The Changing Face Of Social Security Eligibility

On August 14, 1935, President Franklin D. Roosevelt signed into law the Social Security Act, a social insurance fund that would, from that time until the present,  enable Americans to retire with funds sufficient to provide them with basic living expenses until they died. It would also provide for life insurance to aid a bread-winner’s survivors upon death. It would fund the care of America’s disabled, and tide the unemployed over to the next job with unemployment insurance. Since that time, hundreds of millions of Americans have paid into the fund and received the benefits, and the U.S. has remained strong, a leader and beacon to the world, the symbol of a nation just, compassionate, and strong. In part, this reputation was established by the Social Security Act of 1935, and this nation is sure to be remembered by history as a nation that valued each and every citizen and cared for their own. This distinction was not so evident at the beginning, when social security eligibility was more restricted than it is today. Recent events may nullify it in the end.

The Social Security Act covers old age retirement, unemployment, public health services, care of the blind, life insurance, assistance to the elderly, aid to families with dependent children, and maternal and child welfare. Social security eligibility meant you were entitled to one of these programs if you belonged to the group addressed. But in 1935 there were other requirements that reflected the definitions and prejudices of the time.

In the beginning of social security, a worker was defined as a working, white male. Half of all women were not eligible for unemployment and retirement, and over a little less than two-thirds of all African Americans were excluded. The discrimination against Afro-Americans was not principally the practice of the federal government, although the exclusion of certain job categories that were performed primarily by minorities was built into the act and thus indirectly discriminated. Racial discrimination was a result of state control of eligibility: southern states that discriminated on the basis of race did not grant eligibility to African Americans, or they would deem them eligible for less than a comparable white worker or family. In some states, children born out of marriage were also deemed ineligible.

Between 1935 and the present, social security eligibility has evolved along with social attitudes about women, minorities, and occupations. In 1935, employees of commerce or industry were covered, except for railroad workers. Between 1939 and 1990, most occupations gained social security coverage, with railroad workers gaining eligibility in 1951. In 1964 women were also acknowledged to have social security eligibility if they were covered under the act and its amendments.

Occupations are no longer a key factor in social security eligibility. You may have several occupations in your lifetime. You are required to have resided in the U.S. for a minimum of 5 years. The most significant factor for eligibility is whether you have paid the taxes that fund social security. Today, 6.15 percent of your gross pay is taxed for social security under the Federal Insurance Contributions Act (FICA). You pay only half that amount. Your employer pays the other half. Each coverage has its own eligibility requirements and you should look into the one you are seeking. The most common concern is how much you are eligible to receive. For retirement benefits, the amount you receive depends on the amount you paid into FICA. For unemployment benefits, the amount is based on your earnings for a specific recent period before you lost your job.

Into today’s economic climate, the question that concerns most is not how much unemployment you will receive, but how long you can receive unemployment. After several extensions since the world financial crisis began, in June Congress failed to extend unemployment. For 2 million people social security eligibility for unemployment has come to an end. Two million now destitute people may signify the beginning of the Great Society’s end. Let us hope social security comes to mean not only the funding of people’s lives during unemployment or old age, but also the security of the nation’s peace and personal dignity for the individual.

High Yield Money Market Account

If you are not saving anything for the future, then you could be in for a hard road ahead. After all, if you are like most people, you do not plan on working forever. At least this is the goal of most men and women. Everyone wants to retire some day! This is why it is so important to look into methods of saving for the future. One way to go about this is with a high yield money market account. This can come in the form of a high yield savings account, as well as a Roth IRA, or other kind of independent retirement account. The key is to get started at a fairly young age, so that you do not have to worry when the time comes.

There are a few routine high yield money market accounts that everyone should look into when they get a chance. These can be found online at websites like Vanguard.com, EverBank.com, and PersonalSavings.AmericanExpress.com. It is prudent to take some time and look over these online. Especially if you are seriously interested in a high yield money market account. You see, this is where so many people lack or fail. Most people make the mistake of always spending beyond their means, and sadly never investing any money for the future. The problem with this is the debt accumulation over the years, as well as the lack of money saved for the golden years.

There is no magical bank account that randomly appears when you hit a certain age. This is why it obviously pays to be ready for the future with a high yield money market account. The older you get, the closer you are to retirement. The last thing you want to do is wait until you hit your fifties to begin saving for retirement. At this point it is very tough to do, and far too much time has passed. If you begin saving at a young age like 25, you can really be set for your retirement phase of life. In fact, with the right high yield money market account, you can have plenty of money saved by that time.

If you need assistance with a high yield money market account, then you should really try speaking with a financial advisor. This kind of consultant can provide you with plenty of tips for saving money, and investing for the future. Just do not forget about websites like Vanguard.com, PersonalSavings.AmericanExpress.com, and EverBank.com. These sites can assist you greatly with high yield money market accounts, and making the right choices to get started saving for the future.

Your 401K Plan – Can You Bank On It?

Although often touted as a retirement firewall, the 401K plan has come under recent attack by many financial pundits as a pie-in-the-sky dream, founded on a dodge, finally exposed by our financial crisis for the miserable fraud that it always was. This is alarming for the millions of baby-boomers who have been trusting in deriving at least 4 percent of their yearly retirement income from their 401Ks. Is this just more fear-mongering, or is there really something to it?

The reason for this hostility is obvious enough, according to a recent Time magazine article. Whatever money you put into your 401K ten years ago, take about 25 percent from that and that’s what your 401K is worth today. You would have done better to put your savings into a savings account (at least they’re insured), or stuff your mattress with the cash. If the 401K plan is such a disaster, why do financial planners, whose job it is to devise a portfolio of holdings that they claim will keep a retiree in the black for 30 years, still advise their clients to count on this leaking bag?

It seemed smart enough when it first came out in the early 80s. It was named after the section of the tax code that permitted it. You pay into it by automatic deductions from your pay. You never get your hands on the money, so you can’t spend it. It wasn’t as though you couldn’t drop it if you wanted. If your financial condition required it, you could suspend it any time you wanted – it was your call.

I can save my own money, you might say, but there’s more to the 401K plan than forcing discipline on you. It’s better than a savings account because your company matches what you contribute. Most employers liked it better than their pension plans, which always reduced their bottom line. Most dropped those plans and took up with the 401K system instead. Unlike company pension plans, if you left the company, the money in it was all yours. Best of all, it couldn’t be taxed. The IRS does get some in the end, a levy they call it, a tolerable percentage. Your net income doesn’t include your contributions, so you’re being taxed for less than what you actually make. It was conceived as a well paid executive’s benefit, but it quickly became available to anyone who could stand to have a meaningful amount withheld from each paycheck.

That’s not as bad as you might have first thought. Yes, the National Bureau of Economic Research predicted that an average 401K plan, over the life of a career,  would provide about 50 percent of retirement income, but the truth is that today’s retirees can expect their plan to render a mere 8 percent. The reasons for this poor return mainly falls on the participant. Most didn’t contribute enough to hold the amount needed to cover 50 percent of their retirement. Poor investments in other financial vehicles required the participants to cash in early. Other investments are critical to cover the other percentage of retirement income the plan doesn’t cover. The recent crash has wiped out many of these investments, causing the retiree to draw more from their 401K than they expected. The problem, then, is not that the 401K with employer contributions won’t result in the expected savings. The problem is that other investments may well cause you to use more of your 401K savings earlier than expected in your retirement.

Yes, the 401K plan still has the potential to support a retiree in the future, that is, if enough is contributed. Raising your contribution will at least assure you that there is more to draw on when all else fails. Other schemes are being proposed, but the 401K still has a life and can still provide the income to future retirees when they’re in their golden years.

Lowering your Risks with a 401k Investment Plan

Did you ever realize that over the entire country, a quarter of all households have just $1000 in what they own, apart from their house? And half the country lives with no savings over $25,000 – other than their main house, Lots of those people are looking at looming retirements coming up too. It’s the most maddening thing about preparing for retirement – it is unbelievably easy to take all the right steps and to secure yourself against a miserable old age. And yet it never seems to be possible to actually get around to doing it. When it comes to doing the sensible thing in personal finance, it’s never about how you have a lucky day and come by a lot of money; it’s all about how your luckiest day is the day you decide to face your biggest challenge – turning responsible. But should this be that day and you should decide to bite the bullet and do what is best for your 401k investment plan and secure your future, here’s what you do.

The first rule of surviving your entire retirement intact is to start contributing to your 401(k) at work today. If you have one now, you could actually count yourself lucky – lots of struggling employers have actually suspended their 401(k) programs. There is this new online tool that the Bank of America has recently launched that you could use to check how healthy your 401k investment plan actually is. The tool takes a look at how the participants in the program save, how they invest, when the participants plan to retire, and how how well the plan protects participants’ nest eggs like they were sacred. According to the tool, if at your place of work, only less than seven out of ten employees actually participate, then that 401(k) investment plan is headed for disaster. The really good ones have eight or nine out of every 10 employees actively participating.

An evaluation by a retirement advisor might be a good idea. He typically looks at your financial life, and scores you on a scale of 1 to 10 for how safe or risky your plan seems – to look at the pieces are all arranged. The retirement advisor will typically score you on certain behavior patterns. If you’ve never asked your employer for an investment strategy,  if you don’t make full use of what your employer would match in 401(k) contributions, if you don’t save at least 2% of your income every year, if they catch you concentrating your 401k investment plan on certain specific kinds of assets or all on stock in the very company you work for, they call you a sucker for risky retirement behavior.

Lots of people don’t really actively manage their 401(k) investment plans. If a person starts out contributing 7%, it’s likely that he will let that arrangement run to the end of his working life. That’s not the way it’s supposed to be – as you keep working, you’re likely to earn more each year through raises and better jobs. That contribution rate needs to keep up with how much you make. In fact, you can actually apply with your employer to automatically raise your contribution rate anytime you start to make more money. Remember what was said in the last paragraph about concentrating too much with your 401(k) investment portfolio in shares of the very company work for? That counts as putting all your eggs in one basket. Should your employer fail as a business, not only will you lose your job, you lose your nest egg too. It’s all about pulling back on the risky behavior when it comes to your retirement.