This is a guest post from Robert Brokamp of The Motley Fool. Robert is a Certified Financial Planner and the adviser for The Motley Fool’s Rule Your Retirement service. He contributes one new article to Get Rich Slowly every two weeks.
We hear a lot about the doubts over the future of Social Security. Here are a few I’ve come across:
- “Three-fourths of those 18 to 34 don’t expect to get a Social Security check when they retire.” — USA Today
- “My husband and I are both 28, and we laugh every time we hear [‘yes, you’ll receive Social Security’]. No, we won’t receive Social Security, even though we’ve both been paying into it since we were teenagers…I can’t think of one of my peers who expects Social Security to still be around when we’re retirement age. Call us bitter.” — A comment to my last column (“When Will You Be Able to Retire?”)
- “Six in 10 Americans who have not yet retired believe they will get no Social Security benefits when they retire, more pessimistic than at any time since Gallup began asking this question in 1989.” — Gallup
- “According to one survey, 100% of people married to Robert Brokamp wish he would shave his head rather than try to pull off a comb-over.” — My wife
If you’re among the doubters (of Social Security, not my hairdo), then listen up: The following paragraph is the most important group of words you’ll ever hear regarding Social Security. It’s key to understanding how the program works, and whether you’ll get anything. Here it is:
Social Security is predominantly a pay-as-you-go program. Most of the payroll taxes that are collected from today’s workers go into the checks of today’s beneficiaries. Thus, as long as there are people working and paying payroll taxes, there will be money to pay Social Security benefits.
According to the most recent Social Security Trustees report, from 2037 to 2084 payroll taxes will be enough to cover 75% of projected benefits. That’s not great, but that’s not nothing, either.
People who think that they won’t receive any Social Security benefits must believe one or all of the following three things:
- In the future, people won’t work.
- In the future, the government won’t collect payroll — a.k.a. FICA (Federal Insurance Contribution Act) — taxes. Currently, workers “contribute” 6.2% of their paychecks to the Social Security system, and their employers match with another 6.2%; the self-employed pay the whole 12.4%. Another 2.9% goes toward Medicare. As you know if you’ve looked at your paycheck, it’s a separate withholding from income taxes. In fact, the majority of Americans pay more in FICA taxes than they do in income taxes.
- In the future, Social Security will be means-tested to such a degree that the “wealthy” (an arbitrary designation, to be sure) won’t receive any benefits. Those who don’t think they’ll receive Social Security assume they’ll be among these “wealthy.”
I don’t think Nos. 1 and 2 are likely. No. 3 is possible. The program is already means-tested to a degree, since the percentage of income that is replaced by Social Security decreases as lifetime earnings increase. However, I think that if changes to the means-testing formula result in a group losing their benefits completely, it will be a small group — certainly not 60% to 75%, as the aforementioned surveys suggest. I find it very unlikely that a future Congress — elected by future citizens — will change the program in a way that the majority of people who pay FICA taxes won’t get at least some benefits.
Those crazy trust funds
For many years, the payroll taxes collected were more than needed to pay current benefits. The surplus went into the Social Security trust fund, which invested the money in special-issue U.S. Treasury bonds. However, this year — thanks to the stinky economy — benefits will exceed revenues. That’s projected to temporarily reverse, but at some point in the middle of the next decade, the retirement of the baby boomers will cause benefits to exceed taxes. This is where the trust funds come in. They’ll be sold to cover the shortfall.
In my opinion, this is the essence of questions about the future of Social Security: What, exactly, are we to make of these trust funds? Are they truly assets? Here are the two arguments:
- Those who think that the Social Security system is essentially sound will point out that of course the trust funds are real assets. They’re full of U.S. Treasuries, which are considered the safest investments in the world.
- Those who think otherwise point out that since Treasuries are federal government debt, the trust funds contain just worthless pieces of paper with a note written on them that says, “Dear Uncle Sam: I owe you lots of money. Love, Uncle Sam.”
I have to admit, I haven’t quite decided to which camp I belong. I’m inclined to go with the latter. After all, when, say, 2020 rolls around, and the Social Security Administration needs some money from the trust fund, it will take one of these special-issue Treasuries to Uncle Sam and want to exchange it for cash to be sent to retirees. Where will that cash come from? I almost think I need to see a spreadsheet or detailed flowchart or something to fully understand how all that will work. If you have suggestions for how to accurately think about the trust funds, I’m all ears.
For now, plan on getting less
That’s enough talk about Social Security for now (assuming you’re still reading). From a financial-planning perspective, I’ll reiterate my advice from my last post. If you are in or near retirement, plan on getting your benefit. If you’re younger, play it safe and plan on getting 25% to 75% of your projected benefit. But plan on getting something.
I’m sure you have your own thoughts and opinions about Social Security, and I encourage you to share them below. However, let me say this: Often, discussions following articles about Social Security turn into political brawls that degenerate into name-calling and general silliness. So please, all you right-wing nutjobs and left-wing commies, let’s keep it civil. Stick to the topic of Social Security and the facts. And maybe advice for creating a sweet comb-over.
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I have to agree with Miltiadis that the population factor could play a key in the downfall of SS.
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When I last received my SS letter, it clearly stated that,” …by 2037, the payroll taxes collected will be enough to pay only about 76 percent of scheduled benefits.” Do I think that we all will receive “something” by the time we retire, as the writer stated? Honestly, I just don’t know. The amount paid into the system isn’t keeping up with inflation. Plus, SS benefits pays a 3% increase every year (except it has been stopped for a few years starting in 2009). With the funds being depleted by our policy makers and the fact that more is being used up versus what’s coming in, I’m not so optimistic about receiving benefits.
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If your wife THINKS it is sexy to go bald, it IS. Shave your head and put a smile on your face. And hers.
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I’m with commenter #29.
Retirement age to receive full benefits has already been raised for some of us. I was born in 1967 and will need to reach age 68 before I get full SS benefits. Big deal. I likely won’t ever “retire” anyway; I see myself remaining active and earning income well past that age if my health holds out. If it doesn’t, then that’s when full SS benefits plus my own retirement savings will come in handy.
As for “choosing” to not participate in FICA withholding: you always have a choice. Move to another country where you don’t get taxed to provide benefits to you and your fellow community members. Living in a developed country with a high standard of living (safe drinking water, roads, police and military protection, electricity, etc.) means paying some taxes. Deal with it or move to a less developed place where you really see how much it costs for these things since you pay for them yourself, make do without them, or rely on your fellow community members to help you out. Oh wait, is that much different than paying for these things through contributions to a “government” you get to choose? Hmmmm….
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question – anyone do the math on their early vs. normal vs late retirement date SS payouts?
Almost every bit of advice that I see suggests you should wait to the year your benefits max out (in my case 70), but when I run the numbers it looks like vs. early (age 62) start, I wouldn’t ‘break even’ on a cash basis (eg getting to the same cumulative benefit $s) until 78 or 80 (and that’s assuming perfect COLA and no time value of money – otherwise break even is more like 80-83).
So, in my case given family health history & any political/program risk, seems like it isn’t such an bad idea to take benefits asap.
Help me out – am I missing something?
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Yes, because obviously it is necessary to tolerate inter-generational theft via Ponzi scheme in order to have safe drinking water, roads, police and military protection, electricity, etc.
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Shave the head! Funny quote from your wife.
I am glad to know I may be getting something. But what erks me more…is that I have no choice but to shell money out to something that is not a worthy investment for me.
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I’ve always thought that Social Security is a pyramid scheme….it requires that the current working generation is either a bigger population or paying more than the size of the retired generation requires.
No one expected the Baby Boomers, a generation which is more populated than those that have come since…and as soon as retirement age reaches critical mass for that population, we are in trouble.
No one expected that the average lifespan would increase dramatically, meaning that “retirement” is no longer 5-15 years…it’s 10-25. Our generation will have to work longer or pay more to keep that going.
I’m 30, and I don’t want to pull the social security rug out from under those who are in retirement (or close). However, I do think the plan should be phased out. I don’t want the generation after me having to pay more and more to support this pyramid scheme.
If 75% of those 18-35 don’t think we’ll get it, I see that as a clear message we expect the system to change or collapse.
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I agree with your wife.
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I’m in the “it will be means-tested” camp. There are also a few other factors that play into this: prolonged unemployment at 9-10% mean fewer people are paying into the system. How long this lasts will have an impact on the continued solvency of the program. I believe I heard a report that this year SS expects to pay out more than it brings in–a few more years of that pattern could leave the program in a substantial hole.
There’s also news that the US has seen a decline in the birth rate over the last two years. If this trend continues, fewer people–>fewer workers–>lots of retirees would present a problem (see also: Japan).
There’s also news, again recently, that many Americans aren’t saving for retirement outside of social security. So for those who retire and receive 75% of their projected benefits AND who have no other savings for retirement, what will the government do? My guess is that we’ll go even further down the means-testing path. Anyone who can live comfortably on their 401K savings, (decided of course by Congress, who will feel the need to “do something” about retirees living in poverty) will see their social security benefits go to those who didn’t save.
Add into the mix a large and growing deficit, which will at some point lead to higher taxes allowing me to save less outside of social security, I’d have to say I’m on the pessimistic side of this equation.
So, while I appreciate the thought process behind the article, I’m definitely in the bitter/disbelieving camp.
Edited to add: an increased life expectancy also has an impact on how much the program will pay out. People are living into their 90s, which was very, very rare when the system was established. Until this too, is factored into the equation, I doubt it will be solvent for as long as projected.
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All Ponzi Schemes FAIL in the end…
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If you are younger, it doesn’t really matter if you include SS in your retirement calculations since those calculations are just guesses.
For someone in their late 50′s and up – they need a more detailed financial plan which should include some estimate of SS.
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As many above have said, it’s in everyone’s best interest to assume responsibility for one’s own retirement (whatever that turns out to be).
However, let’s not forget that Social Security was created as a safety net to insure that the most vulnerable weren’t absolutely destitute, a goal that is in all of our interests. So the idea that I would expect to “get” anything from a social program intended for people whom I, barring something awful, won’t be counted among, seems ill-informed at best.
CF’s comment above (#28) suggests that, rather than ratcheting up contributions by the wealthy to fund benefits for the middle and upper-middle class, perhaps the income requirements for benefits should be drastically lowered (to revive Social Security’s original intent) and a reasonable flat-rate contribution be imposed, shrinking the pool of beneficiaries and lowering the impact of contribution. Meanwhile, we start thinking of social security as a way to limit extreme cases, rather than an entitlement of reaching an arbitrary age.
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Bob: just shave it!
Without reading all the comments yet, in response to “Aging population, increased longevity, low birth rates” – America isn’t a closed system. It is nearly certain that immigration policies will be eased should the supply of labor ever fall below the rate of demand.
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Thank you Robert! People seem to cling to their belief that Social Security is somehow in danger.
Social Security is adjusted by Congress every 10-20 years to account for demographic changes. This may mean a year or two higher retirement age to account for longer life-spans.
Whatever Congress does to ensure Soc Sec’s long term health, the average American will be paid much more than they contributed! AND, people don’t remember this, it’s also a disability and life insurance plan that pays you if you are widowed or become disabled. That triple package doesn’t even exist on the private insurance market.
And just think, what if ALL your money was in a 401k and social security didn’t exist and you were getting ready for retirement 2 years ago. In 2008, private retirement accounts dropped by $2.8 trillion. How much did Americans lose in Social Security benefits? Nothing.
The point of this post is right on. If you want a nice retirement, of course you shouldn’t JUST rely on Social Security. But you should also take comfort that you will have one constant, guaranteed, life-long source of income in retirement.
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When people think they’re right, the truth is meaningless.
I don’t care much about social security. So I’m paying in for my parents’ and grandparents’ retirement; I’m fine with that. I won’t be having kids so in many ways I have to plan to take care of myself anyway, SS or no. Whether it’s there or not, pays 25% or 75% of expected benefits when I retire, I don’t worry about it.
I do care a LITTLE though. My husband is much closer to retirement age than I am, and has never saved a dime in his life. If he should become unable to work, we would probably have to rely a little on his social security (though I’m working to avoid that). So when I say I don’t care MUCH… I do care SOME. Just not enough to argue about it.
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Thanks to Nicole and “Linda in Chicago” for bringing rationality.
Here, there, and everywhere, a lot of people just don’t seem to realize that we truly do, in America, have the government we choose. Every single service provided by government is something that voters have demanded.
Politicians don’t come up with “pork barrel” budget requests out of thin air; they get them from their constituents. They don’t start oil wars just for the fun of it; they do it because their constituents demand gasoline at less than true market prices. They want to keep their jobs, so they do what we ask them to do.
Agricultural and energy subsidies … government-funded health care for the poor … disability benefits … enormous prisons full of people who could have been educated out of a life of crime if WE THE PEOPLE had chosen to spend our money that way instead: it’s all what we asked for.
You may say that Social Security doesn’t count – you didn’t ask for it. It originated during the Great Depression when thousands – maybe millions – of people could literally have starved to death without it. The government acted to prevent a humanitarian crisis, and voters opted to keep the system in place – and expand it.
If you are willing to give up some other government service in order to ensure income security for all in old age, or if you think it’s time to close out that system entirely, write to your representatives. And vote.
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It is unlikely that SS will be means tested any more than it already is.
Until recently, SS was considered to be a model of government programming. People liked it. A big reason people liked it is because it helps everybody. (Its redistributive properties are even now not well known outside of policy circles.) The SSA wants to keep people liking it. Even politicians will not want it to turn into a TANF kind of program. Nobody likes welfare politically.
And it doesn’t need major fixes, just a few tweaks, though the more we wait, the bigger those fixes will be.
The SSA is full of good people who care deeply about the effects of social security on the well-being of older people. Changes will need to be made, but their focus is on making those changes in a way that will do the least amount of harm, particularly to the people who need SS the most, while still not angering people at higher income levels. That is the focus of by far the majority of their research– how to keep SS solvent doing the least amount of harm.
Politicians, and media… they’re not so much in agreement about what needs to be done.
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Somebody above uttered: “As an aside, there is nothing Ponzi like in the social security scheme. A Ponzi scheme starts from a handful of original members and expands exponentially until it covers the whole population”
The “handful” were the original recipients of SS who got $ without paying in a dime.
It is clear that it has only survived this far because of the influx of new “members” annually. And it is clear that today’s workers are economic slaves to the retired.
The only reason they tolerate this is because of the promise that later on, they will become the slaveowners themselves. Otherwise, it would never have gotten off the ground.
It is a Ponzi scheme, pure and simple. The only variation is that those at the top of the pyramid die off and allow those below to rise another echelon until they also reach the top, at which some point they die off too.
Math does not lie; it is a constant. And the math tells us it will fail if it does not either (a) reduce its payout or (b) gain new revenue.
Work smart and save, save, save. And if you’ve been in the silver market for over a year, congratulations to you. You have hedged inflation for another year.
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We will get whatever the owners of most of our debt and dollars give us. Looking at social security in a vacuum and not at the larger macroeconomic challenges we face is pointless. Continuing to fire up the printing press is not a long-term solution.
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Don Trump is the zen master guru of the comb-over. Spend 10 years meditating in the basement of Trump Towers, and you will achieve enlightenment.
Most find it difficult to live on SS at full benefits. So at 25%, give me a break. I’ll save for retirement on my own and forget SS exists. I think of it as just another tax.
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Shave your head.
I do believe we will have some social security, but we save like there won’t just in case. I rather be safe than sorry, but I don’t accept that there will be nothing.
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This article assumes that:
1) The U.S. government will always maintain a AAA credit rating.
2) Social Security is a relatively good investment.
Neither assumption is even remotely true.
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There is a fourth and statistically real reason why some people do not believe that they will ever receive SS benefits: they believe they will not live to the age where SS benefits are paid. I have a few close friends who don’t believe that they will live to see their 60s, based on family history, health issues, or simply because they have no interest (at their current young age) of living to an age where they perceive their own body will limit their abilities.
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SS has made it more difficult to retire for anyone in the middle class on up. Yes, I said it. It has made it MORE difficult to retire. If I could dump the percent of my salary going to SS in to I bonds and a savings account, I wouldn’t have to put as much into retirement and would be able to travel more often.
Thanks FDR … for nothing.
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Thank you for this article. Why do we have social security? A majority of US citizens do not save sufficiently for retirement, even for necessities/basic level of living. I really don’t see that changing any time soon. Financial literacy is LOW. It is a social safety net that does what it does, preventing a significant portion of retired elderly from falling below the poverty line and becoming an even greater burden on society.
The people who post on personal finance blogs on average are more interested and informed about finances, and feel very strongly about having control over their finances future. But people like that are the minority. And even well informed, well intentioned people have lost their retirement shirts from such saddenly regular meltdowns such as the tech boom and bust, Enrons, Madoffs, housing and and stock market busts. Private sector, the trend is to eliminate pension and other retirement benefits. Yet the solution proposed is to eliminate social security and put yet more money in the stock market? No thank you. I like the idea that some minimum amount will be there for me when I retire, and I don’t want to be surrounded by desperately poor people who are too old or sick to work while I’m retired.
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Hey
I’m just ecstatic to hear that the fund won’t be dried up by the time its my turn!
A very well-needed article.
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Don’t sweat SS. They can tweak the program in tons of ways to make sure it never “fails.”
Worry more about Medicare. Costs grow for reasons outside the control of the program/legislators (e.g. medical advances, new drugs/procedures) and they can’t reduce outflows without (drumroll please) refusing care to folks. Also, if you think retirement planning is hard if you assume zero SS, just try it assuming no/rationed Medicare. Those hip replacements will eat up 10 years of savings…
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When Social Security was created, with payouts beginning at age 65, the average life expectancy was 62 for men and 63 or women. Most people never expected to receive it, because people back then were expected to be reliant upon themselves and their families. It was just an old-age insurance policy for those few people on the far side of the bell curve who made it not only to the average life expectancy, but two or three years past it.
It was never supposed to provide anyone with 25 years of “retirement.” The concept didn’t even exist back then. As life expectancies increased, early recipients enjoyed 25 years of loafing at the end of their lives, thanks to the younger generations paying in, and recovered everything they themselves had contributed in less than a year.
What is wrong with the idea that each of us is responsible for taking care of our own selves? I want to take care of the elderly in our country too, but truthfully in this country age has a higher correlation with wealth than any other factor. The elderly in the USA are ALREADY the richest people here.
Now I know that is not true in every single case, and I am fine with pitching in to help those who would truly be in poverty. But does that mean we should all be auto-enrolled in a Ponzi scheme? And another thing – what do you do about people who have been deadbeats all their lives? Why should we suddenly feel sorry for them just because they are now OLD deadbeats? Guess what, if you’ve spent your life making bad choices you are probably going to struggle in your old age. This system ensures that everyone in both Generation X and Y will struggle during old age, whether they have made bad choices or not.
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Yes, you’ll get social security – just how much is the question?
Excellent article on explaining how Social Security works. The most important takeaway is not to solely depend on social security benefits for your retirement.
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One solution is to lift the cap and tax all earned dollars, not just the first $106,800 (current level in 2010).
I’m not saying I’m in favor of it, but that has been floated as an “easy” fix.
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@Linda in Chicago
You are wrong about your full retirement age. For those born in 1960 or later, the full retirement age under Social Security is 67.
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The reason Ponzi schemes necessarily fail is that they are set up to grow faster than the population, and that the payments to existing members are solely funded by the admission fees of new members, given in exchange of a promise of a future payment. Once everybody is a member, there are no new members to fund payments, and the scheme defaults.
A public pension system does indeed have similar characteristics (thanks to “cheapcookies” above for pointing it out). There is, however, an important difference
A properly constructed public pension system is not set up to grow faster than the population. In fact, the system maintains the pace of the population.
(There is also an argument that your admission fee is not in exchange of a promise of a future payment to you, but that’s much more contentious.)
Ponzi schemes fail when there are no new members and thus no funds for promised payments. Pension systems (properly managed) never get there.
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As a couple of other comments have already pointed out–Social Security (originally called ‘social insurance’, which I find a great deal more accurate) was *never* supposed to fund two decades or more of a comfortable retirement for *anyone*. Retirement is whatever you save for it–whether under a mattress, in a 401K, IRA, or wherever else. (or if you’re one of the lucky few, whatever your company pension gives you). Social Security is supposed to be the last-ditch safety net that keeps the elderly/disabled/orphaned from eating garbage out of trash cans and living under overpasses. To cry about how you’re never going to get back what you put into it, whether true or untrue, is to completely misunderstand what the program is for, IMHO. And if you have a high enough income or a comfortable-enough retirement fund that you’ll never expect to need SS to pay your bills–do you cry about never getting back what you put into your car/homeowners/medical insurance as well?
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agree with @hope
SS should be seen as a way to help low-income seniors (those who could never save in the first place) and not as a pension fund. If you’re earning near an average income, don’t complain that the benefits are very small, some people have to live with that type of salary their whole lives.
I just wish the % taxed from our income wasn’t so high :p
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By the way, what is up with all these articles speculating on what will happen? Will cash be cheaper? Who knows. Will social security exist in the future? Beats me.
Even if speculation is interesting sometimes, you often gain very little. Personally, I’d like to keep these kinds of blog posts to a minimum and focus more on what we DO know, right now. Seems to me that this would be more productive when it somes to personal finance.
Just my 2 cents
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The Great generation deserves the cash more than us anyway. I’m 28 and have had it pretty good so far. I consider Social Security payments taken directly off the top of my paycheck to be a tax on the good life. The folks that are receiving these benny’s deserve my tax.
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I found the article informative. Being 28, I’m one of those “Social Security? what’s that?” people. I plan on making my own retirement and whatever the government throws my way in…oh…about 2047, I’ll toss it into savings. To dwell on it anymore than that brings along bitterness.
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I’m hoping for the best, planning for the worst. I think I’ll get something, but I’m not counting on the precise figure they report to me every year on my benefit statement.
Essentially it will come down to either higher taxes or lower benefits. We have no idea who will have the political clout at that point in time (the taxpayers or retirees) so it’s tough to make a prediction.
Wasn’t SS supposed to be a “retirement plan of last resort” anyway? Amazing how people who were probably against SS at the time got used to that monthly check when it was their turn.
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You 20 somethings better hope that you never become a widow at the “wrong” time, or that your investments only go UP. For those friends of mine who had the terrible tragedy of their husbands dying prematurely, SS has been their lifelines financially. Also, the elderly that I work with would literally have nothing if SS was not there. I’m not so sure that in 50-60 years something might not befall you and you need help…I’m glad there is a SS safety net for all of us. One never knows what the future will bring.
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First, I’m flattered/humbled that I got quoted at my crankiest. I’m the (selectively) bitter 28-year-old…
I appreciate this post, but I’m still not going to plan to get more than about 75 cents from Social Security when I’m roughly 93. As several have noted here, the pessimism will pay off either way: either we’ll be able to retire when and how we want, or Social Security will still be around and we’ll be able to retire when and how we want AND afford a sandwich once a month. There’s no losing!
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@Peggy says
“If Social Security’s going to be there when I retire, why has the media been telling me for twenty years that it’s going to go bust before I reach retirement age?”
This comment was probably sarcastic (I hope) but in case it is not: the answer is because the media makes their money by getting people riled up so they will keep watching & reading. They are not an unbiased truth-telling machine. Please don’t rely on the media to spoon feed you your information.
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Social Security will be there, all they need to do is print more money since there seems to be no consequence to it. The U.S. can use the threat of nuclear annihilation if anyone has a problem with it…
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Here’s a piece by Doug Orr on the topic. It’s five years old, but his points are still valid and timely.
http://www.dollarsandsense.org/archives/2005/0505orr.html
At the time, then-President G.W. Bush was trying to privatize Social Security, so the article is primarily aimed at Bush’s arguments for doing so. As we see from the comments to this post, such arguments are still alive and kicking, though largely based on fear and misconceptions, such as the idea that Social Security is a “bad investment”.
I suggest that we need to follow the money and look at who would really profit from Social Security “reform”: the large brokerage firms that would get the privilege of managing private retirement accounts. They would love to get their hands on that money, and most of us would be worse off for it.
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Didn’t Bernie Madolf go down in a huge “pay as you go” retirement system.
So I guess government funded ponzi schemes don’t count.
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People tend to forget that SS was created in the New Deal era and that the retirement age was BEYOND what the majority of people would live to (62) so the gov’t thought they wouldn’t be paying much out.
Oops. I have a feeling that they are going to “fix it” by upping the age to 72 or 74 by 2020 or 2030.
By then people will live only an average of 6-8 years longer (78-80) and the gov’t won’t have to pay out as long.
I plan on not getting anything from SS. I also plan that if I do I’m going to try to break their mortality tables (my grandmother is still going strong at 91).
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So the government “borrowed” our retirement and replaced it with treasuries which the american taxpayer has to pay off. Gee so I get to pay for retirement twice. The money we paid into the system is not sitting in a bank acct. some where it’s been spent. So they will have to replace the funds with taxes.
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I’m saving & investing for my retirement, there’s no way that I’m going to leave my retirement to someone else. The government isn’t responsible for my retirement. I don’t really plan on social security on being there and even if it is when I get older, I’m 27, I just want to be sure that I have the retirement I want. Its all up to me.
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The problem with assuming we will get social security (I’m 27) is that it’s an assumption based on chance. None of us can afford to leave our retirement up to chance and I think it’s safer and more prudent to assume it’s not going to be there when saving for retirement for those 35 and below.
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@JB: “The problem with assuming we will get social security (I’m 27) is that it’s an assumption based on chance.”
Balderdash. It’s based on having the willpower to demand that this basic social insurance program be preserved.
Social Security is the law of the land. It’s not going to disappear unless the Federal government abolishes it, and that’s why we need to pay attention to what it is and how it really works.
Assuming that you can put your money into private investments and be guaranteed enough to retire on – now that’s *much* more of an assumption based on chance!
A lot of people learned that the hard way over the last couple of years. A lot of people learned that the hard way in 1933. That’s part of why we *got* Social Security.
Of course, we can do our best to calculate *just how much of a chance it is* based on the market’s past performance. That’s what we all try to do, if we invest. But things happen: market scares, recessions, depressions. We can’t always predict them.
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