Will Social Security be Around When I Retire?

Instituted in 1935 by President Franklin D. Roosevelt, Social Security's goal was (and is) to provide government assistance to those retired and/or disabled. The benefits paid were to be supported by taxes dollars that grow in Social Security trust funds. This system was at its core based on the assumption that human beings would live to a certain age which would allow the system to be self-sustaining since the money coming in from taxes would always be greater than the benefits being paid out to those who qualify. Well, as people began to live longer, the ratio of money coming in to the benefits going out begain to decrease. It's not quite this simple, but that's the main point.

The result is that the Social Security Board of Trustees now predict that the trust funds will be depleted around 2037, essentially somewhere between 2035 and 2040. So, it is in part because of this that people keep asking the question, "will Social Security be around when I retire?"

The answer is yes. But at that point (between 2035 and 2040), since the money coming in would be lower than the benefits that should be paid out, the benefits will likely be lower. It is estimated that for every $1,000 in expected benefits, somewhere between $750 and $800 can be paid. That means if you were due $2,000 per month, then you will only get approximately $1,500.

That's not alot, but still better than nothing. However, the situation would get worse over time as people continue to live longer. So, what should we do? Ask retirees to die sooner? More than likely, the government will institute some changes to the Social Security system. Some potential changes including increasing taxes and delaying benefits distributions to an older age. Neither one of these are particularly appealing. The younger generation would cry foul over increased taxes while the older generation would argue about having to wait longer.

So, it's no secret that the optimum word regarding retirement these days is "SAVE." Although Social Security payments will likely still exist when we retire, it may not be what we expect. As such, we need to do all we can individually to take control of our own retirement security while we can. For many, especially the middle class (and lower), this will ring hollow as it is becoming more difficult to save. It is estimated that most middle class families have less than $50,000 saved for their retirement. As such, retirees in this group may need to continue working at least part-time to help ends meet.

Therefore, continue to save as much as you can, and pretend that Social Security benefits will not exist when you retire. That may at least help to provide more motivation for saving. Below are some books that will help to provide further explantions of the Social Security system.