I’m going to say something that some of my readers may not agree with, which is something I don’t often do. However, I believe it must be said that Social Security is the greatest social program passed in American history. Is it perfect? No, but what is? It’s pretty darn close, given the entire picture.

In 1932, only 5% of the elderly in the U.S. were receiving retirement pensions. Social Security was passed during the height of the Great Depression to provide a guaranteed income stream for retirees in America. In 1965, modifications were made to social security to include what we now know as Medicare. Today, every employed person in America has to pay what are known as FICA taxes. 7.65% of your paycheck goes toward the social security trust fund, with another 7.65% being paid by your employer (15.3% total). Of the 7.65% contributed by each party, 1.45% goes towards Medicare and 6.2% goes towards Social Security. There are income caps and surcharges on FICA taxes, but for the purpose of this blog post, I won’t go into any more detail than that. Read more about those rules here if you like.

Social Security generally works like this: You pay out of your paycheck your entire life into Social Security for the ability to earn a paycheck during retirement. The more money you make during your working years, the larger your calculated monthly benefit will be during retirement. Between the ages of 62 and 70, you have a window where you can elect to draw social security. The sooner you start benefits, the smaller your monthly check; the longer you wait to start, the larger your benefits are.

So when should you start drawing social security? It depends on a number of factors, most notably your health and other sources of income. It does very little good to wait until age 70 to draw social security, only to die a year later. On the other hand, it wouldn’t be wise to stop working at 62 only to outlive all of your sources of retirement and have a monthly check that is insufficient for your standard of living. If only we could see into the future when we had to make these difficult decisions.

Critics of Social Security will point to the forced savings component and ask why they can’t manage their own retirement share in their own way. They might also ask what happens to their share if they pass away before ever drawing from the system. It’s true, someone that dies at age 60 without a surviving spouse will have paid possibly hundreds of thousands of dollars into the system with ultimately nothing to show for it.

While both questions are valid to ask, these shortcomings are part of a necessary evil that must exist in order for the greatest country in the history of the world to sustain a standard of living for all of its citizens- not just a select few people that have amassed a large concentration of the country’s wealth. The reality is that most Americans are incapable of managing their own long-term financial security. 

In a country where over half its citizens are already paycheck to paycheck, imagine a society without guaranteed retirement plans or health insurance coverage. Imagine a world where people spend all of their retirement money during their lifetime, or worse, simply make terrible investments in the name of trying to grow their wealth. These scenarios would be INEVITABLE if social security were privatized - that is, made where people can make their own investment choice and/or opt out of it altogether. Sure, some people can do a good job of managing their own retirement, but it is better for society as a whole if there is a system in place that ensures everyone is taken care of.

There’s a reason why privatization of Social Security is always a taboo for politicians - seniors overwhelmingly oppose it. For good measure. We simply cannot have a society of broke seniors who cannot pay for their healthcare. Some savvy and wealthy Americans may be able to design their own successful retirement, but it is not worth having at the expense of elderly people being broke and dying on the street from poverty or the inability to get affordable medical care. Social security is a necessary evil, and I’m not even sure evil is a good choice of words when describing what it does for our society.