How to Fix Social Security

For millions of elderly Americans who would otherwise live in poverty, Social Security is their single biggest source of income, the financial bedrock of their retirement. Receiving it's benefits does not carry the stigma of welfare because it is something they contributed to all their working lives.

Many of today’s younger generation, the so called “25 year olds”, are honestly concerned that Social Security won’t be there for them when they retire. Others call the system a ponzi scheme.

The system is indeed broken, but it can be fixed, and fixed permanently. This website was designed to point out the benefits of the social security system and also the problems that it is currently experiencing. We will take you through a simple step-by-step solution that will insure that the system will not only be there for your children, but also their grandchildren.

Let’s start this discussion with a quick overview of the problems.

This website was not created to discuss the problems with the 1.45% Medicare tax, which is a completely separate issue. We are going to concentrate on the 6.2% collected for OASDI, the payroll tax. This tax goes into a trust fund and is then paid out in two parts: Old Age and Survivor Insurance benefits (OASI) and Disability Insurance benefits (DI), and there are problems with each side of the payout picture.

In 1981 the system paid out 11.24% for disability benefits and 88.76% for old age benefits. In 2011 the payout was 17.97% for disability and 82.03% for old age. That is a 60% increase in the percentage of the budget paid out for disability claims in 30 years, and the growth rate does not seem to be slowing down. In fact, disability claims are so lucrative that law firms can now afford prime time television advertisements for disability clients. This is a problem that has to be addressed by the social security administration. We have to put higher restriction on what constitutes disability, and again, this website is not designed to tackle that issue.

The third problem is what this website is all about, the Old Age and Survivor portion of the system. The problem with OASI is well defined, we are living longer. Each generation is collecting more benefit checks for the same amount of work. This problem is relatively simple to fix if the government and the people want the problem solved.

What if we changed the system so that your Old Age benefit was based on working a fixed amount of time for each benefit check you receive, a fixed ratio? The rate would remain constant and everyone’s “full benefit” retirement age would self-adjust based on how long you have worked and the life expectancy of the average person born the year you were born. You could still retire at any age you wanted, but as with the current system, the longer you work the larger the check and vice versa.

You may be tempted to jump around to the different pages of this website, but if you do, you might miss the entire concept, so please follow the “next page” links at the bottom of each page. During your journey we will explain:

  • How the system was intended to work and how benefits are calculated.
  • Why the Social Security Amendment of 1983 only fixed the system for a little while.
  • What we can do to fix it forever.
  • One possible step by step plan to implement the fix.
  • We will also make a few suggestions for ways to eliminate some of the abuses of the system.

Now let’s move on to how the system was intended to work and how the benefits are calculated.

Next - How the System Works