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Should You Rely on Social Security Benefits?

Social Security is no longer in a strong position to pay out all the benefits it should.  Here is what the Social Security Administration stated on January 2, 2014:

Without changes, in 2033 the Social Security Trust Fund will be able to pay only about 77 cents for each dollar of scheduled benefits.

Our Social Security system has paid out more money that it takes in for over 25 years.  The future of Social Security is not bright.
In addition, when you factor in inflation, that provides an additional problem for Social Security.  Inflation is always with us, regardless of how the SSA and other economic groups calculate the numbers.  Last year, the Consumer Price Index (CPI) only raised 1.2 percent, but the goods and services used were changed from the year before.  To understand how inflation is really affecting you, keep track of your own purchases of medicine, gasoline, food costs, and clothing.SocialSecurityPost these receipts in a journal and then compare from year to year.  I have done this and my average inflation rate is 3.8 percent.  That means that your income at retirement will not go as far, and if you live to be age 84, you will have had a 50 percent cut in income.  This is horrible.  You need to plan for this today, and not wait for retirement.
Even pension plans are underfunded and in serious trouble just trying to pay income for those already retired.  Be observant when the media reports that pension plans are going broke and what it means for employees.
When you try to calculate where your income will come from at retirement, you should probably use 50 percent of the projected numbers from the SSA and 50 percent from your pension plan.  Just to be safe, you may want to work longer, or save more money today before you decide to quit work.  Too much uncertainty in today’s economy warns against too much conservative planning.

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