Arthur J. Altmeyer
THE FACTS ABOUT OLD-AGE BENEFITS
Excerpts from Statement by Arthur J. Altmeyer Washington, D. C., October 26, 1936
The following excerpt from the Press Release of October 26 was made to correct certain misapprehensions regarding taxation under the Social Security Act. It refers particularly to the provisions for Old-Age Benefits as follows:
"The facts are that the Federal Old-Age Benefits section of the Social Security Act goes into effect January 1, 1937, and under these provisions a nation-wide retirement benefit plan is being set up whereby workers will build up rights to the payment of regular monthly benefits beginning at age 65 in proportion to the wages they have earned prior to that time. These benefits will always amount to more than the worker has paid in taxes, no matter how young the worker was when he started paying taxes and no matter how high his wages have been during the time he has paid taxes.
"Moreover, every worker eligible--and it is estimated that 26 million will be eligible at the outset--will receive a monthly retirement benefit upon reaching the age of 65 larger than he could purchase from any private insurance company with the taxes he will have paid the Government. These monthly benefits will range from $10 to $85 a month. If a worker dies before reaching age 65 a lump sum payment is made to his family. This lump sum will amount to 3 1/2 % of the total wages he has earned after 1936. If he dies after reaching age 65 before he has drawn out monthly benefits amounting to 3 1/2 % his family will receive the balance of the 3 %. The tax that the employee must pay amounts to only 1% for the first three years and does not reach the maximum of 3 % until 1949.
"Several concrete examples will best illustrate how much the monthly benefit will be. Let us first take the case of a young man 35 years of age, who enters the system on January 1, 1937, and remains in the system for 30 years. If he earned an average of $100 per month during that period he would receive a monthly pension of $42.50 for the remainder of his life. Now let us take the case of an older person who was 60 years of age when he entered the system on January 1, 1937, and who earns an average monthly wage of $100. When he retires 5 years later he will receive a monthly pension of $17.50. The young man, during the course of his life, would have been taxed $900, and his employer would have been taxed $900, but if he lives out a normal life expectancy he would receive in benefits $6,000. The older man would have been taxed only $72 and his employer an equal sum, but he would receive in benefits if he lives out his normal life expectancy, a total of $2,500.
"The misleading statements that are being circulated in pay envelopes and on plant bulletin boards fail to mention that these benefits are paid as a matter of right regardless of the amount of property or income a worker may have. A worker is not required to show that he is in need and without relatives who can support him as is true in the case of state old age pensions. The Social Security Act not only provides state old age pensions for those already aged and in need, but also provides for the future a decent self-respecting system of old age security on a nation-wide basis which is designed to encourage initiative and thrift by keying the benefits to the wage-earning history of the worker.
"As regards benefits, the significant fact is that for the first time in America it is possible for a worker to build up in an orderly fashion and under Government protection some degree of financial independence for his old age in direct proportion to his earnings and not as charity.
"As regards taxes the important facts to bear in mind are that the workers will pay only 1% for the first three years and never more than 3% and that this tax is matched by an equal tax paid by employers."