What happens when Social Security runs out?

Question

Being 21 and already wanting to put money into retirement, I've been wondering about Social Security that I've been paying into for years. With the amount of people receiving SS in the future, it will be drained by the time I reach retirement. What can our government do, or even us as a person, do to secure our financial future when we cannot work?

Answer 1

You have to keep in mind many things on this -

First, that social security projections are over a very long term, so minute changes in things like interest rates, economic growth, and birth/death rates have a magnified change on a 20-50 year forecast. 2 years ago, they predicted that the surplus would run out in about 20 year. Now that has been revised to around 32 years. If interest rates go up today, it will change again.

Second, the prediction is only for when the SURPLUS runs out. This is extra money that SS has takin in over the years and loaned to other parts of the government in the form of long term bonds (which earn interest themselves). Even if the surplus runs out, SS will continue to take in money and be able to pay out 60% of promised benefits indefinitely.

Third, some minor tweaks to the system can keep the surplus and the rest of the system running indefinitely. For example, raising the exemption limit on what is taxed by only a small amount has major benefits. Right now, only the first $92,000 are taxed for Social Security - if you make anything more than that its not taxed. Just raising that limit to $100,000 pushes the date the surplus runs out to 50+ years.

But most important - Social Security was never meant to be a full retirement fund. It was meant as a safety net, so retirees wouldnt starve or go homeless. Start saving for your retirement now with a 401K or IRA.

Answer 2

Congratulations...The fact that you are 21 and already thinking about funding for your retirement makes you the rare exception to the rule. Most people don't bother to think about such things until much later in life...often not until it is too late.

You are absolutely right not to rely on Social Security. If it still exists by the time you are ready for it, it will be much different than it is today. If you can consistently put away even a small percentage of your paycheck every month, you will be way ahead of most of your peers. You might want to check with a fee-only financial planner for some suggestions on how to proceed.

Good luck to you.

Answer 3

I am 67 and have been retired since I was 60. I started getting reduced SSI benefits at 62 and all the Medicaire I could stand at 65.

Many people never prepare for their retirement. I was fortunate enough to have the financial ability and foresight to start an Income Retirement fund when in was in my early 40's... I regret now that I didn't start earlier MUCH earlier, because my Income from the fund (dividend income) is fixed... it doesn't go up or down, but it's about half of what I thought I would need for retirement when I started the account.

My advice to any young person is: DON'T RELY ON SOCIAL SECURITY FOR RETIREMENT... because, even if it is still available (which is doubtful) when you reach 70 (the age is going up to start and, by 2020 will probably be age 70) whatever you get from SSI will barely be enough to pay for your health insurance. (My SSI is $577 per month because I took it early at age 62)... Out of the $577, I have to pay $98/mo for Part B Medicaire... and it will go up another $10 in January. I have to pay $109/mo for my supplemental insurance. I have to pay $11/mo for Part D (drug supplement)... so out of that fantastic SSI income, I have to pay $220/mo for health care... obviously, I can't BUY anything on the remaining $357/mo because the fixed expenses for my paid-for home is about $500/mo.

SO... Like I said... you really HAVE to prepare for your own retirement and not depend on the SSI you may or may not get. OH... and good luck.!

Answer 4

Per your age, I would 'effectively' ignore SS.
You wont (for now) have a choice but to put $$$ into SS.
But you can invest the same amount of $$ into investmetns and beat the SS beenfit by a long shot.

Me being 48, I have no intention of truely retiring, though I might from one job and go to another.

This idea, that people who paid in should not get 100% of it back is not going to happen.
If I dont get 100% of what I put in, there will be a 2nd civil war.
Thats whether I am rich or not (and am currently not).

Investing even now, smartly, you will definately be a lot better off for it.

Answer 5

I'm 22, and you can believe me that I'm already worried about retirement too. I started putting money into a 401K as a well as keeping savings accounts. Our only hope is that as the baby-boomer generation starts to die the generation behind us will be strong enough to start regrowing the social serurity funding

Answer 6

Tell Bush lite to keep his paws out of it, and how in the hell could it run out with more people being born everyday, growing up and paying in? You really don't believe him, do you? Sheesh! How stupid does this man think we are, Oh yeah, he's the president of dumb asses! Sorry, I'm just pissed off because I have worked since I was 15 and now I'm totally disable and SSS told me I can't receive it because of my husbands income and told me to get a lawyer! And you know what, I'm 54 now and I have no income ! I can't even buy a happy meal! Much less a tank of gas! So save all you can for yourself and your future kids and Good Luck and God Bless b/c we need it!

Answer 7

Better start practicing saying: "Welcome to WalMart."

Either that or you can stop voting for politicians who cut taxes as the answer to everything. Your government is broke and can't do anything about social security without raising taxes.

Answer 8

ask the DNC . this is the baby of a democrate and they say it needs to be fixed so im sure they have the answers even though they havent provided any.

Answer 9

save every penny..if you have any left after being taxed....don't get involved in a law suit, or they will give all your money to whoever is suing you.if they win....my aunt found out the hard way.....

Answer 10

Who needs to retire? Work till you die...