Did you know that according to the Social Security Administration, by 2029 the Social Security trust fund will not have enough money to pay benefits to the wave of aging Baby Boomers? In 1951, there were 20 workers for every one person retired. Today the ratio is 1 to 1.
A USA Today article also states that by 2032 the entire Social Security fund will become totally insolvent. Many people are baffled by this bankruptcy. They mistakenly think that their payroll taxes deducted for Social Security go into a personal account at the Social Security Administration, which will be paid to them as soon as they retire. This is not so. The USA Today article explains: “What [payroll taxes] are not spent on benefits are used to buy Treasury bonds. That means the Social Security surplus is being loaned to the federal government to cover its other expenses.”
In other words, your FICA taxes are not being set aside for you.Instead they are being spent in other areas of government where policies on spending are not fiscally sound. That means that with the influx of Baby Boomers making huge draws on the system, if you will be 65 in the year 2032, you may not be able to count on any Social Security income at all. What will you do to make up for those lost funds?
If you, like many other Americans today, are planning to use Social Security as a default source of retirement income, perhaps it’s time to rethink things, especially n light of the changes to the system which are sure to occur. According to kenneth S. Apfel, former commissioner of the Social Security Administration,
“Social Security can help support your family in the event of your death and pay you benefits if you become severely disabled. But it was never intended to be your only source of income when you retire or become disabled, oryour family’s only income when you die. Social Security supplements the income you have through pension plans, savings, and investments.”
One of the best ways to get on the road to a secure retirement that does not require you to rely solely on Social Security is to build a Spending and Debt Plan using the Money Mastery Principles. Check them out at www.moneymastery.com.