Wednesday, January 04, 2012

Washington Post readers weigh in on whether Social Security is really "insurance" or an "annuity"

There have been some LTE’s to the Washington Post on Social Security means testing.  The basic disagreement  seems to center around whether Social Security is really “welfare”, “insurance”, or an “annuity”.  While we have come to perceive it as largely the latter (mediated by legal spousal relationships), there are some components of the former.

The Dec. 22 editorial “Entitlements v. the poor”, which I wrote about that day, generated an LTE by Thomas L. Schwarz, who writes “The Social Security Administrations shouldn’t care if I’m rich or poor”. Today (Jan 4) there were (more) two responses on “The right or wrong of Social Security means testing”, linking to this letter, here. One person writes that total means testing would discourage separate savings (correct), and the other writes that there should be floors and ceilings between which Social Security doesn’t add to total income.  In that case, what about accumulated assets?  But the writer here refers to Social Security as “insurance”.  It really is not insurance, at least now.

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