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Social Security Isn’t Going Away
[/fusion_text][fusion_text]We all know that Social Security is a disaster, right? By the time I graduated from college (Loras College class of 2004 – Go Duhawks!), I heard enough stories to “know” that Social Security wasn’t going to be around by the time I retired. It was in rough financial shape. There was no way there would be any money left to pay me any benefits. In retrospect, this might have been my first exposure to fake news. The program is in way better shape than most people think.
Here are the facts. Social Security has always been a pay as you go program. As soon as payroll taxes are collected, they are used to pay out benefits to retirees. There were some really good years a while ago when the program had a surplus, which was used to build up a trust fund for lean years. We have been in lean years for a while now. Today’s payroll taxes cover 75% of the benefits that are being paid out. The other 25% comes from drawing down the trust fund. In another 17 years the trust fund will be drawn down to $0, at least in the latest projection.
Okay, so what’s good about that? Even if Congress does nothing, Social Security will be able to pay out 75% of its promised benefits indefinitely. That’s way better than the 0% that most people under the age of 40 expect to get.
I have to believe that at some late date (years from now) Congress and the President will get around to fixing Social Security. This may involve reducing benefits more drastically for good savers (means testing). Even under these scenarios, well-off folks are expected to get 2/3 of their promised benefit. That’s infinitely better than zero.[/fusion_text][separator style_type=”single” top_margin=”” bottom_margin=”” sep_color=”” icon=”” width=”” class=”” id=””][fusion_text]
Legal Disclaimer: These posts do not constitute an offer or recommendation to buy or sell any securities or instruments or to participate in any particular investment or trading strategy. They are for informational purposes only. ASA gathers its data from sources it considers reliable. However, ASA makes no express or implied warranties regarding the accuracy of this information or any opinions expressed by the author and may update or change them without prior notification.