We learned all about Social Security in elementary school. As a kid, it seemed like a pretty sweet deal: you work hard all your life, you contribute some of your check each week and, years later, Big Daddy Government gives everything back; it sounds like a safety net mixed with a gently forced retirement plan. Although we were taught this stuff, it seems that there is still some confusion regarding the whole concept.
For example, a few months ago, that Guy in the White House ran an ad accusing Joe Biden of “promising your benefits to illegal immigrants” (Politifact.com). Not only has Biden been trying to systematically dismantle Social Security, the ad claims, but he wants to give all of your hard-earned money to ineligible people who haven’t even paid their dues!
It would be a disturbing story – if it were remotely based in reality. In actuality, a vast amount of working illegal immigrants pay into the system without ever seeing a dime of Social Security upon retirement. It goes like this: “many immigrants who aren’t authorized to work in the US buy fake Social Security cards.” Then, the employer takes out tax payments and sends them along. When that number isn’t associated with an actual citizen, the federal government holds onto the taxes and, later, drops the cash into the Social Security trust funds; this money then ends up in the hands of retired Americans. (TheAtlantic.com). In 2010 alone, the payments from falsely documented workers “contributed roughly $12 billion” (TheAtlantic.com) to Social Security.
Another thing we get wrong is thinking that what we put into the system will find its way back to us, in full. The Social Security website promises that benefits are calculated based on your “lifetime earnings” (SSA.gov). That sounds just like what we were taught! Wait, though, what’s that next sentence? The SSA continues (as if that “lifetime earnings” thing never happened) by admitting that they only count the “35 years in which you earned the most” (SSA.gov). Some of us have been working on the books since the age of 16, and if we continue to work until 72, that means that there’s 21 years of payments that just go Poof – lost in the ether. Since more than “three out of five retirees” (Fool.com) depend on Social Security for about half of their income, that missing 21 years would come in handy for a lot of people.
Cavalierly ignoring years of work history freed up plenty of time for the Social Security Administration to write rules for uncommon situations. For example, if you’re responsible for your spouse being the opposite of alive, don’t expect those nice survivor death benefits to appear in your bank account (CNBC.com); you won’t even be eligible for the $255 lump-sum death benefit (CNBC.com)! Minor kids playing Norman Bates with Mom and Dad are likewise banned from receiving survivor benefits (CNBC.com). While this makes senses – bad behavior should never be rewarded – it’s frightening to think how many times the situation came up before guidance finally had to be written.
Social Security is a nice program with limitations. These limitations are to be expected, as the Social Security Administration itself warns that the payments were “never meant to be the only source of income” (SSA.gov) for retirees. Social Security helps, but it’s important to understand exactly what to expect upon leaving the workforce. We can’t depend on a partial program to meet all of our Golden Year needs – it’s up to us to make sound financial choices and save as much as we can for the rainy season.
Bourke Accounting bookkeepers and tax preparers understand the subtleties of Social Security. Not only can Bourke Accounting pros counsel you on the best time to retire, they can also discuss ways in which to make the transition painless. Talk to a Bourke Accounting expert for advice on what to do now in order to ensure the best retirement ever.
Come see us any time. Our number is 502-451-8773 and don’t forget to visit our website at www.bourkeaccounting.com. See you soon!
Written by Sue H.
Bill at Bourke Accounting does not like change. I don’t mean progress or new ideas, I mean the jingle jangle in your pockets, nickels and dimes, change. As Bill is a little OCD, it might be the inherent messiness of change that he finds distasteful. It could even be the fact that too many moving parts are required to create viable, spendable money (he’s a person who also treasures efficiency). For whatever reason, Bill does not like change.
I like change. I like the old-school physical representation of the ability to buy things. To me, change is money whereas a card is almost a theoretical concept (this could explain my credit rating). Because of my love for scuffed and elderly coins, I find the current change shortage upsetting.
I was first made aware of the shortage by a pal of mine. He texted that “They” were finally starting the “New World Order” by eliminating cash money. He warned that I should hoard what I have to avoid being tracked by “Them” in a cashless society. When I mentioned that our cellular devices pretty much do the tracking for “Them,” he dismissed the idea and sent me a Facebook post about chemtrails.
Since Occam’s razor tells us that the simplest explanation is usually the right one, I decided to look for another reason behind the change shortage – perhaps one that didn’t involve the end of the world.
First things first. Yes, there actually is a change shortage. Some of you have probably noticed signs stuck to store registers asking that exact money or cards be used. Okay, at least that part is true. Barring the End of Days, what could’ve caused it? If you thought the shortage has most logically been caused by the virus, you win a cookie. Todd Martin, the US Mint spokesperson, reported that at the beginning of our outbreak, the Mint reduced its workforce to facilitate social distancing (Politifact.com). Since the Mint’s staff was cut, obviously, production was cut – 10% in April and 20% in May (Politifact.com).
That was the first cause of the shortage. The second cause was that people weren’t out gallivanting around. If people aren’t wandering about, they aren’t spending money. Stores, therefore, weren’t getting that infusion of sweet, sweet coin. Since stores weren’t getting change, they were forced to order more from the Mint (Politifact.com), which as we’ve discussed, didn’t have it like that. Like everything else in nature, one little alteration causes great, big consequences.
The above reasons make more sense than a shadowy puppet master stealing all of our pennies. While America is leaning more towards plastic and virtual payments, it wouldn’t be possible to eradicate folding money at this point. For example, a letter from convenience and grocery store associations to the Federal government requested that coin makers hurry up. They cited that cash is used as payment in more than one-third of in-person transactions. Additionally, cash is used more frequently by people with lower incomes (USAToday.com). In other words, there is no possible way that we can get rid of cash now.
So, for those of you who believe that the cashless, New World Order is lurking around the corner, rest easy. Even shadowy puppet masters have to put Tooth Fairy quarters under the pillows of their shadowy puppet master children.
Bourke Accounting accepts all types of payment – we only ask that, if you’re using pennies, please have them conveniently rolled. While the virus has changed a lot of things, two things won’t change this second: money is money and you have to take care of your financial obligations. Meet with a Bourke Accounting bookkeeper or tax preparer and make sure that you’re protecting your future.
Come see us any time. Our number is 502-451-8773 and don’t forget to visit our website at www.bourkeaccounting.com. See you soon!
Written by Sue H.