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Social Security –The Pros and Cons

Social Security is a welfare or insurance program managed by the Government with an aim to provide benefits to the retirees and disabled workers. These benefits can also be paid to the dependents of the deceased workers. These benefits include retirement income, disability income, and medical insurance. The benefits are paid to the survivors in case of death of the employee while he is in service. Most nations in the world have their own distinct social system.  The system that operates in the US is one of the largest Government programs in the world.

Types of Programs

Each country has different systems in place to channelize the welfare measures to the beneficiaries. However, the programs can be broadly classified into two types, one is the defined contributory system and the other one is defined benefit system.

  • Defined Contributory System is one that is most commonly used. It is the system that is similar to the pension funds where the workers contribute a percentage of their income so that they can get benefits when they retire. The Governments also contribute some amount to this fund. It is paid to the retirees on the event of retirement. This also covers the disability and death benefits.
  • Defined Benefit System – is one where the Government pays a fixed amount to the workers irrespective of their contribution. The benefits are paid to the retirees from the amount that is contributed by the workers into the system.

Advantages

This system was formed with the main aim of promoting the welfare of the elderly population so that they can continue to lead a decent lifestyle even after the retirement.

Income – It provides a steady income to the retirees in their old age. It also comes as a helping hand to the survivors or dependents in case of death of the worker. If the breadwinner in the family is disabled, the family gets the disability income to support them further.

Better planning of finances – The workers can choose how they want to benefit from the systems as they can delay the retirement age. The benefits will be maximized if the retirement age is delayed.

Drawbacks

Government funds – Though contributory schemes are based on the contributions from the workers, the defined benefit scheme puts a lot of strain on the Government funds which will eventually mean more taxes will be levied on the working population.

Not all are covered – The system may not benefit all. People who do not have a steady and regular work history may not get the benefits of this welfare scheme.

Though it is a huge expenditure for the Government to fund such welfare programs, it definitely benefits the aged people when they need financial assistance the most.

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About The Blog Author

Teresa Duncan received a degree of Master of Science in Healthcare Management from Marymount University. With over 22 years of healthcare experience (15 in dental), she has unique insight into the world of dentistry. Her specialty is helping dentists and managers increase revenue. By focusing on accounts receivable and insurance management, she helps dentists increase the value of their practice. As a member of the Association of Certified Fraud Examiners, she has a special interest in helping dentists identify and safeguard against employee embezzlement.

Teresa is founder and president of Odyssey Management.

She is a Fellow and Educator for the ICOI’s Association of Dental Implant Auxiliaries. Look for more articles from her regarding practice management, dental implants and oral health care news. She was named 2010’s ADIA Educator of the Year.

Teresa is a member-at-large on the board of the Academy of Dental Management Consultants.

Teresa is a Trustee for the auxiliary education-focused DALE Foundation.

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