5/23/2017

 

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The Social Security Fund

The Social Security Fund is the largest entitlement program in the world.

Since the day President Franklin Delano Roosevelt signed the Social Security Act into law on August 14, 1935, Social Security has grown into what is considered the largest social program in the world. The overall size of the Social Security program makes it larger than the economies of most countries.

The amount of money collected and paid out by Social Security is astounding. Since it's conception in 1935, trillions of dollars have passed through the Social Security system making it the largest single item in the federal budget.

Although it is called an entitlement program, it is paid for by tax dollars collected from American workers who pay into the system. Most workers pay 6.2 percent of their taxable incomes into the Social Security trust fund annually while employers pay a matching 6.2 percent per worker. Self employed individuals pay 12.4 percent of their annual income.

Most Americans have been impacted in one way or another by the Social Security program. It is the largest source of income for people over sixty five years of age.

Originally, Social Security benefits were paid only to retired workers but later, other benefits were added such as disability payments to a beneficiary's spouse and children. Programs such as Medicaid and Medicare have also been incorporated into the Social Security fund.

  • Medicaid is a program that is usually operated by state or local welfare offices that furnish basic services to people with low incomes and those with little or no assets. It provides such services as inpatient hospital care, physician' services, outpatient care, nursing home care, and laboratory services are provided by medicaid. Dental care, the cost of prescription drugs, eyeglasses, hearing aids, and ambulance services are also provided.
  • Medicare is a social program designed to provide basic medical care for the elderly and for people with disabilities. It provides a basic hospital insurance plan that covers inpatient hospital care, outpatient diagnostic services, extended care, in-home care services and certain follow-up services. Medicare also provides a medical insurance plan covering doctor fees, outpatient services, and certain other services.

The size of the Social Security trust fund is very large and still growing, but with so many baby boomers retiring over the next few years, it may be depleted by the year 2037 unless changes are made to strengthen it. This means that revenues will have to be increased by raising taxes, benefits will have to be cut, the retirement age will have to be pushed back to make sure that there is enough to keep the system solvent.

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