Social Security: Entitlement or prepaid retirement benefit?

Are Social Security benefits a gift to the retired from the taxpayers of America? Or is Social Security a retirement plan that we subscribed to and made monthly payments while we worked anticipating that some day, when we retire, we would receive a monthly benefit?

What happened to the money taken from my paycheck every payday all those long years I worked starting as a bag boy at Safeway Grocery Stores in Washington, DC, as a young boy in high school? The money was deposited in the Social Security Trust Fund.

How much is in the trust fund? Today it should be $2.6 trillion. That’s not a million dollars, not a billion dollars; it’s a trillion. That’s simple enough.

Just take my next month’s Social Security installment out of the trust fund and deposit it in my bank account. And, just think how lucky we are — $2.6 trillion earning dividends. Why, even if just invested in Treasuries the monthly growth must be in the multi-millions. Right? Wrong! Why do I say “wrong?” Because there is a trust, but it just doesn’t have any money in it.

Why? Because the federal government has borrowed the money and given the trust an IOU. In other words our federal government owes our Social Security Trust Fund $2.6 trillion. Forget the lost interest.

So, you see Social Security is self-funding and off budget. It’s only “on budget” because it is a federal debt. In other words the money paid out to Social Security beneficiaries is not the obligation of the federal government and paid through the budget, which is funded by taxpayer income tax payments and Treasury borrowing. We are just getting back the money we contributed all these years.

I’ll bet, if we were collecting interest all these years, we wouldn’t be short of funds to meet our obligations, we would have a surplus in the trust account. But, why even think about it. There is no way the federal Treasury could ever pay back the money it has borrowed all these years to fund the operations of our federal government.

So, here is our problem, now in 2013. We have too many seniors in retirement and not enough working Americans making payday contributions to Social Security to meet the money needed to pay us old timers who are living much longer than expected. If we can’t go to the Treasury and say “pay back the $2.6 trillion you borrowed” we better make adjustments to the current program to remain solvent, or better said, become solvent. We must become entirely self-financing or again better said, self-sufficient.

Arizona Republican Sen. John McCain, onetime Republican candidate for the presidency, said on Meet the Press, Jan. 23, 2011: “We could resolve the Social Security question on the back of a matchbook.” And he is correct.

This is what must be done: Increase Social Security taxes. In other words pay more now so there will be something there when you retire. Increase the salary cap for the collection of Social Security contributions. If we can pay 4.6 percent of our paycheck when we earn up to $106,800 a year we could certainly make contributions up to say $250,000 a year.

Make an adjustment to the amount of money Social Security beneficiaries receive. Raise the retirement age. In 1935, when Social Security was created it was anticipated that the life expectancy for the average American was 67.1 years. Today it is 77.5. Common sense says we are working longer and the need, except for the disabled, to retire should be later than 62.

I do not have the ability to make the adjustment calculations to meet the four modifications I cited above but once made Social Security would no longer be a federal budgetary consideration. We would be selfsufficient, self-financing and no longer a problem for the White House and the Democrats and Republicans in the Congress.

It will take a little more space than the back of a matchbook to resolve. But you are certainly correct, Sen. McCain, it is solvable.

We appreciate your opinions on this column whether in agreement or disagreement. Please send your comments to (fax number) 305-662-6980 or email to The opinions expressed in this column are not necessarily those of this newspaper, its editors or publisher.

Connect To Your Customers & Grow Your Business

Click Here

Print Friendly

About the Author

Kenneth Bluh
Kenneth has been writing a column for Community Newspapers since 1989 when he first wrote about the incorporation movement in UMSA (Unincorporated Municipal Services Area). His columns cover the political scene in Miami-Dade and Tallahassee. Educated at the Wharton School in Philadelphia, Kenneth has been a member of the banking/mortgage lending profession in Florida since 1962. Contact him at or 786-247-0547 where he manages American Bancshares Mortgage LLC’s Reverse Mortgage Department.

Be the first to comment on "Social Security: Entitlement or prepaid retirement benefit?"

Leave a comment

Your email address will not be published.