Social Security should be the topic of conversation for everyone approaching the social security retirement benefit age. Will Social Security be there in the same way as it exists for retirees now?
The government knows there is a problem with the retirement plan that they created. Twelve years ago, I wrote a very detailed article about Social Security’s financial problems that have yet to be solved. No one in government wants to be tasked with taking care of this, as they have their own agenda.
In one form or another, pensions have been around for thousands of years. Social Security is considered to be a form of pension that is provided by the government, which was brought to fruition in 1935 by President Roosevelt. The concept of government pensions was not developed here in the US, but rather we took ideas from other countries and made Social Security our own plan. The difference between now and then is people are living much longer and the dollar amounts to support the average retirement of twenty-five years or more is now taking their toll on the Social Security System.
Let’s explore some of the problems a little deeper. The average life expectancy in 1935 was close to 61. The average life expectancy today is in the upper 70’s or low 80’s. Social Security was intended to start paying benefits at age 65. This is politics at its finest. The government tells citizens about this great benefit but fails to mention the majority of people would not ever be able to collect on it. It worked brilliantly early on. In fact, it worked too well. The government had the authority to collect taxes, pay virtually nothing in benefits, now had a large pool of money that was not being used.
Notice the word “had” in the previous paragraph. Balancing the budget has never been a strength for the government. As the government increased their spending, they found no reason not to use this growing pot of Social Security money. Secretly using our hard-earned money and then basically putting together a promissory note to pay the money back. When I originally wrote about this topic, the only thing the government would’ve needed to do was stop spending the surplus money on things outside of Social Security benefits and invest the difference. Even though I wrote about this a long time ago it was much too late to close that gap. What I mean by this is that the government was spending far too much to back off. Now the government is paying more in Social Security than they are bringing in on taxes.
Now it’s left to an educated guess as to what the government will do next. My prediction is four things will happen.
The government will try not to abandon the Social Security program until it is failing and beyond any repair. At first, the government will likely try to modify the existing program. Social Security provides a lot of government jobs. Social Security also brings in a lot of tax revenue that the government can spend. There is no way that the government would want people to opt-out of social security and self insure if they can control it.
The average citizen does not plan for retirement because they feel that the government will provide for them. Many retirees depend on their social security and it might be their only source of income. People more than 10 years away from social security age may want to consider that they may only get a portion of what is shown on their statements and that people further out may get virtually nothing or at least should start planning this way.