what is the future of Social Security?

Question

what would be a good investment option to make sure and income later if SS fails. are ther other options than 401K?
are there 401Ks that don't have to be related to my job?

Answer 1

Indeed SS does have some problems to deal with. I for one will be very unhappy if after paying into that sink hole for 40 years, I do not get anything out of it. But a lot of the SS problem does not have to do with SS as such but as to the fact that the govermnet stole the money from the funds to waste on other ventures. I would imagine however that the political pressure would be so great that any dramatic changes would be politically unacceptable to the elected officals. In short they would loose their jobs.

To answer the other part of your question, there are actually several other options open to you in addtion to 401ks. They are traditional IRA, Roth IRA, and just plain investing on your own. With either IRA, you unfortunately limited to depositing $4000 annually if you make that much in wages. If not you are limited to what you make. To learn more about IRA accounts go to this site.

http://www.irs.gov/publications/p590/index.html

As for investing on your own, that is an option that is readily available to everyone. There are no limits imposed by government rules. And when retirement time comes around there will be no worry about SS and no having to eat cat food.

Answer 2

First, Social Security will always be there. It may not be exactly the same form as now, or pay at the same rates, but it will be there. Perhaps they'll be paying only 70 cents on the dollar. Perhaps they'll index it against other income, so rich people won't collect. But I do not forsee Social Security just going away all together.

Nevertheless, even if Social Security stays on plan and delivers as promised, it still should not be viewed as a primary source of income to live on. It was never intended to be such. It is a supplement and you should plan accordingly.

There are many options. Traditional and Roth IRAs allow you to put money away for retirement with favorable tax treatment either now or later, depending on which you choose.

There are low or no tax investments out there, such as Government bonds. There are tax-managed mutual funds that invest so as to limit tax consequences.

Real estate is also a good investment in the long term. Now is actually a pretty decent time to buy in as the market is really soft. Actually real estate makes a damn fine investment for retirement. If you start when you are 30 and buy a home, and then 10 years later buy another home and rent the first, and then repeat again and again, by the time you are 60, you'll have 4 homes with 3 of them producing income and the first possibly paid off.

Bottom line, start now whatever your age. It's up to you to provide for your own retirement. Put yourself first before your kid's college educations. There are all sorts of assistance for college, like scholarships and loans. There are none for your retirement. I've recommended some material below to learn more.

Good luck.

Answer 3

aside from what has already been mentioned....
the closest option to SS that you can get is a deferred annuity.
many people will bad mouth them as expensive and poor...but they have their place.... namely they can provide lifetime monthly income checks.. with survivor benefits if elected.... just like a pension.

how they work: lets say you are 55.....you give money to an insurance company... say 100k...... 10 years from now you retire.. at age 65... you start the annuity payments and receive 1031.23$ per month .... until the day you die...

how that works;... basically its like earning about 5% on your money ...the insurance company took your 100 and invested it... 10 years later they figured it had grown to 160k...then they look at the research and decided somone currently at the age of 65 will die at the age of 87... so they deduct for their fees...and owe you payments. ..... they win if you die before 87.since they will keep all the money (although you can select payout options that limit this).. they lose big if you live to be 100....but overall they balance their risks... just like all other insurance and spread the it around. ....

talk to a financial advisor.... rates will change....i was just giving hypothetical numbers... but they will be similar.

this will be completely unrelated to SS, your job, your 401k....and the income will be predictable and timely...

just keep in mind you will be entirely dependant on the company to make payments... so make sure you only use a highly rated carrier with a long history of making good...don't get tempted by big promises from low rated companies.