Quote:
Originally Posted by Fast_Eddie
I don't think so Pete. Or at least that's not my understanding. Just a couple of thoughts- if it were a "forced saving account" then it would be, you know, an account. We'd have individual accounts and be able to track their progress and benefits paid relative to performance.
Second, if it were intended to be a saving account, then it wouldn’t pay out to anyone who had not paid into it. But benefits, I believe, started when the bill was passed. Clearly none of the first recipients had "paid in" to an "account".
Finally, the program was commonly called the "old age pension" when it was passed. I’m pretty sure it was modeled after similar programs, some passed by some individual states, using similar language, and at least in part by the Old Age Pension Act passed in the U.K. in the early 20th century.
A pension plan isn’t a saving plan, but a guaranteed annuity- a distinguishing characteristic and benefit being you cannot outlive benefits. Sure enough, this continues to be the case with Social Security today and, in fact, that's a big part of why we have an issue. People are living much longer and so drawing more out of the system.
That’s my understanding. If you have information to the contrary, as always, I’d be happy to look at it and see if I’m wrong.
|
Eddie, let's see if we are on the same page. The (defined benefit) pension plans I deal with have monthly contributions, and those contributions are segregated into a trust fund. While it technically is not a savings plan, it is funded by your contributions and/or contributions made on your behalf. The amount of your defined benefit is going to be based on your level of contributions, but not necessarily on the total amount of your contributions.
The SS disability and SSI benefits were added on later. The SSI benefits are a means tested disability benefit for those who do not otherwise qualify for Social Security. SSI is essentially a hybrid of retirement benefits and welfare payments, leaving room for arguments about whether they belong in the social security system. The SS disability benefits work similarly to several pension plans I have dealt with. The disabled person who has not reached retirement age receives an accelerated eligibility for full benefits.
In sum - SS looks more like a retirement plan than a savings plan. (IRAs, 401(k)s, on the other hand, are retirement savings plans.)
Regards,
D-Ray