathetic. I cannot emphasize enough how their service has taken a weight off of our shoulders especially during a world pandemic that has targeted nursing homes across our country. I highly recommend retaining Josh and his firm!
I had a simple legal question to them that I needed answered and they very helpful in giving me the information I needed. I highly recommend them and will reach out to them if I need more advice or assistance. Thank you for taking your time to just answer a couple of questions I had!