In acknowledgment of National Financial Awareness Day and the anniversary of the Social Security Act this coming Sunday, we’d like to repost a blog written in 2021 by Tristan Fitzpatrick.
This Saturday, August 14, is National Financial Awareness Day and the anniversary of the Social Security Act. We acknowledge each because they both raise awareness about the importance of guaranteeing a secure retirement.
While we do not know the origins of National Financial Awareness Day, its purpose is clear: to shine a light on the precarious state of Americans’ financial security. As the wealthy and well-connected continue to see their net worth soar higher and higher, stagnant wages and a rising cost of living threaten many workers’ ability to prepare for retirement. Fifty percent of American households, for example, live paycheck to paycheck, putting the goal of retirement saving out of reach for too many of our families and friends.
National Financial Awareness Day is recognized on the same day as the anniversary of the Social Security Act, which was signed into law by President Franklin D. Roosevelt 86 years ago on August 14, 1935. The act established the Social Security program, a federal initiative that extends disability, retirement, and survivor benefits. The spur to create such a program providing these benefits became evident during the Great Depression, as one in two Americans died in poverty following the market crash of 1929.
Social Security is primarily financed through employers and employees with payroll taxes. As of 2021, employers and employees each pay a 6.2% tax on wages up to the taxable maximum of $142,800, while the self-employed pay a 12.4% payroll tax. According to the Center on Budget and Policy Priorities (CBPP), the average retirement benefit is a modest $1,514 per month. Without Social Security benefits, the CBPP estimates that four in 10 Americans 65 and older would fall below the poverty line.
As we note this dual remembrance in a time of increasing retirement insecurity, we hope that policymakers prioritize protecting defined-benefit pensions for our nation’s dedicated public employees. Pensions ensure that our public employees can retire with the security and dignity they deserve after a lifetime of public service.