Social Security is Not Social or Security

It is Supplemental Retirement Income

Yahoo Finance today has a nice short article on how the disposable income from Social Security will be going down. 

3 Ways Your Social Security Payments Are Already Being Cut

Like many headlines, including ones used in this Forum, the headline itself is misleading.

What the article is saying is that given the facts that (1) Full Retirement age is increasing, (2) Medicare Part B Premiums, which are subtracted from SS benefits will be rising and (3) SS is taxed once a certain income level is reached, and up to 85% of the benefits can be included in taxable income, then the amount income one has from SS to pay basic living expenses is being effectively decreased even without any changes in the SS law.

This illustrates a very basic point about Social Security.  Social Security is not a full retirement income package, it was not and is not designed to provide people with their retirement needs.  It was designed to provide retirees with a minimum standard of living, so that they do not spend their senior years living in poverty and to supplement their private savings income.  Social Security, along with Medicare has accomplished this goal, poverty among those over 65 has been declining for decades. Here’s an except from another Yahoo Finance article

During the past 40 years, one of the seldom trumpeted successes in the United States has been the enormous reduction in senior poverty. Social Security, Medicare, and Medicaid have provided income and health supports that reduced poverty among people age 65 and older from well over 30 percent to less than 10 percent--the lowest poverty rate of any population group in the country. When the dust cleared from the Great Recession, poverty rates had risen for all groups except the elderly. For that group, the poverty rate fell further, to 9.7 percent in 2009 and 8.9 percent last year. By contrast, the poverty rate among children is roughly twice as high.

Yes, Social Security and Medicare are government programs that have met their policy goals.  They may be expensive, they may not be sustainable in the future, but as of today they are doing what they are supposed to do.