Money Matters – Social Security Primer: Is It Doomed
BOSTON (CBS) – Is Social Security doomed? I don’t think so! But it is in trouble.
The current political environment has taken the spotlight off of Social Security reform in Congress.
There is a lot of turmoil whirling around the system right now. Social Security will be there in the future, and it will be there for you today if you need it. It will look different in the future and will evolve into what’s needed for American workers and their families.
You may have to contribute more and or retire later to be eligible for full benefits and you may be taxed on all of your benefits, but there will still be benefits.
Social Security and Medicare make up the largest part of our national budget. Almost 54 million individuals received $58 billion of Social Security benefits last year. Of that close to 37 million were retirees who received $42 billion in benefits. Social Security provides a minimum foundation of protection for retired workers, disabled workers and their families.
Social Security was never meant to be the sole source of retirement income for retirees. The average retiree is receiving $1,153 a month. Hard to survive on an annual income of $13,836.
The baby boomers, 76 million of them, have already begun to tap into the system with the oldest taking early retirement. And as with everything else this group has done, it will have a big impact on the Social Security system in several years as more and more Boomers retire.
By 2035, there will be almost twice as many older Americans as today – from 40.7 million today to 76.3 million. There are currently 2.9 workers for each Social Security beneficiary. By 2035, there will be 2.1 workers for each beneficiary.
Social Security is a pay-as-you-go system with most of the taxes being paid today going to fund current benefits. Excess funds are credited to the Social Security trust fund.
Benefit payments are projected to exceed taxes in just six years in 2017, and the trust fund will be exhausted in 2037. Now that does not mean that Social Security will not have any money it means that Social Security will only be able to pay about 75% of benefits owed, using dollars that are coming in from workers paying into the system. Now, this is if nothing is done about the situation.
We do need to fix the problem! And soon! There are many great minds working on a solution. There are ways to fix the problem. Increase retirement age beyond age 67 to 70. Increase the maximum amount paid into Social Security. Raise the percentage paid which is now 6.2%. Decrease benefits. No one wants to talk about increasing taxes or taking away benefits which is what I believe we need to do to solve this problem.
For more information on Social Security: 1-800-772-1213 or www.socialsecurity.gov