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“Social Security won’t be there for me.”

I used to say that in my thirties and forties, not long after I learned that the government raised my retirement age from 65 to almost 67 in a change to Social Security that took affect in 1983. That was also before I understood what benefits are provided by the Social Security System and the fact that the government can’t allow Social Security to fail. Not entirely, anyway. They can only muck it up, like everything else they tamper with.

A complete failure of the Social Security system would result in an economic strain on the country that would have a cascade effect. Money not being supplied to retirees would not be spent on items that drive the economy. In 2013, almost 58 million Americans will receive $816 billion in Social Security benefits. That’s money of which most is returned to the economy through required spending of those who receive it.

If Social Security didn’t exist millions of elderly would find their way to shelters, hospitals, and the streets. Not that there isn’t that situation today, but the increase would be staggering and far more would be spent on social services by the government with no benefit to the economy, than is now spent on Social Security.

What is likely to happen is that the age requirement to begin collecting full Social Security benefits will increase again, as was already done for those born after 1937. Those born before 1938 can retire with full benefits at age 65. Time is then added for each year until 1960 and after, at which time those who qualify must wait until age 67 to obtain their full retirement amount. See The Retirement Calculator.

We’re told it’s because Americans are living longer and I don’t argue with that, but depending on what job a person has had through their life, doesn’t necessarily mean that all these people are working longer. An office worker can work to age 75 and beyond from behind a desk. A manual laborer is lucky to continue in his job past the age of 60.

What it amounts to is bean counting by the government. The longer you extend the age of full retirement the more will die before applying for benefits and fewer will collect for longer periods.

Clouds are on the horizon for changing  Social Security.

For you John Boehner fans, The House Republican Leader wants to raise the retirement age to 70 for those who won’t retire in the next 20 years. For Obama fans, some disdain for Boehner should be held back for The President. His creation of a bi-partisan deficit reduction commission has panel members looking to scale back Social Security benefits.

Even the Obama budget proposes to change a basic formula for calculating payments to retirees. The cost-of-living formula for Social Security –  as well as military pensions and federal worker pensions – would be changed to something called the “chained CPI.” CPI means consumer price index, but this change would “adjust” the cost of living formula on the assumption that, when the price of an item goes up, retirees will stop buying it and substitute something else, and so the price increase of the original item should be ignored.

Why do the well-paid and benefit heavy elected ones target Social Security to fix the deficit? Lets look at a basic example: Average Joe needs about $7000 in minimum contributions to the system through Social Security tax (1/2 that out of his paycheck,  if he works as a W-2 employee – the employer pays the other 1/2). If average Joe qualifies, the Social Security System provides the following benefits him for his 10 years (40 quarters) of minimum, entry-level coverage :

1) A retirement income for Joe starting as early as age 62;

2) A retirement income for Joe’s wife, as early as her age 62, even if she has never had earned income;

3) A full medical system at age 65 (Medicare) for the remainder of his life;

4) A full medical system for his wife at age 65, even if she has never had earned income;

5) Disability benefits for Joe in the event of injury today;

6) Disability benefits for his wife even if she has never paid into the system;

7) Dependent benefits for a disabled, minor, or dependent children, even after Joes death;

8) Dependent benefits for his dependent parents;

9) Child care benefit for Joe’s wife to care for any children at home under age 16 in the event of Joe’s death, disability, or drawing of his retirement benefit;

10) Death benefit for Joes widow.

Joe gets all of this for $7,000? Yes. Our Social Security System – possibly the greatest financial investment available to every American – has been misunderstood, maligned and ignored by nearly everyone. The system is not meant to be just a retirement plan, it is more precisely a safety net for all Americans providing rudimentary retirement, disability and medical coverage at all ages to nearly all Americans.

What Joe, his wife and most Americans overlook is the tremendous safety net provided by this system. Lets look at a few examples.

What if Joe dies tomorrow? His widow still gets a retirement benefit, as early as age 60. If she is personally disabled, she could get benefits as early as age 50. She also still retains her full Medicare coverage at age 65, (as Joes widow), even if she has never paid a dime into the system.

What if Joe is disabled by a car accident at age 50? Joe still qualifies for a full, unreduced Social Security disability check as if he had waited until his full retirement age to stop working, and Joes wife does not lose a single benefit. And if Joe is fully disabled, after two years he also will qualify for Medicare even though he is well under 65.

What if Joe and his wife divorce? Once they have been married for at least 10 years, Joes wife is covered under Social Security, even if she has never paid into the system. This means she retains her retirement, disability and Medicare coverage forever.

Finally, what if Joe decides to continue to work even after reaching his retirement age of about 66? For each year that Joe postpones his retirement, his annual benefit goes up by roughly 8%. This 8% return is certainly better than most Americans can do with their own investments, and Joes delay does not hurt his wifes benefit or their Medicare coverage.

Most Americans are aware that Social Security provides them with a retirement benefit. What they do not realize is that it also provides disability, medical and dependent coverage for themselves, their spouses, their parents and their children.

Are there funding problems with Social Security? Absolutely, but the problems that need to be addressed, aren’t. Such as the rise in people claiming disability, who are conducting fraud. As much as 25% of those collecting disability payments are suspected of gaming the system with the help of corrupt doctors and lawyers.

Our elected officials also need to stop “borrowing” from the Social Security system to fund other programs. If all the money taken from Social Security over the years was returned, there would be enough money in Social Security for the next 25 years.

If the government wants to put a dent in the deficit I suggest they stop borrowing money from China in order to give it away as foreign aid to countries located in the Middle East. We can start with canceling that $1.5 billion promised to Pakistan every year.