What You Should Expect From Social Security

Wednesday, October 20, 2010

Share
retweet
EmailPrint.You've probably heard the news: Social Security recipients aren't getting a bump up in their benefits next year. The Social Security Administration recently announced that because inflation has been flat, there will be no cost of living adjustment for seniors.
Whether or not you think that's a good thing depends a lot on your age. Seniors are upset, but younger workers have reason to celebrate the news: Fiscally conservative choices now could mean a stronger system later.
There are plenty of reasons for 20 and 30-somethings to worry about the future of their Social Security payments. The Social Security trust fund will start taking in less than it pays out around 2016, and by 2037, as today's 30-somethings start thinking about retiring, it's scheduled to run out. At that point, if nothing changes, the benefits will shrink to about three-quarters of what they are now because only money that is then being paid into the system will be paid out.
Workers have clearly gotten the message that they're largely on their own: Just-released numbers from Charles Schwab reveal that almost half of the general population say they do not plan on counting on Social Security as a source of income in retirement.
The uncertainty over future benefits has led to a debate over whether the current budget and entitlement structure is fair to young people, who may never see all of the money that they pay into the system. (Social Security benefits are based on a person's average earnings over his lifetime and depend on the age of retirement; the current maximum benefit received is $2,346 per month for those who retire at age sixty-six.)
"They should be upset, and concerned that Social Security is structured in a way to give them less than they might otherwise receive. They'll certainly get less than their parents and grandparents, and they're stuck in a position where they are either going to pay higher taxes or get lower benefits, or, what's worse, both," says David John, senior fellow at the Heritage Foundation.
As Andrew Biggs of the American Enterprise Institute puts it, "There's no way Social Security is as good a deal for a 20-year-old as it is for a retiree today."
The AARP, which represents retired Americans, has a different perspective. It is quick to point out that there is such great political support for Social Security that it is not in danger of slipping away. The organization released a statement opposing the cost-of-living freeze after the Social Security Administration made its announcement late last week.
While the AARP is right to point out that Social Security isn't going anywhere, it's possible that it will undergo major changes in the coming decades. Here are some of the possible shifts:
Higher taxes, especially for high-earners. Social Security is funded through payroll taxes, which are currently capped at $106,800. That means workers don't pay Social Security taxes on income above that amount. Congress could raise that limit.
A higher retirement age. Changing the retirement age to 68 from 65, instead of the 67 it's currently scheduled to reach, could mean a reduction in benefits for younger workers since they'd have to wait longer to collect their payments. If premiums or Medicare-related taxes are increased or benefits are reduced, that would also have a major negative impact on young workers' retirement finances.
A new government-backed investment plan. Some academics, including Alicia Munnell, director of Boston College's Center for Retirement Research, have proposed an altogether different method of risk management — one where the government bears the brunt of the risk. She imagines a new kind of guaranteed account, where the government would guarantee that beneficiaries receive a certain rate of return on their investments.
If the market plunged before they retired, then Uncle Sam would make up the difference. If a relatively modest guaranteed rate of return were chosen, such as 6 percent, then she says the government would rarely have to step in, so the cost would be minimal. Another option is to guarantee just a 2 or 3 percent return but to allow investors to keep any higher return provided by the market. If the government found itself needing to pony up during bad periods like the current one, then, Munnell says, "it can take on more debt and spread the losses over several generations," instead of forcing the soon-to-be retirees to absorb most of the pain.
Regardless of what changes, one thing is certain: Young workers need to save more on their own, because government programs are unlikely to comfortably fund a relaxing couple decades by the beach.
This article is adapted with permission from Kimberly Palmer's new book "Generation Earn: The Young Professional's Guide to Spending, Investing, and Giving Back" (Ten Speed Press).

___

Vote for this comment
0 users disliked this commentRALPH 13 minutes ago Report Abuse To all the people that have no clue about what they are talking about. Since Reagan revamped the Federal pension system Feds contrbute into SS They also have paid into medicare for longer then that. And if you happen tp be in the old CSR system I am not sure of the exact year I think before 1950 or so You can only get 45% of your earned SS (the exact amount and year I am not sure of )So before you start putting down people know what you are talking aboutReply.1 users liked this comment
Vote for this comment
Vote for this comment
0 users disliked this commentBob S 1 hour ago Report Abuse Politicians become Politicians because they see the huge money pot of the common man's earnings. Millionaires aren't compassionate folks. They didn't become wealthy by being honest so we will never see tham play fair.
They all need to see a violent thinning of their own herd from the common man's wrath. It's called "The Big Bang Theory". They will never respond properly otherwise.Reply.1 users liked this comment
Vote for this comment
Vote for this comment
1 users disliked this commentaudrey 1 hour ago Report Abuse if all the senate and congressmen would give up receiving
ss,that they didnt earb-us poor folk would have a chabce
show me one good honest person running this country
i owuld be happy al a bunch of crooks and ingrades,Reply.2 users liked this comment
Vote for this comment
Vote for this comment
2 users disliked this commentb 1 hour ago Report Abuse Bernie Madoff went to jail for a LONG time doing this, which of the scum sucking bottom feeding politicians will receive the same justice. Social Security is just another Ponzi scheme, always was, always will beReply. 3 users liked this comment
Vote for this comment
Vote for this comment
0 users disliked this commentA Yahoo! User 2 hours ago Report Abuse Inflation is flat in the eyes of politicians, that behind closed doors decided not to include things such as food and gasoline in their decision for the COLA for Seniors and people that are Disabled. When did we as Americans get so lazy that we let our government decide to play God and put there sticky fingers into what was not theirs and basicly decided who will live and die. Amercia we had better wake up to those that are defining everything we do with behind closed door deals. If you have ever watched cpan senate instead of some soap opera you would be amazed at the deals being made that effect our lives right in front of our eyes. Well, only the Americans that want to stand up and let Washington know that they work for us and not the other way around will maybe be able to change the way our Country is run. On another not I would love to put a sign on the Statue of Liberty that says"No Vacancies".Replies (1) .5 users liked this comment
Vote for this comment
Vote for this comment
0 users disliked this commentEZduzit 2 hours ago Report Abuse What about the money that the Federal Government stole from Social Security? They should pay it back with interest.Reply.0 users liked this comment
Vote for this comment
Vote for this comment
0 users disliked this commentLarry 2 hours ago Report Abuse GEE. A REAL CLASS ACT. SEMPER FIReply.2 users liked this comment
Vote for this comment
Vote for this comment
0 users disliked this commentJan 3 hours ago Report Abuse I worked for the government, I did not pay soc. security but neither do I get it I did pay into our pension plan & also health plan. I do not get my husbands s.s. and never will even if he passes away. So alot of what you hear is not always true.Reply.10 users liked this comment
Vote for this comment
Vote for this comment
0 users disliked this commentfed up vet 3 hours ago Report Abuse The illusion of Social Security has been just that since the government started looting the account shortly after it was instated. For politicians to see that much money (somebody else's - even belonging to their own parents) just sitting in an account accruing interest and having less go out than what is coming in, was toooo much temptation. So, our retirement money was used for the whim of the Federal government. Now the illusion that it is our fault that Social Security is going bankrupt! Ha! There was no vote offered to the beneficiaries as to how the money was used - it was just stolen. Wake up!! It will happen to each generation and the propaganda will be that "they had too many children" or "because of medical breakthroughs not enough people died". As for cost of living raise and inflation - guess what - COL is calculated without the price of food or energy involved. What a crock! We may be aging, but we're still not stupid!!!Replies (1) .5 users liked this comment
Vote for this comment
Vote for this comment
3 users disliked this commentjames 3 hours ago Report Abuse You said social Security will run out around around 2016. Obama make a deal with the republicans that the payments to Social Security will be cut . That money is what's being used to pay the ones on now. Like with Clinton they got him to get rid of welfare.

Don't get me wrong there was lots of welfare cheats. But a lot of people really needed it. But today the ones who misused welfare is still on it. Like young girls having babies to get out of the house is still going on. But its not for to long but it costs more.

When the baby is born they are helped to get get a apartment. But they are not allowed to work until they are told too. In the meantime they have to attend classes. And it's mandatory to have the child in one of their approved day-care.

When the child is bused in the first thing that's done is to undress the child totally and checked head to toe for marks. If one is found D.S.S is called in and the child is taken to a undisclosed location.

The day-care or D.S.S. don't bother to inform the mother. She finds out when the bus don't show up. You say well she got right's she gets a free lawyer and goes to court to get her kid back.

Wrong, the one who runs the show in the court is D.S.S. so why pay the judge. As for the lawyer he is more like a cheering section. He will tell the mother what he can do and not to worry she will see her baby back. That never happens.

The child is worth to much to the state. You know the Lincoln freed the slaves yes but not all. A child is the property of the state till they are 21 years old. Another thing that's done is under the law you have the right to be present to during the police questioning your child.

But thanks to Clinton we now have cops in every school. Even in kindergarten and they question your kids about you. Troops died in WW2 to stop this in Germany.

Getting back to your child being worth something to the state. When a child is taken they are put up for adoption and the new parents are so excited they forget about everything else. Like the fact they just spent 60,000 to buy that child. My sister took 6 but never got what she wanted because she wasn't rich eought.. She wanted a baby but she took 6 older ones at 300,000.

As for our social workers they are worst parents than the ones having their kids removed. One had a 14 year old daughter but with her so called training she didn't know her daughter was a alcoholic and to support her habit she was a hooker.

In Massachusetts under Bush immigration still did their job and caught 45 illegal women and 2 under-age boys. The boys were sent to Florida and the women were sent to Texas. The governor who is a good friend to Obama sent 45 social workers to Texas to visit with the women. But not one to Florida for the 2 boys.

But of course the tax payers paid for their vacation. But as for Social Security the age to retiree is going up to 60 here. But in france it's gone up to 70. But Social Security was not a tax it was set up so the ones that pay later will pay for the ones who are on.

But there would always be a nest egg to keep it going. So Reagan who coned everyone spent like there was no tomorrow. Like a 20 billion cartoon called star wars to scare the Russians. It worked the Russians were afraid and spent and went broke.

To cover up his spending they borrowed the nest egg then changed it to a tax to make the national debt look better. After that every president hit Social security till nothing was left.

They did what the mob did with the retirement of the union members and they got away with it too. Now they want to push the government over the edge and into bankruptcy. Which means we lose our consitution or bill of rights and our county.

Why because neither party has a clue on whats going on. Other countries along with the rich is causing this to make us fall. They will set up a new country the way they want. Unemployment, oil, the national debt can be solved in 5 year. But neither party tried.Replies (2) ..Comments 1 - 10 of 532
FirstPrevNextLastPost a comment
Comment Guidelines