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Including Social Security in Your Financial and Retirement Planning (Part 1)

Updated: Apr 25, 2022

By: Ted Norwood, Chief Legal Officer, Integrated Benefits, Inc.

Editor Carol Harnett of the CDA's Note: You are about to enjoy the most entertaining and informative blog post I’ve ever had the pleasure of editing about Social Security benefits. Read on to learn more about what the Social Security Administration and chocolate chip cookies have in common.

Thinking about protecting your family’s income, your children’s future, and your ability to retire can easily overwhelm anyone. The future is uncertain for the next month, let alone next year. Even with lots of sources out there, it is hard to tell who to trust, where to put your money, how to understand the risks, and how to get started.

Social Security isn’t going anywhere

“I can’t count on Social Security, because I don’t even know if it will be around when I retire.”

I know many of you were thinking about the viability of Social Security when you saw the title. The good news is that it will be here for you. The bad news is you may want to reconsider where you get information. Social Security has been around about as long as the chocolate chip cookie.

Neither one is going anywhere any time soon. Imagine the outrage if chocolate chip cookies (including chocolate chip cookie dough) disappeared because the government wanted to get rid of them – maybe because they contain too many calories and are too delicious. Those cookies are fueling an obesity problem! You’d start seeing cookie monster stickers on the back of pick-up trucks and Priuses.

Social Security is just as safe. Certainly, there are disappointing chocolate chip cookies, and some people don’t like chocolate or sweets. Some people prefer a fancier cookie. Social Security has some issues, and it isn’t the macaron of government programs (that is the National Park Service, which is the most popular federal agency). Still, in a March 2022 poll on the public’s opinion of federal agencies, Social Security is really popular – only second to the park service with a 69 percent favorability rating.

Don’t trust anyone peddling Social Security’s collapse, especially if they want you to invest more money with them because they say Social Security might fold. Maybe they don’t know what is going on, in which case, don’t give them your money. Worse, they may be too willing to play fast and loose with the truth, in which case, don’t give them your money.

Social Security is going to be around for a long time. It would take a revolution to get rid of it. It isn’t going to run out of money. If it gets close, they will address it – there are lots of various plans. As of February 2022, over 70.1 million people were getting benefits from Social Security. Elected officials care deeply about reelection. Cutting benefits for over 70 million Americans and their families will not win many reelections.

Congress would have to figure out what to do for all the premiums people and employers have paid into Social Security. If the government ends Social Security, people will want money back. I don’t think Social Security will discharge much in bankruptcy.

Further, the Social Security Administration has about 60,000 employees and thousands more contractors and contracts. That is a lot of jobs to replace if SSA goes under. With people losing monthly payments, people losing future payments, and people losing jobs, ending Social Security would be a shock to millions of American families. If earlier you thought it would be impractical to eradicate chocolate chip cookies, I hope you see that it is almost as absurd as eliminating Social Security.

Nobody is voting to stop benefits to 70 million people and to put over 60,000 federal workers and contractors out of work. People may talk about it, but it won’t happen. I’ve staked my career on it as a disability lawyer. With the same confidence, I’ve made chocolate chip cookies my dessert of choice. These have become fundamental elements of America. They are here for the long run.

OK, so Social Security is here to stay. Remind me exactly what they do.

Social Security is “the most successful anti-poverty program in our nation’s history.” FDR signed the Social Security Act into law in 1935, creating payments for retired workers beginning at age 65. In 1939, Congress created Survivors’ benefits for families of a deceased worker. In 1956, Congress added disability insurance for disabled workers. In 1965, Congress added Medicare to provide health insurance for beneficiaries. In 1972, Congress added SSI (Supplemental Security Income), a needs-based program to provide minimal income for people over 65, disabled, or blind. (Note: Social Security has a great page for their history and the history of economic insurance.)

Not everybody has access to Social Security benefits. You must pay for the coverage. You purchase the coverage by paying FICA taxes. If you are an employee, you pay half of the taxes, and your employer pays the other half. If you work for yourself or are not an employee, you will need to pay full price. Some people have alternative pension plans, including some federal workers, state workers, and teachers. Most workers have Social Security coverage. That coverage provides retirement, a small life insurance, disability insurance, and survivor’s insurance.

Former Undersecretary of the Treasury Peter Fisher described the US government as an insurance company with a standing army. Many people think of Social Security as an insurance company. This isn’t wholly accurate, but it does have some useful elements of truth. As with any insurance policy, a claimant must satisfy the definitions in the policy. These terms include how much you have paid in, when, and distinctions for what benefits you can collect and how much.

Social Security is a piece of your financial protection and retirement planning. The issue is determining the role these public benefits play in your overall plan. To figure that out, let’s look at some basics of planning for financial protection and retirement.

(Keep an eye out for Part 2 coming soon)

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