100Feed: Social Security Not the Deal It Once Was for Workers

People retiring today are part of the first generation of workers who have paid more in Social Security taxes during their careers than they will receive in benefits after they retire. It’s a historic shift that will only get worse for future retirees, according to an analysis by The Associated Press. Previous generations got a much better bargain, mainly because payroll taxes were very low when Social Security was enacted in the 1930s and remained so for decades. “For the early generations, it was an incredibly good deal,” said Andrew Biggs, a former deputy Social Security commissioner who is now a scholar at the American Enterprise Institute. “The government gave you free money and getting free money is popular.” If you retired in 1960, you could expect to get back seven times more in benefits than you paid in Social Security taxes, and more if you were a low-income worker, as long you made it to age 78 for men and 81 for women. As recently as 1985, workers at every income level could retire and expect to get more in benefits than they paid in Social Security taxes, though they didn’t do quite as well as their parents and grandparents. Not anymore.

A married couple retiring last year after both spouses earned average lifetime wages paid about $598,000 in Social Security taxes during their careers. They can expect to collect about $556,000 in benefits, if the man lives to 82 and the woman lives to 85, according to a 2011 study by the Urban Institute, a Washington think tank. Social Security benefits are progressive, so most low-income workers retiring today still will get slightly more in benefits than they paid in taxes. Most high-income workers started getting less in benefits than they paid in taxes in the 1990s, according to data from the Social Security Administration.
The shift among middle-income workers is happening just as millions of baby boomers are reaching retirement, leaving relatively fewer workers behind to pay into the system. It’s coming at a critical time for Social Security, the federal government’s largest program. The trustees who oversee Social Security say its funds, which have been built up over the past 30 years with surplus payroll taxes, will run dry in 2033 unless Congress acts. At that point, payroll taxes would provide enough revenue each year to pay about 75 percent of benefits. To cover the shortfall, future retirees probably will have to pay higher taxes while they are working, accept lower benefits after they retire, or some combination of both. “Future generations are going to do worse because either they are going to get fewer benefits or they are going to pay higher taxes,” said Eugene Steuerle, a former Treasury official who has studied the issue as a fellow at the Urban Institute.

How can you get a better return on your Social Security taxes? Live longer. Benefit estimates are based on life expectancy. For those turning 65 this year, Social Security expects women to live 20 more years and men to live 17.8 more. But returns alone don’t fully explain the value of Social Security, which has features that aren’t available in typical private-sector retirement plans, said David Certner, legislative policy director for AARP. Spouses can get benefits even if they never earned wages. Children can get benefits if they have a working parent who dies. People who are too disabled to work can get benefits for life. Because of spousal benefits, most married couples with only one wage earner will continue to get more in benefits than they pay in taxes for the foreseeable future. “You are buying this lifetime inflation-protected benefit that you can never run out of and that will always be there for you,” Certner said. “It protects your spouse, protects your family and protects you from disability.” Certner noted that private pensions, retirement savings and home values took a big hit when the economy collapsed, putting a dent in the retirement plans of many Americans.

“When you have that combination of factors, Social Security becomes more and more important,” Certner said. Social Security is financed by a 12.4 percent tax on wages. Workers pay half and their employers pay the other half. Self-employed workers pay the full 12.4 percent. The tax is applied to the first $110,100 of a worker’s wages, a level that increases each year with inflation. For 2011 and 2012, the tax rate for employees was reduced to 4.2 percent, but is scheduled to return to 6.2 percent in January. The payroll tax rate was only 2 percent in 1937, the first year Social Security taxes were levied. It did not surpass 6 percent until 1962. Even with low tax rates, Social Security could afford to pay benefits in the early years because there were more workers paying the tax for each person receiving benefits than there are today. In 1960, there were 4.9 workers paying Social Security taxes for each person getting benefits. Today, there are about 2.8 workers for each beneficiary, a ratio that will drop to 1.9 workers by 2035, according to projections by the Congressional Budget Office.

About 56 million people now collect Social Security benefits, and that number is projected to grow to 91 million in 2035. Monthly benefits average $1,235 for retired workers and $1,111 for disabled workers. Social Security provides most older Americans a majority of their income. About one-quarter of married couples and just under half of single retirees rely on Social Security for 90 percent or more of their income, according to the Social Security Administration. “Social Security is what’s carrying me,” said Neta Homier, a 79-year-old retired hospital worker from Toledo, Ohio. “There’s no way I would have made it without it. The kids, they’re on their own, now, and I’m not going to be a burden for them. That’s what it would have been if I hadn’t had Social Security.” Homier said she started receiving Social Security when she was 63 and now gets about $800 a month, after her Medicare premiums are deducted. She said her father died at 51, so he never received Social Security, and her mother died at 71 and collected benefits for only a few years. “It’s definitely worth it,” she said.

At 52, Anthony Riley of Columbus, Ohio, has a different perspective. Riley said he has a private retirement account because he worries that Social Security won’t provide adequate benefits throughout his retirement. “I use to think that it was worth paying for your Social Security, but now I don’t think so,” Riley said. At 22, Mackenzie Millan of Los Angeles has even greater doubts about whether Social Security will be a good deal for her. “The money that I put aside now, it’s not like that money is going to be waiting for me. That money is going toward someone else,” the recent college graduate said. “If I wanted Social Security 50 years from now, when I wanted to retire, I would have to hope that someone else is still working and putting money aside in their paychecks to pay for my Social Security at that point.”

100Feed: Top Ten Lies Men Tell Women

By Jane Zuckerberg

Lie # 10: “I’m Stuck in Traffic”
“He figures it’s much easier to just say this than to try to explain the real reason he’s running late,” says John Amodeo, author of The Authentic Heart. “Remember, men aren’t as good at communicating as women are.” The funny thing is, a guy will toss this line out even if what held him up is perfectly legitimate. Still, you shouldn’t let it slide – it’s a lie nonetheless.

Lie # 9: “It Wasn’t That Expensive”
“Men like toys, and they don’t like sensing your disapproval, even if you don’t share a bank account,” Amodeo says. He could also be dropping this fib to try to prove he’s responsible with money, says Barton Goldsmith, author of Emotional Fitness for Intimacy. “He doesn’t want you to think that if you do share funds down the line, he’s going to blow them all on things like plasma TVs.”

Lie # 8: “I’m on My Way”
Guys usually throw you this line when you’re making them meet you at some event they don’t want to attend – like, say, your family reunion. He’s stalling, but he’s also being pouty. Consider: He can’t exactly refuse to go without enduring serious repercussions from you, and he can’t very well throw a temper tantrum in front of your pop-pop. So saying this and then showing up late is his way of gaining a wee amount of control.

Lie # 7:”I Didn’t Have Too Much to Drink”
This lie could point to a serious problem – and we’re not just talking about your relationship. If he says it often he could have an alcohol issue, Goldsmith says. You need to talk to him about how concerned you are, but watch the timing. “That’s definitely a conversation you need to have when he’s sober,” Amodeo adds.

Lie # 6: “Sorry, I Missed Your Call,”
Lie # 5: “My Battery Died,” and
Lie # 4: “I Had No Signal”
These three lines all mean the same thing: I screened your call. Why? “Often men will feed you these lies because they’re afraid to tell you to back off a bit, that they need a little alone time,” Amodeo says. You might want to ease up on the checking in and let him miss you more.

Lie # 3: “No, Your Butt Doesn’t Look Big in That”
Look, if you assail him with the question in the first place, you’re really just asking to be thrown this all-purpose mollifier. “Every guy has a buddy who’s told him, ‘I answered this question wrong once, and my girlfriend wouldn’t have sex with me for a year,’ ” Goldsmith says. This is the one safe response he knows, so there’s no way he’s going to risk the worst by straying from it. If you want an honest opinion, go ask one of your girls instead.

Lie # 2:”This Will Be My Last Beer”

Our experts say this man-lie delivered over the phone means he wants to get you off ASAP so he can spend more time with his buddies. The thing is, even if he says it three times in a night, each time he believes it, Goldsmith says. It’s like when you vow this will be your last cookie…five times in a row.

Lie # 1: “Nothing’s Wrong, I’m Fine”
A whopping 52 percent of men have told their girlfriend this line. According to experts, this go-to fib is all about avoiding drama and protecting male pride. Men know they’re not as good with articulating what’s happening or how they’re feeling, so it’s easier for them to just keep you out of the situation. Next time he uses this line, give him a couple days and then ask him again if he is still bummed…and why. By then he may have figured things out.