Originally published at Forbes.com on March 13, 2018.
“Why does [name of sibling] get to [do or have desired activity or thing] and I don’t? It’s not fair.”
“Oh, yeah. Well, life’s not fair.”
How many times have you been on one end or another of this parent/child conversation? I still can picture in my mind the time that my one-year-older-than-me sister was allowed to stay up late to play Monopoly with my parents and I couldn’t.
As it happens, a writer at the Washington Post made this discovery about Social Security: it’s full of benefits that benefit the wrong people and shortchange others, a litany of items that call to mind my first-grade self standing there in my nightgown saying, “it’s not fair.” (Did I really do this? I have no idea.)
The article in question, “How late-in-life dads — like Trump — are eligible for a Social Security bonus,” by Allan Sloan and C. Eugene Steuerle, starts with a complaint about what it calls the “Late-in-Life-Baby Bonus” which gives supplemental benefits to parents of minor children. As Sloan and Steuerle see it, it is particularly unfair because, on the one hand, parents who have not yet reached retirement age aren’t eligible to collect these benefits (unless, though the authors don’t mention it, because they’re widowed/widowered or disabled), and, at the same time, retirees who have children for shameful reasons (e.g., President Trump being a parent late in life because he took up with a younger trophy wife) and who don’t need the money (again, Trump) are eligible.
But it is in the nature of Social Security that there is no means test, and there is no judgment of whether those late-in-life children are due to skeezy May-December relationships or because of unexpected near-menopausal pregnancies or because retirement-age individuals have adopted children, sometimes even grandchildren when their parents are unable to care for them. It’s just taken as a given that household financial needs are greater with a child present so additional benefits are provided.
Also subject to criticism is the so-called “Single Parent Shortchange,” which is another way of observing that the somwhat crude mechanism by which Social Security provides benefits to stay-at-home/low-earning moms, constructed in an era in which those moms were expected to be married to the fathers of their children, is a benefit that isn’t earned by those women and accordingly comes from everyone else’s FICA taxes. They write,
Single parents are among the lowest-income payers of Social Security taxes. Why should they subsidize other folks’ never-working spouses in a way that gives the biggest benefits to the best-off people?
The fact that Social Security accommodates divorce by providing spousal benefits to divorced ex-spouses, in the same manner as if the couple was still married, is subject to criticism as the “Serial Spouse Bonus,” that is, because any given worker, if he had been married multiple times, each for over 10 years, would have multiple ex-wives able to claim spousal benefits if they exceeded benefits under their own earnings records.
And, finally, they take issue with the “Equal Earner Penalty,” which they characterize as
a couple with two people each earning $40,000 gets about $100,000 less in lifetime benefits than a couple with one spouse earning $80,000 and the other earning nothing. This happens even though both couples and their employers pay identical Social Security taxes.
This is, of course, not a surprise — again, spouses’ benefits are a clunky form of social welfare spending built into Social Security. And even comparing two unmarried individuals, the progressive nature of Social Security benefits means that, in a more real-world example than a zero-lifetime-income individual, a person with a low lifetime income gets an “unfair” amount of “extra” benefits due to the 90% first-bendpoint percentage — irrespective of whether that low income was due to having been poor, or having been a stay-at-home mom in a middle-class family.
I’ll remind readers that my preferred benefit is a flat benefit, and all of these are non-issues in such a system, especially if the issue of benefits for mothers is solved by giving accrual credits to individuals who were out of the workforce caring for children, rather than adjusting benefits at retirement, or, alternatively, by not caring at all about employment history in handing out benefits.
But such a system would generate its own cries of unfairness: why should Bill Gates get a benefit if he doesn’t need one? Why should that fat slob who never worked get one?
Ultimately, all these cries of unfairness really highlight the ways that Social Security does dual duty as a social welfare program for the elderly and as a mainstream income-replacement retirement program. People want it both ways — they want to feel they’re “earned” their benefits but at the same time, they want benefits to be progressive, with the needy getting more and the wealthy paying more. And when it comes to proposed updates to the system, we see even more of these two impulses, as pundits and ordinary Joes and Janes alike simultaneously insist that workers have earned every penny of their future benefits by dint of their own hard work and FICA taxpaying, and yet, in order to repair the solvency of the system, that the millionaires and billionaires had better be called upon to pay in their “fair share,” that is, subsidize the system.
December 2024 Author’s note: the terms of my affiliation with Forbes enable me to republish materials on other sites, so I am updating my personal website by duplicating a selected portion of my Forbes writing here.
for the benefit of the entire ssa system I believe that we should all be charged the same PERCENTAGE of our ENTIRE income regardless of whether we earn 10k dollars or 10 B dollars. Then the payouts should be capped to not replace more than 25% of our base salary up to a maximum of 20,000 dollars/year. the payout should be taxed only after SSA + other income from any other source = exceeds 30.000 dollars/year.
So I will take $80k in salary, and the rest in cap gains or dividends, thanks.
Also, what’s your plan for those who earned $20k per year? Are you really only handing out $4,000 to them?
$30,000 is a drop in the bucket these days, considering costs of living for mortgages, HOA fees, rent increases,
insurances for auto and home, utilities, out of pocket medical bills, food, and auto repairs.
It would be more like it if a retiree or worker was earning more than, say $65,000 per year.
You rich Forbes folks earn your money off the backs of the peasants working silly, pay into the system and the working people will keep their dignity paying in along side you.
We have earned our S.S. and Medicare benefits and they are NOT “social welfare” funds. We paid taxes into them for 45/50+ years AND SO DID OUR EMPLOYERS. THOSE BENEFITS ARE FOR US WHO PAID INTO THE SYSTEM – NOT FOR UNDOCUMENTED ALIENS OR ANYONE WHO PREFERS NOT TO WORK BUT REAP THE BENEFITS OF MONEY OFF OUR BACKS. Also, understand that persons receiving S.S. may stand to have taxes deducted from their S.S. if it exceeds certain gross adjusted income amounts.
We also pay (with annual increases) Medicare which comes off our S.S. and we ALSO PAY FOR ADDITIONAL HEALTH CARE INSURANCES. Retirees need every cent the receive from S.S., pensions, and investments.
You, writer, have not worked long enough to realize what’s at stake. When a country decides to gut, reduce, and tax seniors retirement incomes, it then becomes an ethical issue and reflects how well a country cares for its Americans who have paid into the system.
Too bad, Elizabeth. You could have written a good article without all the Trump bashing. Sorry you harbor so much hate; it must be rather debilitating sometimes, like when you write about a serious topic but are compelled to mix it with your political views.
I agree. I hate the late in life parent bonus too….it is ridiculous and my own father got it bc he remarried and had my sister. It ticked me off. But bashing Trump bc he had a child late in life when you have not shown proof of him receiving this bonus is total bull!
I don’t think you really pointed out that Social Security is already progressive in nature due to the multiple bend points. A recipient receives: 90 percent of the first $895 of average monthly earnings, 32 percent of the amount between $895 and through $5,397 and 15 percent $5,397 up to the max.
Very nice article. One thing that has always bothered me that is not ever talked about. One couple husband worked and received $1500 a month for ss. His wife who has never worked receives $750 ss drawing on her husbands ss. If husband dies she would get survivor benefits that would equal $1500 total ss for her. Now next couple both spouses worked she draws $750 a month on her ss. Her husband draws $1500 on his ss. If the 2nd couples husband dies the spouse would get a total of $1500 a month survivors benefit. Example one has only one person paying into the system and the other has two people paying into the system but they both receive the same survivors benefit. Does not seen fair the second couple has paid in much more money and receives the same amount back as the first couple.
Social Security is an unconstitutional rip off.
As you already pointed out, those lower on the income scale get back more relative to what they pay FICA taxes than those higher on the income scale. That acts like a steeply progressive income tax and is internally redistributive within the system.
Furthermore anyone who has more other income than a certain amount that is not adjusted for inflation has part of their benefit taken back by making it subject to taxation. And on top of that, higher income people have to pay higher Medicare Part B premiums and that gets deducted from Social Security benefit payments.
Anyone who is middle class and up would have been far better off keeping and investing those FICA taxes in a stock index fund in a 401 K type account. They would have a far greater rate of return on their money than they ever will from Social Security and they would have a property right to that money unlike Social Security benefits that can (and have) been modified strictly at the whim of politicians..
If this article is aimed at those with disability, then disability should visit the author of this article with speed IJN Amen.
I was born with, and diagnosed with Epilepsy. Even AFTER having brain surgery, I still have seizures (whether they be aura, petite or grand mal — although in my opinion I believe they are more aura ones as I don’t know if I really have them without someone telling me). However with that being said, I was FINALLY granted SSI disability in 2008, but in order to receive ANYTHING, they have to go off from my HUSBAND’S INCOME because I have been a stay at home mom since my children were born. They both are grown adults now, and I STILL fight Social Security about how I am NOT cleared by ANY of my medical doctors to even TRY and work, and their EXCUSE for my NOT being able to get FULL TIME DISABILITY is “you haven’t worked in the past 5 years”. NO DUH!! Even when I ask for help in trying to get an ADVOCATE for me, they don’t seem to want to help, or tell me because I already receive SSI benefits, I DON’T QUALIFY FOR SSDI. Also, I try and receive Food Stmps for my husband and I, and they tell me that “I only qualify for $16 for a family of 2 for the month!” I’m lucky to get 2 week of milk if that!! My food usually has to come from. Food bank, and I would LOVE to shop for groceries again REGULARLY!! I’ve said it MANY TIMES — “THE SOCIAL SECURITY SYSTEM IS BROKEN!!” I’ve LITERALLY been told that the system they use has NOT CHANGED SINCE IT BEGAN!! One income family, with a disabled person, SHOULD BE ABLE TO RECEIVE FULL DISABILITY BENEFITS NO MATTER WHAT!! I CAN’T WORK, AND MY HUSBAND CAN ONLY SPREAD HIMSELF SO FAR WITH WORKING 2 JOBS TO TRY AND MAKE ENDS MEET!! $58/MO for SSI, and $16 for FOOD STAMPS, and an income LESS THAN $25,000 DOESN’T CUT IT!!! WE need help, and I am BEYOND FRUSTRATED!!!!
Your logic falls apart at “people want it both ways”. Not true. I am 55 and have this talk all over my life with people all over the income brackets. “We” want the cash we & our employers paid in. don’t get me started on interest. This is about 12% over most workers job life. 6% from employees, 6% from employers. Some opt out and agree never to draw ie the Amish. An extra 12% in my 401k over my Career would be millions at 65 or 70. I want what was paid in for me. That’s all most people I speak with want. Rough math says that’s $360,000.00 divided by $36,000.00 a year in benefits at 70. I need to live to 80 to break even. Maybe. Same money. Same time. Compounded @5% north of a million. My father paid in for thirty years died at 48 and collected nothing. Yeah life’s not fair. But the structure and rules of “social security” if your going to work 40 or 50 years and pay in is criminal towards you. My advice to the youth in my life is… be Amish. You will be ahead of the “game”.