With the word “security” in the title, you would hope that it is pretty secure. Many people are asking, “Will Social Security be around when I retire?” And, “If Social Security runs out before I retire, what am I going to do?” — If you’ve asked those questions, you are not alone.
Social Security’s future as been a hot topic over the past couple years. Taking a look at the origins of Social Security may give us some clues to help predict the future.
HISTORY 101: Social Security
On August 14, 1935, then President Franklin Roosevelt signed The Social Security Act into law. It looked a lot different back then, but then you could say that about a lot of things – our cars, our clothing, our military, or our labor force. As you may or may not know, the original intention for the Act in the first place was to pay benefits only to the primary worker in each family.
Social insurance, as conceived by President Roosevelt, would address the permanent problem of economic security for the elderly by creating a work-related, contributory system in which workers would provide for their own future economic security through taxes paid while employed. As makes sense, this is when Social Security Numbers were established because it was necessary to track and “register” the workers eligible for this system. While originally intended for the retired individual only, the Act was soon amended to include spouses and dependent children.
According to the Social Security Administration website, in 1937, there were 53,236 beneficiaries to the program, and payments made equaled $1,278,000. In 2008, there were 7,520,501 beneficiaries to the program, and payments made equaled $43,040,000,000. That number is staggering, and with the number of retirees growing every year, and life expectancies increasing, the fear of extinction of this program does weigh heavy on many, especially those who have not prepared for retirement with other sources of income.
One source I found indicated that in July of 2015, the Social Security Administration’s annual report revealed that the trust that funds Social Security benefits will likely be unable to pay scheduled benefits by the year 2034, the year in which today’s 48-year-olds reach full retirement age. But there are other sources who sway on both sides, including more optimistic.
Wake Up Millennials!
If you are turning 36 years old on your next birthday – you are a millennial. You should be preparing for your retirement now. You may not want to count on Social Security. How will that reality change the way you live today so that you can live the way you want in retirement?
Social Security Reform?
In this crazy election year, you’ll hear several of the presidential candidates with their own ideas about how to fix Social Security. One would like to increase the age of eligibility. Most agree that those at or nearing retirement age should not be penalized. What about phasing out these social security retirement benefits for Americans in higher income categories? Economists and politicians will continue to wrestle with this.
Social Security: A benefit
Lest we not forget, these Social Security payments are “benefits”. We should consider the payments as something “extra.” Sadly many people in our society, both retired and not retired, look at Social Security as their “only” retirement income. Social Security benefits are meant to “supplement” your other retirement income and bring “benefit” to your retirement years.
Planning to Retire?
Whether you are nearing retirement age or just graduating college, make sure your retirement is secure. Social Security may be alive and well for years to come, but those benefits should not be your only source of income. To help supplement your retirement nest egg, there are many great ways to earn some extra cash.
In today’s society, the internet affords many opportunities to market and earn income. You can do this at any age, and many times from home in the small pockets of free time you have. One great resource to check out is Wealthy Affiliate.
Remember, the best hands in which to place your future are your own.
Please share your own questions, ideas, and reflections in the comments below. I look forward to hearing from you.