January
Written by Harini Jayaram
Jan 16, 2025
Of the 6.2 trillion dollars used in the United States government budget of 2023, 1.35 trillion dollars of it was allotted for social security. Social security remains the greatest cost of our government. It is still unmatched in its size, as even military spending reaches only 824.3 billion dollars. Social security is a government program that provides financial assistance to groups aligning to the OASDI requirements. OASDI stands for Old Age Survivors Disabilities Insurance. One may be eligible for the old age benefits once they reach 62 years old; however, the amount given monthly will be less. The full standard applies to those born after 1960 when they are 67 years old, and 8% will be added each year until they are 70 years old, reaching 132% of the standard should one wait till then. Majority of social security goes into supporting the elderly population.
Other categories of eligibility include the survivors. It ensures that should the primary provider pass away, the family would be able to survive with government assistance. For example, if a father passes from sickness, then the government would provide monthly payments to the affected family until the child reaches 18 years old. The final category of aligning into social security benefits is for the disabled. They often cannot find work due to their limitations, so the government offers monetary assistance to keep justice for them and their right to live.
Social security is gathered from taxes on people’s income. Along with income tax, there is a 6.2% social security tax that every individual residing in the United States must pay. Then, the employee of said individual will match that cost and give it to the government. However, for those who are self-employed, they must pay the full 12.4% of the income themselves. As for how social security is distributed among people of differing average incomes, it is generally calculated using AIME, the average index of monthly earnings. Should a person earning an average of 100,000 dollars a year, and decides to wait until they are 70 years old to collect their benefits, then they would receive around 3,253 dollars of assistance. The greatest payment of social security given to any person earning over 160,000 dollars is 4,873 dollars. However, this is not the only option for planning for retirement. Investing in the stock market, high-yield savings accounts, and 401k plans are all more lucrative alternatives for amassing wealth before this government plan.
As the national debt continues to expand exponentially, and the deficit in government is growing larger by day, placing all one’s hopes into the government social security plan is proving to be less satisfactory. This system was established in 1935, a year of which the life expectancy was 58 years old for men and 62 years old for women. With the medical advancements of the present age, this number has risen to approximately 77 years for men and 82 years for women. Now, the age requirement is easier for many Americans to fulfill, giving them eligibility for these government funded retirement assistance, accumulating debt into the budget. Taking these factors into consideration, one must plan for retirement based on the lifestyle they would like to uphold.
