When it comes to Social Security and the financial stability that is supposed to be provided for your future, then you should expect to be paid back when you retire, and that’s what millions are told. This is something that you pay into your entire career, shouldn’t you get that money back?
You might have wondered at some point; will there actually ever be a problem or is social security running out?
Social Security is running out though, this fund is already cash-flow negative and eventually there won’t be enough to go around and support the needs of so many retirees. This is not new news to some who have known this for years, economists have been telling us for decades that Social Security is not sustainable.
For Social Security to work, at least 3 employed workers need to be working for there to be enough support for one retiree. Now this ratio sits near 2.8 and has been projected to fall even further to a low of 2.3, there aren’t enough workers to support the demand.
There’s just not enough money to fund the dream. Many people are going to be very surprised when they find out that the money, they thought they had paid into and should expect to be paid back, will never end up in their hands. That is obviously going to be a difficult pill to swallow with so many retirees who will need those benefits and the help.
There are not enough people working and paying into the system to support the millions of retirees who will need it. Despite the lofty goals that this fund project might have, it comes down to mathematical facts that there isn’t enough financial support and that it will eventually run out of funds.
When will that take place?
It has been estimated by the Social Security and Medicare Boards of Trustees, who publish an annual report, that it could run out in as little as 15 years. The report states that by 2020 it’s expected that the total cost will exceed the total income for the first time since 1982.
These Trustees are essentially giving you a date to circle on your calendar.
How Modern Social Security Came To Be
The Social Security Act was signed into law back in 1935 by President Franklin D. Roosevelt and the objective of this legislation was to establish a fund that would help assist older Americans.
How did it work?
Americans would pay into the fund and upon retirement they could expect to receive payment. Eventually that program was amended to include benefits for other family members, such as a spouse or children etc., and more recently health coverage (Medicare).
It is funded through the FICA tax, also known as the Federal Insurance Contributions Act. This is a payroll tax and a percentage is paid by both you and your employer every time you receive a paycheck. If there is ever any surplus from funds that have not been designated to be paid out to benefits, then that money is used to purchase government bonds and are held in the Social Security Trust Fund.
Even though you pay throughout the years in those taxes, that money isn’t the same money you will receive later down the road. It is spent, and so the money received later isn’t going to be the same dollars that were taken from you years ago while you were working. The money you paid went to fund people many years ago and now current workers are paying in to support you when you retire.
The Future Of Social Security (Or Lack Thereof)
So, what’s the issue?
With the working population getting smaller in the United States, baby boomers retiring at a record pace (roughly 10,000 per day) and life expectancy increasing, there is too much pressure being placed onto those who are left holding the bag, needing to fund the entire endeavor.
Eventually, more people will be taking money out than those who are paying into the system, and that is where there will be a very big problem and a ton of upset people. It has been estimated that perhaps by 2035 Social Security might be fully exhausted, millions of people who are expecting to see benefits then might simply be out of luck and left looking elsewhere for help. Despite having paid into the system for years they still won’t be able to claim any help from it and that will be a huge problem.
Are there any alternatives?
Raising the retirement age has been suggested which would make it so that people had to wait even longer before they could access that money and receive their benefits. This might help a bit to extend the funding, but it might eventually need more of an overhaul.
For those who are hoping to receive these benefits in the years to come, this should send shivers down the spines of the of the people who depend on Social Security as their sole source of income. Some say that it’s too late to fix, plain and simple.
Long gone are the days where Americans could have peace of mind about retirement, knowing they always had a check from Uncle Sam to fall back on. Most people will need to take the responsibility upon themselves to prepare for retirement.
That leaves many people wondering, what will be done to help ease the circumstances in the future when this pipe dream runs out of funds?
But this is America, right? So, not all hope is lost…
Fight Back To Protect Your Wealth
Today I want to encourage you to take matters into your own hands, fight back, and shield your wealth against inflation.
You can begin investing in commodities like precious metals, and at the same time earning a monthly income from them, which will provide you with an avenue to a prosperous retirement.
Here’s to Growth, Preservation, and Income all wrapped up in one!
Act now and don’t let the Social Security Supernova blind you.