This is a question I am asked all the time. Will I ever get a penny from Social Security? Most people have come to the conclusion that they won’t get anything. Everyone has heard about Social Security running out of money in the about 20 years. However, I would like to go on record to say that Social Security will still be around when you retire and you will receive monthly benefits.
There’s a lot of misleading information out in the public domain. Much of it is politically motivated. If it weren’t for the careers of 535 members of Congress, problems like Social Security would already be solved.
The Social Security Administration reports on its annual statement that by 2033 there will be enough to pay 77 percent of benefits that are owed. That’s not good, but it’s not bad either. We’d love to see a projection showing 100 percent of benefits earned will in fact be paid. However, this projection doesn’t include any changes to the current program.
Social Security has been a very successful program. I would argue it’s been too successful since it is now the only source of income for millions of retirees. It was never intended to fully support an individual’s retirement expenses. Social Security was created to supplement retirement.
How to Fix Social Security
There are many changes that can be made to Social Security to fully fund future benefits. An interactive tool on AARP’s Web site called “You Earned A Say” allows you to choose between a list of options to fix Social Security. I created a scenario in about one minute. My solution involved removing the income limit for the Social Security tax and to increase retirement age by one year.
For those that don’t know, Social Security is funded by your taxes. They charge 6.2 percent of your earnings that go toward paying for the program. However, this tax is only charged up to $117,000 of income. Income above this limit is not charged the 6.2 percent tax. If this income limit is removed, then pretty much most of Social Security’s funding problems are fixed.
This isn’t the only solution to fixing Social Security. The final solution will and should be a mix of several things. Remember that this program was created in 1935. No one can expect a government program to operate forever without some changes. Eventually, our elected officials will address the problem.
Politics aside, the important thing to know is that Social Security will be around for your retirement. You will get a monthly Social Security check. You can plan on it.
Steve Doster is a Certified Financial Planner™ professional providing commission-free financial advice for do-it-yourself investors. You can reach Steve at Doster Financial Planning by phone 619-688-1192 or email steve@dosterfinancialplanning.com. You can also follow Steve on Facebook, Linked In, Twitter, or his blog to get more personal finance advice and tips.
