One of the questions on the minds of Texans seeking to leave the union is whether Texas will still receive Social Security payments if they leave the state, experts spoke with. newsweek About what they think will happen.
Although not an overwhelmingly popular concept, some Texans have expressed support for greater freedoms and full secession from the United States. But some wonder what a move of this nature would mean for benefits such as Social Security that residents have paid for throughout their lives.
“If I opt out, will I still receive my monthly Social Security check?” one user posted in the Texas Patriots’ Facebook group “Ask to Leave”.
According to Social Security experts, the answer to that question is a little complicated.
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Social Security was originally established under the Social Security Act of 1935 as a federal program to assist the elderly, disabled, and survivors of deceased workers. This funding is entirely funded by payroll taxes under the Federal Insurance Contributions Act (FICA), which means that support for retirees relies on contributions from active workers.
Since Social Security is a federal program administered and distributed entirely by the federal government, problems would arise if Texas were to actually secede from the United States.
“When a state secedes, its residents are no longer subject to U.S. federal law, including the Social Security Act and its subsequent amendments,” said True Tamplin, founder of Finance Strategist. Newsweek.
Tamplin said some believe that perhaps through secession, residents of the seceding states would no longer contribute taxes to federal programs and therefore lose all eligibility for Social Security benefits.
And unfortunately, that means all residents’ previous contributions remain within the federal system and cannot support them when it’s time to retire.
“This program does not function like a personal savings account, but rather as a social insurance system,” Tamplin said.
Operating as a new state, Texas will have to establish its own rules for how to support retirees and disabled people who have traditionally been covered by Social Security and SSDI benefits.
“If Texas is no longer part of the United States, Texas will need to find new ways to help these people,” said financial expert Michael Ryan, who runs michaelryanmoney.com. . Newsweek. “This is a big undertaking, and the state of Texas has to be very smart about how it handles the funding to make this a success.”
If this is the case, Texas would have to enact and explain new rules, which could be a major challenge given the number of people involved.
“Imagine how confusing it will be for people to understand the new rules,” Ryan said. “So what about residents who travel in and out of Texas for work? Or what about companies headquartered in Texas?”
Still, this conversation may be contentious, given that the U.S. Constitution does not allow for state secession. After the Civil War, the Supreme Court ruled: texas vs white (1869) Stipulated that states could not unilaterally secede from the Union.
Therefore, any act of the insurgent Texas Legislature is invalid, even if ratified by a majority of the people of Texas.
The potential financial responsibilities of Texas to residents now and in the future who expect monthly Social Security checks can be an overwhelming hurdle as well.
“Leaving the union would be devastating for Texans,” said Kevin Thompson, a certified financial planner and founder and CEO of 9i Capital Group. Newsweek. “Texas should take ownership of all Social Security benefits on behalf of the state.”
All Medicare and Medicaid programs, along with other social net programs, would fall under the jurisdiction of the Texas government, potentially putting some of the state’s most vulnerable residents at risk. It means something.
“The social security system is likely to change under the new regime,” Thompson said. “Maybe it still exists, but it might look very different than it does now.”
While it is possible that money Texans have already paid into the system could be transferred to the state, there is no standard legal framework to ensure this. Negotiations will need to be discussed, and Texas and the Social Security Administration will likely have two very different goals, especially since the benefit fund for Social Security is expected to be depleted by the early 2030s.
But some think the U.S. will eventually treat the issue in a similar way to how it treats Americans moving abroad.
Although moving abroad does not immediately disqualify an American from receiving Social Security benefits, withdrawal could have an entirely different meaning due to potential tensions between Texas and the rest of the country. There is sex.
“There will almost certainly be litigation and it will be resolved in the court system,” said Tyler Meyer, a financial planner and president of QED Wealth Solutions. newsweek. “We would expect some sort of settlement where benefits would be reduced but not completely eliminated. In other words, a compromise seems most likely.”
While this may seem like a refund based on deductions, “it has to be weighed against the overall health of the Social Security Trust Fund, which we all know is not in very good shape,” Meyer said. he said.
Despite the fringe push for state secession, Meyer argues that situations like Social Security provide a convincing example of how complete secession never proves unlikely. I believe there is.
“The state system and the federal system are so intertwined that it’s completely inconceivable that something like this could happen,” Meyer said. “I think it’s highly unlikely that politicians and the public as a whole have the political will to make this happen.”
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Newsweek is committed to challenging conventional wisdom, finding common ground and finding connections.