Allegro

Social Security: an entitlement we are entitled to!

Volume 125, No. 4April, 2025

Martha Hyde
mhyde@local802afm.org

For years, Social Security has been disparaged by opponents as an “entitlement,” as if that were a bad word. I want to turn this on its head and say that we have an earned right — yes, an entitlement — to it. I would also like to dispel some of the mountain of misinformation about this benefit. As musicians and as workers, we have earned a right to Social Security after having paid into it our whole lives, and we should not let it be chipped away from us.

Disclaimer: the information below is what I have found on my own and does not represent “official advice.” The official information is at www.ssa.gov and I encourage you to do your own research. I also encourage you to take financial planning seriously and perhaps consult a financial planner. I am not a financial planner. Any opinions expressed here are my own and do not necessarily represent the members, staff or other officers of Local 802, but I do stand by my facts.

First, some history. Social Security was signed into law on August 14, 1935 by President Franklin D. Roosevelt to prevent poverty for elderly and disabled Americans. It has worked, not only to prevent poverty among seniors but to reduce the inequality between low and high wage earners.

Some FAQs:

  • When can you start taking Social Security? Answer: it depends. See the full chart here.
  • How much will you collect on Social Security? Answer: it depends. See the calculator here.
  • Is there a difference between Social Security and Disability? Answer: yes, but for the purpose of this article, I’m focusing on “regular” Social Security, based on how much you’ve worked in your life. SSI (Supplemental Security Income) and SSDI (Social Security Disability Insurance) are separate programs administered by the Social Security Administration.

Back to misinformation. Many doomsayers talk about Social Security “disappearing.” Let’s look at it carefully.

Social Security is funded by a 12.4 percent payroll tax, half paid by employers and half by employees on the first $176,100 yearly wages. Any wage income above $176,100 is exempt.

Remember, this is one of the huge advantages of working as an employee (i.e. W-2 income) vs. as an independent contractor (i.e. 1099 income). As an employee, your employer contributes half of your Social Security taxes. As an independent contractor, you are responsible for the full 12.4 percent Social Security tax.

This tax money goes into the Old Age and Survivors’ Insurance (OASI) trust fund. (For this article we will deal with the OASI and not the Disability Insurance trust fund. We referred to the OASI above as “regular” Social Security).

When a worker retires, they receive a steady benefit which is a percentage of their average earnings while working. The benefit is paid to that worker for the rest of their life. If the worker dies and there is a surviving spouse, the spouse gets a monthly benefit for the rest of their life.

The benefit amounts, called the Primary Insurance Amounts (PIA), are tiered to give an advantage to lower wage workers. For a worker who earned an average monthly wage of up to $1,226 the monthly benefit is currently 91 percent of that wage. If the average monthly wage is between $1,226 and $7,391 the benefit is currently 32 percent. And above $7,391 it is currently 15 percent.

The OASI is facing a funding shortfall. It has been paying out more than it takes in for 15 years and will be exhausted within the next decade if nothing is done. If that happens the fund will only have payroll tax income and it expects to be able to pay 79 percent of scheduled benefits from that point on. This leads to a basic math problem: either income needs to increase, outlay needs to decrease or both.

Between disinformation spread by people ideologically opposed to Social Security and the real funding problems, there is a lot of misunderstanding. Let’s take that on.

The OASI pays out more than it takes in because there is an increasing number of retirees compared to active workers. It does not mean Social Security is going bankrupt or will cease to exist. The benefit will be reduced if nothing is done but it will not disappear.

The OASI is not underfunded because the government “raided it.” The OASI is only permitted to invest in special government securities, which are considered the safest investment and which are insulated from market volatility present in publicly available government securities. The OASI is not being “raided.” It is loaning money to the government and being paid back with interest.

Social Security is not a Ponzi scheme. In a Ponzi scheme, people are persuaded to give their savings to a con artist, who promises them improbably high returns. The con artist skims money off the top and uses the leftover money to pay earlier “investors.” The scheme collapses when there is not enough money to pay everyone. In contrast, Social Security is a 12.4 percent tax on payroll which then promises and delivers a guaranteed monthly benefit for the rest of the retiree’s life.

The revenue increase needed to shore up the OASI could easily be accomplished by raising or eliminating the salary cap which is currently $176,100 annual income subject to the tax and possibly taxing non-wage income which accounts for most high earner income.

Social Security is a legitimate entitlement. An entitlement is a right given by contract, law, contribution or membership. For instance, an 802 member working under contract is entitled to representation by the union. A worker who has contributed payroll taxes to the OASI for their entire working life is entitled to the benefit when they retire. Ideologues have turned the word into a slur and people have largely bought into it. Entitlement is not a bad thing. Let’s re-claim it.

Martha Hyde is a longtime Local 802 member and Broadway woodwind doubler. She’s a member of Local 802’s Executive Board and serves on the Local 802 health fund, the AFM pension fund, and the DECIBAL steering committee.

Sources for this article: