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Social Security IS NOT a social safety net

| January 17, 2020
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Many people treat Social Security as if it’s a social safety net program, meaning there is a life event and the government steps in to help out. Think of a natural disaster - tornado comes through town and the Federal Emergency Management Agency (FEMA) is there to help, hopefully. You could argue those folks paid for that assistance INDIRECTLY through their federal taxes, but there are thousands of things you pay for INDIRECTLY via your federal taxes.

In the case of retirement, people seem to think “now I’m retired (the event), time for the Feds to help me out and send me a Social Security check”. But Social Security is NOT a social safety net program, it’s very different. So what is it?

To answer the question consider the official name of the Social Security program – OASDI Old-Age, Survivors, and Disability INSURACE. Also consider how Social Security is funded. Working Americans pay a percentage of their wages each paycheck, up to a limit, via a line item most of you see on your pay stub called FICA (details on this in posts), which stands for Federal INSURANCE Contribution Act. After many years of working and paying FICA Social Security calculates an all important number specific to you; a number on which all of your benefits are calculated (again, more on this later), it’s the PIA or Primary INSURANCE Amount.

So, to qualify for the OASDI, you pay FICA out of your wages, and they come up with a benefit amount for you called the PIA – Social Security is an insurance program, not a social safety net. You have been paying premiums, called FICA, into this program all of your working life. For many of you the total of those premiums is significant and can be found on the second page of your Social Security statement in the lower left corner. If you are planning to claim Social Security as soon as possible without further analysis you may be robbing yourself of tens of thousands, maybe hundreds of thousands, of lifetime benefits that you have paid for. Our goal is to help you maximize something that you have paid for to benefit your situation as much as possible.

We’re Social Security enthusiasts. In spite of the negative press the program often gets we’re enthusiastic about what Social Security can do for you and you’re family. Join us next time to learn more ways to make Social Security work for you and your family.

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