Lately, with talks of reducing the debt and deficit, Social Security has come up in many conversations. Most people will tell you Social Security is bankrupt, and that by the time they are going to retire there will be nothing left for them. According to ABC News' Tahman Bradley, Social Security will be exhausted by the year 2036. That certainly is not welcome news if you are planning on being alive beyond the next twenty-five years. What should we as a nation do to address this problem? Raise the retirement age to seventy? Cut Social Security benefits for those that will be very well off in their twilight years? I don't think so.
The simplest and fairest solution is uncommonly easy. Raise the cap on Social Security deductions from it's current level at about 106,000 dollars of annual income. Currently for those of us that are lucky enough to make more than 106,000 dollars, Social Security does not receive anything from the excess income. By raising the cap on deductions there will be more revenue put into the system to ensure it's solvency for a greater amount of time. People can still retire at sixty-seven, and Social Security will continue to be a viable source of income for our seniors.
Think about this for a minute, someone making 50,000 dollars a year and contributing roughly five percent of gross income, will generate about 2,500 dollars for Social Security. At 100,000 dollars a year the contribution would be 5,000 dollars. Remember, the current cap is at 106,000 dollars, any additional income beyond that figure contributes nothing to Social Security. So the person making 1 million dollars a year still only contributes about 5,000 dollars of their gross income. This certainly does not seem logical. If the numbers are broken down the individual contributing 5,000 dollars of 1 million dollars worth of income is only contributing about 1.0526 percent, while the individual making 50,000 dollars is contributing about five percent. When both people retire they are going to get the same amount monthly from Social Security. So why should the person who is generating less income be contributing at a greater percentage. If we move the cap on Social Security to 500,000 dollars for example, we will generate nearly five times what is currently being generated. Simple fix.
Not only is this a simple way to fix a huge problem, it also makes the system a little more balanced based on income levels. Yes, there is an argument to be made that the wealthiest among us probably will not need Social Security by the time they retire. If they are not going to need this insurance, then why pay for it? This is my opinion, most people do not generate enormous sums of wealth by themselves. It should be part of ones social responsibility to look after the worker bees that helped you manufacture the wealth you have accumulated. It's not like society is going to steal all your wealth, most people just don't want to be homeless and starving, if they actually get to the point of retirement. People are all very different, however, we all pay into social programs to help us out when we become to old to contribute by our own means. We had better not forget that the average worker is the very person who put in the sweat and muscle so the above average entrepreneur could amass great sums of wealth. Henry Ford didn't turn every bolt on his Model T's, however, he made sure all of his employees made enough in a year to purchase a Model T. Sound wisdom, from a master capitalist. Good Luck America!!
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