Why do some people feel the need to voice opinions about subjects they know little to nothing about? Almost daily, for the past 22 years that I’ve been writing this column, I get emails from people voicing opinions about Social Security that are ill-informed — and often, downright wacky. It surprises and even saddens me that people who hold these strange beliefs feel obligated to spread their ignorance to friends and strangers alike. I’ve saved a couple examples of this phenomenon and present them here today. They go from the merely uninformed to the downright ridiculous.
Q: Why don’t you make people aware of the sneaky and systematic reduction in Social Security benefits that has been carried out for years now? We all know a Social Security benefit is based on your highest 35 years of earnings — but only up to the maximum tax for each particular year. For example, in 1956, the Social Security tax applied to only the first $4,200 of earnings. But in 2019, it was $132,900. Most workers in 1956 met the $4,200 limit. But how many people do you know who are making $132,900 or more? The net result is a secret reduction in benefits for those millions of retirees who don’t make the $132,900 threshold. How come you, and politicians, don’t talk about this hidden fact?
A: Well, I can’t answer for politicians. But I can tell you why I don’t talk about it. And that’s because what you are saying doesn’t make sense!
You are right that a Social Security retirement benefit is based on your highest 35 years of earnings. So whatever your earnings are, you get a benefit based on your average income over those years, period. There is nothing sneaky about that.
Your premise seems to be based on a theory that there is some kind of bonus paid to people who reach the maximum taxable earnings limit each year. There is no such bonus. It is true that if you do have maximum earnings for all 35 years, you will get a higher benefit (because you had a higher income and paid more taxes) than someone who has lower earnings.
But the flip side of that argument is also bogus. In other words, you are just flat-out wrong when you say that people with lower earnings suffers some kind of secret Social Security reduction. They do not. They will get a lower benefit than those who had maximum earnings, but they will get the benefit they deserve based on their lower earnings. I can’t emphasize this point enough. There is no secret reduction in benefits for someone with lower earnings.
In fact, just the opposite is true. The Social Security retirement benefit formula has always been skewed to give lower-income people a better rate of return than their higher paid counterparts. That formula is way too complex to explain in today’s column. Simply put, very low wage earners will get a benefit that represents up to 90 percent of their preretirement income.
Very high wage earners might get 30 percent or so. Of course, 30 percent of a rich person’s income will result in a higher Social Security benefit than 90 percent of a poor person’s income. But as a percentage of what they kicked into the system, lower wage earners get a much better deal.
Q: I don’t see why people think Democrats are the big champions of Social Security. After all, it was President Johnson, a Democrat, who stole Social Security’s trust funds. It was President Clinton, a Democrat, who first taxed Social Security benefits. And it was President Obama, a Democrat, who allowed illegal immigrants to get Social Security checks!
A: Well, you’re wrong on all three counts. In the past, I’ve spent entire columns explaining the history of the financing of Social Security. I don’t have space to rehash that. But I will point out that what Johnson did was just an accounting trick. At the time, the country was running huge deficits because of spending for the Vietnam War. However, the Social Security trust funds, which were running huge surpluses, were kept on a completely separate set of books. Johnson merely combined the two ledgers in the official government bookkeeping logs. Adding Social Security surpluses to the government’s books made the overall budget deficit disappear. But Johnson did not take a dime out of the trust funds. Again, he merely combined the books. (By the way, this accounting gimmick has been used ever since.)
The taxation of Social Security benefits began in 1983, during the Reagan administration. And it is just an outright lie that President Obama allowed illegal immigrants to get Social Security checks. If you are living here illegally, you will never collect a nickel in Social Security benefits, even if you have paid money into the system. Actually, Social Security actuaries point out that illegal immigrants who work “above the table” with ill-gotten Social Security numbers pump about $2 billion per year in taxes into the Social Security trust funds and never get anything in return.
Q: I heard that Social Security clerks get bonuses for every dollar that they save the trust funds. They are paid to cheat retirees out of Social Security benefits they are due. We all know that the 10 scariest words in the English language are: “I’m with the government, and I’m here to help you.”
A: That is absolutely ridiculous. Government employees get bashed all the time. I know; I was one for 32 years. It just goes with the territory and you learn to accept it. But I took great pride in the work I did. Over the years, I helped tens of thousands of people get the Social Security benefits they deserve.
Having said that, I know that sometimes the service my readers get from the Social Security Administration is not up to par. But any poor service or misinformation is just the product of an increasingly complicated program, an exploding workload of 10,000 new retirement claims every single day — not counting disability and survivor claims, and a reduction in staff imposed by the current administration. It has absolutely nothing to do with your silly notion that SSA employees “are paid to cheat retirees.”