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What About Social Security?

Social Security began in 1935.  In it's first year, it paid about $1.3 million in benefits to around 55,000 people.

By 2011, almost $650 BILLION dollars are paid to over 50 million people.

Social Security works by taxing workers 6.2% of their earnings, which is matched by their employer, up to a maximum ($113,700 in 2013).  This money is NOT put into personal accounts.  Instead it is used to deposited into a general fund to pay beneifts to retirees who've already contributed to the program.  

This is an important function to be aware of.  For years, the largest segment of the population, the "baby boomers"(someone born between 1945 and 1964) have allowed Social Security to collect more money than it has had to pay out.  This has allowed it to amass more than $2.7 TRILLION dollars.

However now that Baby Boomers are retiring, more money will begin flowing out than in.  If nothing changes, many project Social Security will be bankrupt by 2033.

If you are 18 years old in 2013, you won't be 65 until 2060.  What's going to happen to your retirement?

 

Something will be done by then, of course, but it involves at least one of three things:

(1) Increase Taxes

(2) Decrease Benefits

(3) Defer the retirement age - requiring people to work longer, perhaps until age 70

 

Do you want to retire comfortably at age 65?  You better begin making plans now!