Actually, there is no problem at all with the old age pension and survivor benefits parts of social security other than the one congress has created by delaying action on the Trustees recommendations. If congress will act and pass a 2.36 cent per dollar (1.18 cents employee, 1.18 cents employer) increase in the contribution rate, Social Security will be fine as far as anyone can project. Naturally, changes in the contribution rate are needed from time to time to adjust for changing demographics. H, oping to get their hands on the 2.6 trillion dollar Trust Fund, Wall Street has waged an unrelenting smear campaign of disinformation on social security . There is, however, a somewhat more serious problem with the separate disability Trust.
If the contribution salary cap were to be is raised , Social security benefits could actually be increased. Social Security is a brilliantly conceived, defined benefit, basic retirement plan that takes advantage of shared risk. Compared to individual retirement plans, to receive the same monthly benefit, Social Security trades a significantly lower contribution rate and a retirement benefit that can't be out lived, for lack of any residual when you die to leave to your heirs. Social Security contributions also include some protection against disability, whereas private plans do not. That must be separately purchased separately in the case of a private plan. With private retirement plans you lose the risk sharing benefit and therefore you can run out of money, and most importantly for those with low incomes, you must contribute quite a bit more per month for the same monthly benefit that Social Security gives you, but you will leave to your heirs any unspent residual left in your retirement account when you die. Wages in the United States are so low that It would be literally impossible for low wage workers to fund their own private retirement program!
We, in the United States, are very fortunate to have the best of both worlds when it comes to retirement plans. We have Social Security for all, and for those of greater means we have a wide choice of private retirement plan options that can be built on top of Social Security.
Social Security benefits are based on your 35 highest earning years. Earlier contributions are weighted more heavily than newer contributions in the formula.
https://www.ssa.gov/oact/progdata/fundFAQ.html#&a0=8
There is a big problem with Medicare -- medical care costs in the U.S. have for many years risen faster than the overall inflation rate. Because Social Security has only easily remedied problems, whereas Medicare's problems will be far more difficult to fix as long as the U.S. Medical Care Delivery Cartel is left in tact, it makes no sense to lump these two entitlement programs together when discussing entitlements. They are two completely different kettles of fish. One is Pompano the other Carp.
