Asmar Ali Shah
Microeconomics Essay Assignment.
10/23/15
Social Security
What is social security? What is the importance of social security in a citizen’s life? Different type of questions occurs when we discuss about the social security. This is one of the problems that United States has faced is their economy, but then again every country faces these kind of problems. Social security future solidity is one of the major issues in United States. What are the requirements for receiving social security benefits? How long do they prolong? Technically social security is a government program that helps workers and retired people and gives them benefit to spend the rest of life. Social security has different types of branches or different types of benefits we can call them. It is not only for retired people, it also helps people with disability, and people with no jobs. The benefits that come with disability and unemployment are limited. For example, its common sense if you find a job back you won’t be getting unemployment benefits, and if people that are disable start to show improvement in their health, their benefits will be terminated. Is the working population big enough to support the social security program for the future? However, there are costs and benefits for keeping this program. Is it possible that something else can be added to the social security program to help people more?
Issues
A lot of people these days’ worry about how to fix the social security issue. This is totally the wrong issue become people think that the trust fund will run out by the time they retire. Which is not true. So, the question is how does the investment fund work? Workers pay their social security taxes through their employees. Each employer sends a sum of payments to the U.S. department of treasury which includes all of the income taxes and Social Security plus the Medicare payroll taxes paid by both the employer and its employees. The Treasury department of social security both receives the payroll taxes and pays monthly benefits on behalf of the Social Security Administration (SSA). All the money remains in the Treasury's hands unless it is either paid out as Social Security benefits or otherwise spent by the government. “In fact, no money ever goes into the trust fund. Instead, the trust fund balance is the result of two accounting entries by the Treasury.” Here is a graph that shows how Asset reserves grew from about $47 billion at the end of December 1986 to about $2,838 billion ($2.8 trillion) by the end of June 2015. (Cited source) Which means population has grown dramatically over the years and in future we need more job to accomplish the success of social security program.

Investment fund
What is the social security investment fund? How are trust funds invested? The Social Security Trust Funds are the Old-Age and Survivors Insurance (OASI) and the Disability Insurance (DI) Trust Funds. The social security trust funds are managed by the department of the treasury. There are two types of general securities. 1. The special issues (securities only available to the trust funds) 2. The public issues (securities only available to the public). The trust funds only deals with the special issues now, but they have been dealing with the public issues in the past. Benefits to retired workers and their families, and to families of deceased workers, are paid from the OASI Trust Fund. Benefits to disabled workers and their families are paid from the DI Trust Fund. More than 98% of total disbursements from the combined OASI and DI funds in 2014 were for benefit payments. (Cited Source) Taxed income is also deposited on daily basis in the special issues securities. The cash exchanged for the securities goes into the general fund of the Treasury and is indistinguishable from other cash in the general fund. In years when Social Security collects more in payroll taxes and other income than it pays in benefits and other expenses as it has each year since 1984 — the Treasury invests the surplus in interest-bearing Treasury bonds and other Treasury securities.
Future of social security
“As a result of changes to Social Security enacted in 1983, benefits are now expected to be payable in full on a timely basis until 2037.” (Cited source) So, technically we are good for the next 20 years or so. But, even after that it won’t be a problem because the population is increasing day by day. Everyone pays for their social security while they are working. As long as people are working, nothing will happen to this government program. “The Social Security Board of Trustees project that changes equivalent to an immediate reduction in benefits of about 13 percent, or an immediate increase in the combined payroll tax rate from 12.4 percent to 14.4 percent, or some combination of these changes, would be sufficient to allow full payment of the scheduled benefits for the next 75 years.” (Cited source) A lot of people ask what the government is doing to keep the program solvent. An individual can ask after looking at the program that will he/she get their benefits by assuming that there will be no change in the law in future what so ever. Well this is where we look the solvency of the program and figure it out how beneficial is the future for us. Here is a chart for Combined OASI and DI Trust Fund assets as a percentage of program cost, 1990–2008, projected under alternative assumptions, 2009–2085. “The relatively more optimistic assumptions of the low-cost alternative I show solvency for the program throughout the 75-year projection period, while the relatively pessimistic high-cost alternative III assumptions show trust fund exhaustion even sooner than 2037. These alternative sets of assumptions are just one of several ways the trustees illustrate the uncertainty of long-range projections for the future.” (Cited source)

Requirements and Qualifications.
The social security program is for legal citizen and it requires a certain age (65) to receive the benefits. The requirements follow as
1.) A citizen or national of the United States 2.) A non–citizen who meets the alien eligibility criteria under the 1996 legislation and its amendments.
The biggest factor after being eligible for social security is the age. The legal age is 65. However, you are required to work at least 10 years in the U.S. in order to receive social security. Unless you get disabled and then you apply for disability and the sources decide if you are eligible for the benefits. It is possible for people who want to retire early they can but the benefits would be reduced. When we talk about Non-Citizen eligible for SSI. Beginning August 22, 1996, most non–citizens must meet two requirements to be eligible for SSI: 1.) The non–citizen must be in a qualified alien category, 2.) Meet a condition that allows qualified aliens to get SSI benefits.
Immigrants: -
It doesn’t matter if you are a student or a teacher, a farm worker or a businessperson, a refugee or a temporary resident, if you are an immigrant and you need to do business with Social Security, you have come to the right place. Two ways to apply for social security card. 1. Apply for the car in your application while you are applying for immigrant visa. 2. Or apply one when you get to America, when you start working.
Young People. At the end of 2014, about 3.2 million children under the age of 18 were receiving an average monthly benefit of $548 because one or both of their parents are disabled, retired, or deceased. (Cited source) * About 327,665 minor children of retired workers were receiving an average monthly benefit of $628. (Cited source) * About 1.2 million minor children of deceased workers were receiving an average monthly survivor benefit of $821. (Cited source) * About 1.7 million minor children of disabled workers were receiving an average monthly benefit of $335. (Cited source)
The "adult child"—including an adopted child, or, in some cases, a stepchild, grandchild, or step grandchild—must be unmarried, age 18 or older, and have a disability that started before age 22.
It is not necessary that the adult child ever work because benefits are paid based on the parent's earnings record. In fact: * Approximately 1 million disabled adult children were receiving an average monthly benefit of $751 at the end of 2014.
The Solvency and Solidity of Social Security program.
The solidity of the economic structure doesn’t seem too well in the U.S. To make sure and secure the solvency of the social security programs there are some things that needs to be done. Instead of helping other foreign countries, U.S government needs to fix their economic structure, because U.S. economy is not at its best in helping others. Cutting down the foreign aid would be the first step to take. Cutting that aid won’t help that much but it would help the government and they will stop borrowing money from the social security trust fund. There are so many military troops all around the world. Millions and millions of dollars are being spent on them. They need to reduce these troops. Especially from Asia and Eastern countries. New invention, new missile creations needs to be reduced or hold them off until the economy is better than before. Cutting down these cost will help save money, and that money can be used to create more jobs, create small business where people can work and the work will provide funds for social security benefits. When jobs are created there is more money to be saved because, the unemployment money is saved when people get hired and when people work, taxes and social security funds are increased. All of these decisions will benefits the economy. Here is a graph for unemployment rate over the years. Why is there unemployment in this country? Just think about it. A lot of money can be saved if jobs are made by the saved up money from reducing troops and foreign aids. It is going to help the economy big time. I think unemployment rate should be 0%, no one in this country should be unemployed. Once that happens the economy will get better itself. Federal government needs to cut down all different types of programs in order to have money for millions of people (Social security funds).
Economic Growth
On the other hand, the economic growth of the social security simply depends on the reforming social security. There are reasons why it should be a priority. The program damages the economic growth in some matter. Some changes are needed indeed. For example, social security taken out of the payroll taxes puts a different between what employers pay and what employees receive. Which automatically decreases jobs and hiring new people. It makes it even more difficult that the social security gets piled on the income taxes and with that millions and millions of family face a very high taxed rates on their yearly income.
Consulting Social Security Program with an adult. After researching about the topic, I discussed this topic with my uncle. His ideas were totally different then what I expected. He said the maybe not now but somewhere in time this program will fail when there are less jobs and more unemployed employees. What are they going to do then? He asked. Have they prepared for the worse? So, I asked him uncle what do you suggest what is the solution to have a better social security program? He replied to reform social security a better way, they need to just wipe out the program and let people have personal retirement accounts. He said that private retirement plans have been used in other countries. This will make the young generation today worry about their future themselves instead of depending on the government. He said that program is not good for us because someone working from the age of 21 up to the age of 65, that too much. He said they take too much for so long and give so little for small amount of time. He said every few years they increase the age of retirement. I asked him why you think they do that. He replied with a giggle, “They don’t want to pay people” He told me how all the generations of American people have always depended on the government to take care of their retirement. He said that is how to they money, making a law that everyone has to pay for social security and then when you get old all these programs of social security and welfare just make you dependent on the government. My uncle said if we switched to personal retirement plan where the government wouldn’t interfere, it would help people save for their future. He said majority of people working odds jobs don’t even save. They get their pay check and spend it all which is because they are too dependent on the government. It gives more control over your retirement planning if it’s personally accounted. My uncle said in the last that saving is very important, off course someone who is rich and has a business wouldn’t really worry, but middle class and average people, if they start saving they can build small business for their families. This can’t happen if they have to pay so many taxes for social security. He said that I think this is definitely the reason why social security system is damaged and economically it is going down.
Personal thinking after researching and discussing with an adult.
I never expected my uncle to just phase out the entire program if it was in his hands. I think that won’t good because not every knows how to save. But, then again it is not a bad idea because the economy going down big time. This topic has always been one of my favorite because I am surrounded by so many people which are near the age of 65. They are always talking about retirement, pension etc. I learned some different stats about social security. I didn’t know a non-citizen can also get the benefits. I enjoyed reading the social security, Turing the tables, the economist. It was very detailed. I learned a bit about the investment trust fund and how it works. I don’t think very differently about the topic even after talking to my uncle. I personally think I am only 21 years old, and not old enough to decide until I start working.

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