Retirement a nonpartisan issue

CATHARINE COOPER

Everyone, it seems, is talking about retirement. Whether they are in

it, about to be in it, preparing to be in it, or realizing, like some

of us, that they’ll never be in it ... Retirement is on the lips of

everyone.

The Social Security debate wages across state borders, slips

through cities and glides from the boardroom to the bedroom. Is there

enough? When will the system crash? Is it broken? Salvageable? In

need of an overhaul? There is no consensus, and what to do about it

remains a topic of powerful debate, pressing what we’ve come to know

as reds vs. blues farther into their respective corners.

Social Security has never figured into my own retirement picture;

the numbers have never penciled out, and there’s this odd 10-year gap

in my benefits statement, due to a dissolution of marriage prior to

the end of 10 years. Since I’ve always worked for myself, the concept

of a golden parachute is not part of my vernacular. No 401K. No

belief that the system was going to take care of my financial needs.

But there are millions of Americans who rely on this system to carry

them through their post-wage earning years.

The Social Security system pays dividends in relationship to money

deposited via taxes, based on a person’s 35 highest-earning years. By

a strange quirk in the tax code, if a couple divorces prior to the

conclusion of 10 years of marriage, the benefits go to the owner of

the reporting Social Security number. My ex and I dissolved our

relationship at 9.7 years, and 10 years of both wage-earning and

contributions vanished from my history.

Talk about parochial. I find I’m a bit steamed that my ex’s next

wife will receive monies that I paid into the system. It’s as if I

didn’t exist, or it’s just plain theft.

I’ve written to my representatives, congress people -- all to no

avail. I receive the polite form response: Thank you for bringing

this issue to our attention -- blah, blah, blah. I know it’s at the

bottom of the list, somewhere near global warming.

Insult to injury: Individuals working for corporations currently

can contribute 7.65% of income only up to $90,000. For the

self-employed, we have the luxury of a 15.30% rate. This is, of

course, because the employer must match the employees’ contribution.

And why the cap at $90,000? Why not simply a straight tax on all

income, which some calculations estimate would dump an additional $10

billion into the system?

I have no desire to be an expert at the tax code, but it becomes

more important in this period of a “dismantling” debate to understand

both what the current system provides and what would be lost. I do

not trust the folks in Washington to protect my best interests.

The Social Security Act of 1935 was originally named the Economic

Security Act, and paid benefits only to the primary worker. In 1939,

a change in the law added survivor benefits and benefits for the

retiree’s spouse and children. In 1956, disability benefits were

added.

From 1937 to 1940 Social Security paid benefits in the form of a

single, one-lump payment, and monthly benefit payments began in 1942.

From 1937-1942 contributions were used to build up the trust funds

and provide a qualification period. The first lump-sum payment was to

a retired Cleveland motorman named Ernest Ackerman. He retired one

day after the law was enacted, and received a one-time payment of 17

cents. Ida May Fuller, from Ludlow, Vermont, was the first recipient

of monthly benefits.

The average lump-sum payment in the initial period was $58.06.

Today, the average monthly Social Security payment is $930, with the

maximum for fully retired workers in 2005 -- $1,939.

Retire on $930 a month? That’s below the poverty level in the

United States. There can be endless debate on the merit of Social

Security at its inception, but we have come to believe that it is

designed to protect our senior population from cat food diets and

living on the street. Current plans being proposed all include a

decrease in benefits over the next 30 years of up to 20%.

This is one debate that begs of our officials to cast aside their

partisan politics and look at broader possibilities. Analyze multiple

options. Engage in information assembly. Poll bright financial minds.

Put down the need to be right, and develop a solution that leads all

Americans to a brighter future.

* CATHARINE COOPER can be reached at (949) 497-5081 or

[email protected].