Tuesday, March 20 , 2018, 11:50 am | Mostly Cloudy 63º

Your Health
A Noozhawk partnership with Cottage Health

Bibi Taylor: Framing the Social Security Debate

It makes a lot of sense that Social Security stories get top billing in the media. The Social Security system touches more lives than just about any other federal program. By the end of 2012, $786 billion was paid in benefits to 57 million Americans. Another 161 million people paid payroll taxes into the system.

Bibi Taylor
Bibi Taylor

When President Franklin D. Roosevelt initiated the program in 1935 to foster inter-generational transfers of wealth, it would have been fairly inconceivable that the program would grow to its present-day largess.

The first recipients of Social Security benefits retired in 1940. Interestingly, however, back then the average life span was only 61.6 years. People are living on average 17 years longer today.

For its first nearly 50 years, Social Security was a pay-as-you-go system. Tax receipts funded benefits paid. In anticipation of the onslaught of baby-boomer-aged professionals nearing retirement, in 1983 Congress made sweeping changes. Increased payroll taxes provided the lion share of Social Security revenue. For nearly three decades, the system collected significantly more than it paid in benefits and invested the surplus in special non-tradable Treasury bonds. The interest was credited to the Social Security System’s two trust funds.

As of Sept. 30, 2013, the trust funds together held more than $2.8 trillion in Treasuries. These funds are separate from the federal government’s budget, and as such have maintained high surpluses. Some years the surplus has reached as high as $153 billion. The president can borrow from these surpluses, but loans must be repaid with interest.

The problem that has plagued the program since 2010 and is expected to continue is that expenses outpaced revenues. The gap amounted to roughly $55 billion in 2012 and was covered with credited interest in the trust funds. The system can continue covering the deficit in this way until 2020 at which time Treasuries must be redeemed to meet benefit obligations.

Upon depletion of the trust funds, which is projected to occur in 2033, the program — if unchanged — will rely solely on tax revenue. This will only cover about three-quarters of the scheduled benefits.

Over the course of the upcoming years, we can expect a number of debates about potential changes to the program. Some changes under consideration include changing the formulas for calculating benefits, potentially increasing payroll taxes and increasing the cap on taxable wage income (currently $113,700).

While the debate over the future of Social Security rages on in Washington, Americans can take steps to secure their own financial future. Talk to a financial advisor about creating guaranteed income streams throughout your retirement and other ways to supplement your Social Security benefits.

Please feel free to email any Social Security questions you may have to [email protected].

— Bibi Taylor, MBA, is a wealth manager for AmeriFlex, 3700 State St., Suite 310, in Santa Barbara. Call 805.898.0893 for more information.

  • Ask
  • Vote
  • Investigate
  • Answer

Noozhawk Asks: What’s Your Question?

Welcome to Noozhawk Asks, a new feature in which you ask the questions, you help decide what Noozhawk investigates, and you work with us to find the answers.

Here’s how it works: You share your questions with us in the nearby box. In some cases, we may work with you to find the answers. In others, we may ask you to vote on your top choices to help us narrow the scope. And we’ll be regularly asking you for your feedback on a specific issue or topic.

We also expect to work together with the reader who asked the winning questions to find the answer together. Noozhawk’s objective is to come at questions from a place of curiosity and openness, and we believe a transparent collaboration is the key to achieve it.

The results of our investigation will be published here in this Noozhawk Asks section. Once or twice a month, we plan to do a review of what was asked and answered.

Thanks for asking!

Click here to get started >

Support Noozhawk Today

You are an important ally in our mission to deliver clear, objective, high-quality professional news reporting for Santa Barbara, Goleta and the rest of Santa Barbara County. Join the Hawks Club today to help keep Noozhawk soaring.

We offer four membership levels: $5 a month, $10 a month, $25 a month or $1 a week. Payments can be made through PayPal below, or click here for information on recurring credit-card payments.

Thank you for your vital support.

Reader Comments

Noozhawk is no longer accepting reader comments on our articles. Click here for the announcement. Readers are instead invited to submit letters to the editor by emailing them to [email protected]. Please provide your full name and community, as well as contact information for verification purposes only.


Special Reports

Heroin Rising
<p>Lizette Correa shares a moment with her 9-month-old daughter, Layla, outside their Goleta home. Correa is about to graduate from Project Recovery, a program of the Santa Barbara Council on Alcoholism & Drug Abuse, and is determined to overcome her heroin addiction — for herself and for her daughter. “I look at her and I think ‘I need to be here for her and I need to show her an example, I don’t want her to see me and learn about drugs’,” she says.</p>

In Struggle to Get Clean, and Stay That Way, Young Mother Battles Heroin Addiction

Santa Barbara County sounds alarm as opiate drug use escalates, spreads into mainstream population
Safety Net Series
<p>Charles Condelos, a retired banker, regularly goes to the Santa Barbara Neighborhood Clinics for his primary care and to renew his prescription for back pain medication. He says Dr. Charles Fenzi, who was treating him that day at the Westside Clinic, and Dr. Susan Lawton are some of the best people he’s ever met.</p>

Safety Net: Patchwork of Clinics Struggles to Keep Santa Barbara County Healthy

Clinics that take all comers a lifeline for low-income patients, with new health-care law about to feed even more into overburdened system. First in a series
Prescription for Abuse
<p>American Medical Response emergency medical technicians arrive at Santa Barbara Cottage Hospital with little time to spare for victims of prescription drug overdoses.</p>

Quiet Epidemic of Prescription Drug Abuse Taking a Toll on Santa Barbara County

Evidence of addiction shows an alarming escalation, Noozhawk finds in Prescription for Abuse special report
Mental Health
<p>Rich Detty and his late wife knew something was wrong with their son, Cliff, but were repeatedly stymied in their attempts to get him help from the mental health system. Cliff Detty, 46, died in April while in restraints at Santa Barbara County’s Psychiatric Health Facility.</p>

While Son Struggled with Mental Illness, Father Fought His Own Battle

Cliff Detty's death reveals scope, limitations of seemingly impenetrable mental health system. First in a series