The United States is a country that is best known as a world power and as the land of opportunity. Thus, one would assume that a government as strong as the United States would have proper laws and resources in place. However, the government continues to struggle in many avenues such as social security. The United States is ranked as number 31 out of the 35 OECD (The Organization for Economic Co-Operation and Development) countries, which compared the “social security benefits for median workers as a percentage of earnings”(). On that account, this is a clear indicator that it is necessary for our nation's benefits system to improve in order to be able to compare to other developed countries such as Israel, who ranks as number two out of all OECD countries. Leading to the point of this paper, which is to compare the social security benefits of the United States and Israel, and hopefully to allow a clearer understanding of where we as a country stand compared to one of the leading distributors of social security benefits. Hence, from this comparison one will have a better understanding of the sources of funding whether they are from either federal or state (or from both), pension amounts, setbacks, ways to improve. Such improvements are extremely overdue for a nation that is considered to be a world power.
UNITED STATES – BENEFITS + DISADVANTAGES
Before going into the specifics of social security, one needs to have a proper understanding of what the overall goal and purpose of such a governmental program is. With the fundamental goals of such benefits being similar for almost every country around the world, which is to secure a decent standard of living (). This ultimately depends on where one lives; however, the United States benefits system targets retirees that are over the age of 66 years old (). Therefore, to qualify for these retirement benefits the individual needs to earn credits by working a certain amount of years to reach eligibility, which ultimately differs per person. For instance, if a person was born after 1929, then they need to work for 10 years to earn 40 credits to be eligible for social security benefits or for disability benefits. With a maximum of four credits being awarded each year in relation to one's total yearly earnings, needing a total of 40 credits to reach eligibility. The year an individual was born distinguishes what age an individual is eligible for full benefits. Likewise, the pension amount that an individual would receive when eligible, will differ by person and will be based on an average of how much they made yearly while working to match the standard of living (CITE).
On the contrary, if an individual retires at 62, which is the earliest age one may retire without receiving full benefits, they will receive a reduced percentage of the benefits because they are retiring before the required age (). Yet, if one decides to retire before the age of 62, they will not get the benefits until they reach their retirement age, with a further reduced benefit amount. Which may be up to 25 percent of the original amount. Although, if there is a case in which an individual has to have an early retirement because of health reasons, then they may apply for social security disability benefits which is around the same amount one would get at their full retirement age (). Moreover, if an individual has a delayed retirement there are two ways in which they may increase their overall benefits. The first being that with every extra year working past the retirement age, the higher the individual’s social security record, which correlates to the possibility of greater benefits. Secondly, if a person chooses to continue working after the retirement age, they will be awarded a specific percentage per year until the cut off age of 70 years old().
The social security benefits program in the United States has various cases that are brought up to allow our country to be prepared for any scenario possible. This may or may not be the reason why as a nation the United States is ranked as one of the least efficient pension programs among the thirty four OECD nations(). With other retirement benefits included for widows/widowers, benefits for family members, spouses benefits, benefits for a divorced spouse and children benefits() Each of which having further detailed qualifications as to what is required for eligibility . Such as for widows or widowers being eligible for partial benefits at age 60 with the optional choice of switching to receiving full benefits at full retirement age(). While having many different factors that are involved with family member benefits including; eligibility for spouses that are 62 years or older, former spouses, children up to 19 if they haven't graduated from high school yet, and if one has a disabled child they will be eligible no matter the age(). With the case of which a spouse is not able to work the needed amount of hours to earn the credit to receive full benefits, one may receive benefits from their spouses on top of receiving half of a retired workers full benefits; However if a spouse's pension amount is greater than the others, the overall pension benefits will equal the higher spouse's benefits(). Lastly, describing the qualifications required for a dependent child to receive benefits from one's guardian which include; having to be under 18, a full time student between the ages of 18 and 19, unmarried, or disabled before one turns 22().
Moreover, there are disability benefits, survivor benefits and medicare that are also involved in social security. In order to receive disability benefits it depends on the individual’s age and when he or she became disabled(). This will indicate how long one needs to have worked to receive disability benefits. For example, if a 23 year old individual acquired a disability, then they would need to have worked for at least a year and a half to earn the six credits needed to be eligible(). With the amount of credits required increasing as one continues to get older, meaning one would need to work longer to acquire more credits. With survivor benefits taking place when an individual that pays for social security tax dies and their benefits are passed on to their family members. There are only a few individuals that may take possession of the deceased benefits which include; a widow/widower at the age of sixty or a a disabled widow at 50, a divorced spouse, unmarried children younger than eighteen, dependant parents over the age of 62, and disabled children before the age of 22().
Yet surprisingly, the building of an individual’s social security credit can help aid in the eligibility for medicare down the road(). Which just shows how interconnected all these governmental programs are, especially since they’re all funded by the governments. Having 24 percent of our national budget being spent on social security benefits, translating to 916 billion dollars as of the 2016 fiscal year(). Being one of the highest budgeted governmental programs behind medicare, medicaid and chip. . The federal government subsidizes most of the budget required to allow the social security program to function properly. Overall providing for three million children and spouses, 10.6 million disabled workers and 6 million of the deceased for survivor benefits(). However this program is funded mainly by payroll taxes just like medicare is, but is divided into two trust funds which are “ The old age and survivors insurance (OASI) and the “ Disability Insurance (DI)” by the United States Treasury (Investopedia). With having such funds, the governments needs to find a way to divide the capital between the two in which case 15 cents goes to the DI fund and 85 cents goes to the OASI fund for every dollar given to one's social security(). While the payroll tax is dependent on a person's earnings as well as if you work for someone, because an employee would pay 6.2 % of their income while the boss would also pay 6.2% of their income(). However if an individual works for themselves then they would have to pay the full 12.4% tax(). Furthermore, the aging population is growing so rapidly that experts believe there will be financial challenges for this program in the future mainly because the “ social security program has been spending more than it has been taking in”(CITE). This alone would be enough to cause the program to become bankrupt.
ISRAEL – BENEFITS, DISADVANTAGES
As mentioned previously, a comparison was made between the thirty five OECD countries to determine who received the best social security benefits based on their salary, and Israel was shown to average 86 percent while the United States averaged forty percent(). The difference is staggering, especially with the OECD average being at around fifty nine percent, showing just how far behind the average our nation is compared to other developed countries around the world(). Which is why this paper focuses on the comparison of two countries that are on opposite sides of the spectrum, to bring forward the differences between how such benefit systems are run. In order to translate the differences into a learning experience for struggling nations like ours. Furthermore, when it comes to a country as advanced as Israel, especially when it comes to science and technology it comes to no surprise that they are yet again a figure of example for countries all around the world. And with a detailed description of how there benefits program operates, we as a country will get a better scope of what is needed to inch closer in the right direction.
When it comes to social security in Israel one may only receive benefits if they are residents of the country(). Dividing the old-age pension into two groups, one of which are for those individuals that reach a certain age which are 70 for men and 68 for women to receive a pension without an earnings test, and the second group are for those that will require an earnings test at the ages of 67 for men and 62 for women(). With no needed qualifications for women that are “ widowed, divorced, abandoned, married to an uninsured husband, unmarried and immigrated to israel at age 57 or older, or receiving a disability pension during the month before reaching the retirement age”(). Having three different supplemental groups, the first being a deferred pension supplement which aids for women between the ages of 62 and 68 and for men that are between the ages of 67 and 70, specifically for those that have not received an earnings test. While a dependent’s supplement gives benefits to those that are dependent on another, such as a spouse, a housewife, if a child is in the army and a widow in the case that they aren't already receiving benefits(). If a widow is already receiving benefits then they are not eligible to receive the dependents benefits. While the third supplement is for seniority which targets those that have more than 10 years of work or contributions. In general one must acquire at least 60 months of contributions in the past 10 years to be eligible for benefits.
With disability pensions in Israel there are no qualifying periods, meaning that one may apply anytime throughout the year to receive such benefits. However to be eligible, one must have a total assessed degree of disability of either forty percent, fifty percent, or sixty percent, but higher percentages are possible. Having forty percent of a disability correlates with a single impairment, fifty percent correlating to a disabled spouse such as a housewife, and sixty percent disability correlating to two or more impairments(). Although, to be able to get to such percentages, the individual will have to go through an array of examinations to determine where exactly they stand. For example, if an individual's leg gets fully amputated, then the doctor will automatically assign him or her a degree of disability of eighty percent ().
Moving on, if an individual is partially disabled then he or she will be paid around seventy four percent of the full pension while if an individual has a degree of disability that is beyond seventy five percent then they will receive full benefits(). With additional assistance for individuals with psychological issues, measuring the degree of disability through percents to give an estimated illustration of the severity of ones issues. While having benefits available for disabled children under the age of 18 that do not have a mobility allowance, a guardian or a foster parent to provide for them(). Furthermore as stated previously, there are many different deciding factors that are taken into consideration before an individual is approved for receiving pensions other than the elderly who will automatically receive some form of assistance whether it be income tested or not.
Leading to the eligible people that may receive benefits from a deceased individual. Starting with a widow that is over the age of forty that cares for their child who is under eighteen years old or if they are in the Israeli military then they will receive benefits. In addition, if a widow is over the age of fifty five and was married to the deceased in the previous year, they will be covered in the case that criteria is met through an earning exam. Having child and seniority increments as well as many different grants that include; a remarriage grant, a bar mitzvah grant, a funeral grant, a spouse grant, and a death grant. With benefits given to widows that have a dependent child under the child increment, and a different benefit given if the deceased had at least ten years of work and the bar-mitzvah grant is given to orphaned boys at age thirteen or to orphaned girls at the age of twelve().
Israel as a country spends 86 billion shekel or 22.8 billion USD on social welfare in 2014, with eighty percent of overall expenditures going to the funding of social security(). Having the number of pension recipients increase by about thirty two percent from the year 2000- 2014, rising from 657,000 to 868,000. In addition there was a sixty six percent increase of the long term care benefit recipients from 96,000 to 159,000(). WIth the highest allowance requiquired for the old-age and survivors benefits program.
With funds being distributed in a similar fashion as in the United States, which is by a combination of the government's expenditures and insured individual/ employer. Moreover, if an insured individual makes more than 3.85% of the national average they need to pay
Relate to class work
Comparing the United States Social Security Benefits with Israels
It is evident that after all the information given about both the United States and Israel one may better understand the amount of time, effort and capitol it takes to support not just one family but millions. Israel provides their citizens with benefits such as __, which is currently not offered in the United States. These benefits will be valuable for all Israeli civilians and will ultimately lead to a happier and sustainable life. If the same opportunities were given to the people of the United States through fundings, it will make the country more self-sufficient.