ARTICLE 22 of the United Nations Declaration on Human Rights in 1948 declared that “every member of society, has the right to social security.
Do you ever wonder what your life will be like during retirement in the absence of social security arrangements? Social security is discussed as encompassing government or non-government programs that provide monetary assistance to people with an inadequate or no-income. These include child benefits, old age benefits or maternity benefits.
For the interest of this article, we are going to focus on old age benefits as it relates to contributory benefits compared to social assistance programs provided by the state at old age in certain context.
Old age poses important questions and challenges for many people. It is either you have retirement benefits, which your working years contributing towards, or you do not have contributory benefits because you were not part of any social security arrangements during your working years.
We are going to focus on the contributory benefits, as it relates to employee and employer arrangements. Social Security works as a forced savings mechanism and provides a basic income for retirees.
Social Security benefits alone are not enough to provide a decent retirement, though. For that, you’ll have to save on your own. Though the system is well known, many may still wonder: What is Social Security?
We explore the details of this government entitlement program. Although Social Security is most famous for its retirement benefits, it is actually much more than Why social security is our safeguard in old age that.
It includes disability benefit, maternity benefit, survivor’s pension, temporary unemployed benefit and education benefit, also, widows and widowers can get spousal and survivor’s benefits from Social Security.
Social security is a compulsory saving programme for employees, also popularly known as a social insurance policy so as to distinguish it from commercial insurance policy.
One of the popular social security benefits is old age benefit (retirement benefit), the challenge is whether old age benefits will be adequate to meet the needs to retirees in the future.
If the benefits are inadequate, how do retirees supplement their income, since their income earning capacity has declined? This brings to the forefront the need to have additional savings in conjunction with your social security.
Social security benefits help millions of workers keep their heads above water. It can be a complex system, but it is there when you need it, and it helps when your earning ability has stopped or reduced due to disability, old age or any contingency that might disturb earning capacity.
Also, Social Security benefits are particularly important as they come with the cost of living adjustments that are inflation-indexed. In order to be eligible for social security retirement benefits, an individual must have contributed for 180 months which works out to 15 years.
That means you have to be part of the workforce for more than a decade to become an eligible earner.
In order to access social security benefits an individual can either take voluntary retirement at the age of 55 or during mandatory retirement at the age of 60. Social Security contributions are taken out of your salaries with every pay check.
Those payroll contributions help pay for the vast benefits program of the social security administration. That’s where things can get controversial, with some saying that Social Security is too expensive, In the social insurance policy in Tanzania, contributes rates are 20 percent of the basic salary.
The 20 percent divided equally between employee and employer, whilst for civil servants, the contribution rates are 5 percent paid by the employee and 15 percent is paid by the government.
According to the social security law in Tanzania, the contribution rate should be equal between employees and employers or employers must make the largest contribution. On the other hand, self-employed individuals must cover the entire 20% on their own.
If you are approaching retirement, you are likely to think about what a social security check could mean to you. You can estimate your social security benefits and start working on a budget for your post-work years even before you apply for social security benefits. You can also calculate how much your total retirement savings will have grown by the time you leave the workforce.
This should take into account not only Social Security gratuity but also the funds in your monthly pension. Social Security relies on both social and economic foundations. It’s a hedge against financial ruin and destitution, helping people live with dignity.
When people fall into poverty, they suffer and so does the economy. Tanzanians with no income cannot buy goods and services or invest. The idea behind Social Security is to protect individuals and society as a whole by providing a safety net.
Of course, some people pay into the system who do not really need the Social Security checks they eventually claim.
To wealthy people, Social Security retirement benefits are a drop in the ocean of their total financial resources If you are young, you might think of Social Security as the reason your pay check is a little smaller.
You might even grumble about the transfer of wealth from younger people to older people. If a disability keeps you from working, though, you will be glad that Social Security has your back Do not forget to include Social Security payments in your overall retirement income calculations.
Although you probably won’t be able to live off them entirely, they’re an absolutely valuable addition to your portfolio. Planning for retirement is a complex venture, so the aid of a financial advisor could be welcome for some.
If you want to avoid the financial stress so many of today’s retirees face, do yourself a favour and save for what might end up being your single greatest expense during your golden years.
You will be thankful for it later.
- * Silvanus Kuloshe is social security analyst and designer.
- m a i l t o :s k u l o s h e @ gmail.com” skuloshe@ gmail.com