Social Security and Medicare are grand Ponzi schemes that make Bernie Madoff’s operations look like petty theft. They discriminate against black males especially because they pay into the system on every job they have, but many die of health problems and violence long before they collect a dime in benefits. Middle and higher income Americans have to live into their nineties, if not past a hundred, before they collect more in benefits than they paid into the systems.
I receive the maximum Social Security benefit — about 60 percent of the median household income — but the checks have largely been play money for my wife and me. Because Congress repealed the earnings penalty for people who have reached their normal retirement age — in my case, 65 years,
10 months — I remained fully employed with an annual income within the top few percent of all income earners.
Politicians have always extolled a key virtue of Social Security: keeping low-income seniors out of abject poverty. For my family, the monthly checks helped cover my daughter’s education costs at a private university and then her wedding.
Now that I am retired, those Social Security checks come on top of my very generous retirement income (with full benefits) and my wife’s employment income. The checks don’t keep us from falling into poverty. They ensure that we don’t have to sell our second home or tap our financial assets built up over the decades in, of course, tax-deferred 403(b) accounts and other investments.
What is remarkable is that the federal government has sunk ever deeper into debt so that my wife and I, and tens of millions of other middle-class and well-off Americans, can live the lifestyles to which we have become accustomed. Those checks will likely finance a cruise or two and maybe a couple of foreign trips. Our lifestyle would be even grander had we been allowed to invest our Social Security taxes in higher-yielding mutual funds.
Granted, tens of thousands of low-income people — especially those who were unable or unwilling to save while working — may use their Social Security checks to buy basic food, shelter and transportation. As the head of AARP noted in 2011: “Social Security is the principal source of family income for over half of older Americans, and roughly one quarter of those aged 65 and older live in families that depend on Social Security benefits for 90 percent or more of their income. In 2009, Social Security benefits kept over 36 percent of older Americans, including 39 percent of all older women, out of poverty. Before the enactment of Social Security, more than half of those 65 and older were poor.”
Advocates for never touching the benefits of the elderly in lower income groups will never acknowledge that many have much better retirement lifestyles than their annual incomes might suggest. Elderly people who have just started receiving Social Security are often surveyed when their incomes are temporarily suppressed because they have lost jobs, or they are out of work for health reasons. The future job, income and health prospects of some may be bleak, but that is certainly not the case for all.
Some elderly people with low incomes one year can expect relatively nice lifestyles their remaining years. This is especially true for those with savings and no mortgages — who sometimes have backyard swimming pools, nice cars and large-screen HD televisions, as studies have found is the case for many poor people.
Today, over a third of Social Security recipients have total family incomes above the national median income (about $50,000); over a fifth of social security recipients have family incomes over 50 percent higher; and nearly an eighth (12.2 percent) have household incomes above $105,000. Given the country’s extraordinary fiscal exigencies, are Social Security benefits politically untouchable — even for high-income recipients?
Richard McKenzie is a senior fellow with the National Center for Policy Analysis.