Benefits Available Through Social Security - Term Paper Example

 Benefits Available Through Social Security Introduction Yuan and the State University of New York at Albany (2007) argue that the changes in demographic patterns have drawn attention to the aging group in society. The issues that concern the elderly include social profile, physical health, mental health and their economic status. Financial security has been the key problem to the aging and the disabled population over the past years, which has changed from traditional family support to that which involves private savings and social responsibility. Yuan and State University of New York at Albany note that in America, child support is no longer given priority, and neither is it a means of elderly income from the end of nineteenth century. They note that, in general, the elderly are no longer willing to either sell or downsize their homes for a couple of years. Therefore, housing equity is not liquidated to provide consumption support after retirement. Fortunately, the US Census Bureau 2005 report reveals that the largest share of overall income for US population aged 65 years and above comes from social security. In 2001, a report showed that 39% of personal income in the form of money comes from social security. This was followed by earnings accounting for 24 %, 18% from pensions or from social security with 16% derived from asset income (Yuan and State University of New York at Albany, 2007). The survey also showed that of the 20% recipients of social security beneficiaries, their social security payments were found to be their only source of income, while the other 13% of social security recipients had more than 90% of their total income derived from social security benefits. In overall, the survey found out that 65% of recipients depend on social security in US, which accounts for more than half of their total income (Yuan and State University of New York at Albany, 2007). The large number of elderly people depending on social security compensation as their source of income implies that there are many benefits associated with it. But what are these benefits? This essay will explore the background of social security compensation and the benefits derived from it in US. Background Berkin et al. (2010) note that social security program came into being in 1935 after the passage of the Social Security Act. Since its establishment, millions of Americans have benefited from the system. It is for this reason that payment of social security takes 18 percent of the US budget. Nuschler and Siskin (2005) note that under current policy, social security programs in the US provide monthly compensation benefits to the aged retirees, disabled workers and their survivors and the dependants of the deceased workers. For an individual to qualify for the benefits, he or she must have worked in jobs covered by social security for a specified period. Nuschler and Siskin reports that US workers need at least forty quarters of coverage to become eligible for the benefits (Gruber & Wise, 1999).The programs are financed by mandatory taxes derived from a workers payroll on wages and self-employment income. Nuschler and Siskin note that many jobs in the US are covered under the program with about 96% of employers required to submit taxes on Social Security payroll. They reveal that in 2004, workers and employers covered by social security were each required to pay 6.2% of their earnings up to $87,900. On the other hand, the self-employed workers are to pay 12.4% net of their self-employment income up to a tune of $87,900. Moreover, they are required to subtract a half of the payroll taxes derived from federal income taxes. Social security compensation has been of benefit to the disabled citizens in the US. The Social Security Administration (SSA) describes disability as a severe mental or physical condition that impedes an individual from working. However, due to social security compensations, these vulnerable groups in the society have nothing to worry about as their plights are covered by social security (Gruber & Wise, 1999). For instance, in case an individual is permanently disabled according to SSA medical guidelines, these individuals are eligible for disability compensations. The benefits are equivalent to the amount that people with disability would get on full retirement (Blinder, Gordon, & Wise, 1981). These compensations are usually paid on a monthly basis. For instance, the disabled usually receive a check from the SSA at the end of every month to offset the earning losses incurred. On average, a disabled worker in US is paid a check worth $780 by the SSA. On the other hand, married disabled with more than two children receive an average compensation of about $1,200. This form of compensation has been of benefits to the disabled and their family members in meeting their daily requirements and well-being. For instance, a report reveals that more than four million disabled US citizens receive a monthly compensation from social security administration. Apart from this, the report also reveals that more than 1.7 million disabled dependants, especially children, are also subject to the social security benefits. This money usually helps these dependants to pay for their school fees, meet their medical expenses, food and other requirements. This has helped in improvement of the living standards of America’s disabled and their dependants. For example, those who are severely affected by disability are paid to a tune of $201,000 for those earning average income and with spouse and children. This is not little money (Duggan, 2006). One of the worst things that cause devastating financial and emotional effects to a family is death. For instance, in certain families, the father may be the only breadwinner while in others it may be the mother. As a result, when one of these parents passes on, survivors tend to find it hard trying to cope with the emotional and financial effects. Nevertheless, due to the existence of social security compensation in the US, the survivors have very little to worry about. This is because, in case a family member passes on, then social security administration usually comes in and provides compensation. Duggan (2006) notes that survivor benefits provides financial compensation to family members left because of the demise of a working member of the family. The compensation is usually based on the deceased earnings record and history of his or her work. Under the social security law, the more the worker contributes toward social security, the more his or her survivors will get when he or she passes away. Duggan (2006) argues that the percentage of the benefits is dependent on survivors’ age and the kind of relationship shared with the deceased. For instance, social security administration reveals that a widow or widower who has attained full retirement age or have attained an age above that of retirement are entitled to receive 100% of the amount of his or her basic working benefit. Those who are 60 years or older but have not attained retirement age are entitled to a compensation to a tune of 71% to 99 % of working benefits. Money recouped from social benefits has helped the elderly a great deal to manage their lives and business after retirement just as Yuan and State University of New York at Albany (2007) found out. That is, more than 20% of US citizens depend of social security compensation as their only source of income. The US Census Bureau (2005) reveals that nearly 7.4 million US citizens, out of whom about2 million are children, depend on survivor’s benefits paid by social security administration because of parent or spouse’s death. On average, the report shows that a spouse with two or more children is entitled to a survivor’s benefits amounting to $322,000 derived from life insurance policy (Gruber & Wise, 1999). On the other hand, survivor benefits that are usually paid on monthly basis to such spouse amounts to $1,400. The amount received out of survivor’s compensation can be used to settle bills such as school fees for children orphaned, food, start business and other related expenses. This form of compensation has helped improve the living standards of survivors in the US because of death of a family member. Another benefit of the US social security compensation is that it can be paid to an individual irrespective of whether one is in the US or not as long as the individual in question is eligible for it. In this case, payment will be sent to the individual using a check no matter how long the individual stays out of US. This is of immense benefit to people who travel outside the US territory and may want to use the money to meet certain bills. In conclusion, it can be deduced that since the Social Security Act was passed and came into operation, millions of American citizens have benefited a great deal. This ranges from the old, the disabled, deceased survivors and their dependants (Gruber & Wise, 1999). This is the reason why a large number of US citizens have opted for the system. For instance, the disabled who may not be at a position to work due to physical impairment are provided with a compensation to improve their standards of living. For instance, the money received can be used to pay medical expenses, school fees for children, and buy food. The elderly have also benefited from the system a great deal. One of the major things that workers tend to worry about is the life after retirement. However, with the existence of social security, many aged American retirees have not had many problems since social security takes control of their life after retirement. This is by paying them money in accordance with the contributions they made to the program while still working. This has helped improve the living standards of the aged. On the other hand, it is also evident that the benefits are not only attributed to the elderly and the disabled alone but also to the dependants and survivors of the deceased person. This has helped reduce financial problems and mental strain associated with death of a family member. This is because, when a member who has been working and covered by the program dies, then his survivors will continue receiving monthly payments from social security. This has helped many orphans, widows, and widowers in the US to cope with life despite the loss of a family member. References Berkin, C., Miller, C., Cherny, C., Gormly, J., Egerton, D., & Woestman, K. (2010). Making America: A history of the United States. New York: Cengage Learning. Blinder, A.S., Gordon, R.H., & Wise, D.E. (1981, December). Reconsidering the work disincentive effects of social security. National Tax Journal, XX XIII(4), 431-442. Duggan, M. (2006, November). The growth in the social security disability rolls: A fiscal crisis unfolding, 3, 222-278. Gruber, J., & Wise, D. (1999, January). Introduction to" Social Security and Retirement around the World," 1-35. Nuschler, D., & Siskin, A. (2005, May 11). Social security benefits for noncitizens: Current policy and legislation. CRS Report for Congress, 1-24. Yuan, X., & State University of New York at Albany. (2007). Social Security programs and retirement behavior in Korea and China: A Micro…Michigan: ProQuest. Read More