Posted on 06/24/2018 11:52:27 AM PDT by SeekAndFind
If you read the latest Social Security Trustees Report, you're aware that the program's combined trust funds are expected to run dry in 2034. And clearly, that's not great news. But before you start panicking about your benefits, it's important that you understand the implications of those trust funds running out.
The most important thing you should know about Social Security's trust funds is that they're not the program's primary source of funding. Rather, the bulk of the revenue that Social Security takes in comes from payroll taxes.
Now for the first time in multiple decades, Social Security is dipping into its trust funds, and will most likely continue to do so for the next 16 years. The reason is that workers have been retiring at a relatively rapid pace, and we're not getting enough replacement workers to allow the program to take in as much money as it needs to pay out. However, once those trust funds are depleted, Social Security will continue to have access to its primary income stream, which means that in a worst-case scenario, future benefits will be cut, not eliminated.
How much of a reduction are we talking about? Based on the latest projections, come 2034, recipients might lose 21% of their benefits if Congress doesn't step in with a fix. And obviously, that's a pretty harsh blow for those who depend on those benefits to provide the majority of their income. But if you're years away from retirement, you can take steps to compensate for the potential benefits cut you might face, thereby ensuring that you don't end up struggling financially.
One major myth associated with Social Security is that seniors can live off their benefits alone. Well, the truth is that they just plain can't. Even if benefits aren't cut in the future, those payments will only replace about 40% of the typical worker's pre-retirement income. Most seniors, however, need more like 80% of their former earnings to pay the bills in retirement. Therefore, if you're still working, you should be taking savings matters into your own hands regardless of what happens to Social Security down the line.
If your employer offers a 401(k), that's certainly a good place to start. At present, you can contribute up to $18,500 annually to a 401(k) if you're under 50, or $24,500 if you're 50 or older. This means that if you're 50 years old and don't have a dime at present, maxing out your 401(k) until age 67 will leave you with roughly $755,000 in retirement savings provided your investments generate an average annual 7% return during that time (which is more than doable with a stock-focused strategy). And that, combined with whatever Social Security ends up paying you, could make for a pretty comfortable retirement.
Of course, not everyone has the ability to max out a 401(k), nor do all workers have access to one. But even if you're only working with an IRA, whose current annual contribution limits are $5,500 for workers under 50 and $6,500 for those 50 and over, or a lower savings threshold due to personal circumstances, you can still amass a sizable sum if you save consistently for many years. In fact, contributing $400 a month over 17 years will leave you with $148,000, assuming that same 7% average annual return. Now, that's not a ton of money, but it could be enough to help fill the gap where Social Security leaves off.
No matter what happens to Social Security, there are two things you need to take away here: The program is not going bankrupt, and it also won't be enough to sustain you in retirement even if benefits don't get cut. And the sooner you start establishing your nest egg, the greater your chances of covering your expenses as a senior, regardless of what your benefits ultimately look like.
Awwww! The demoncraps won’t have anymore money to play with.
I got mine you get yours. Millennials? Screw them. They’re Marxists anyway. They’re for getting rid of those not useful.
Gramps said no big deal, he’s got a shotgun to go do his shopping with.
What trust fund? It is made up of IOUs as the SS payments are part of the general fund.
If we keep Trump in office and STOP throwing billions of dollars away on illegals the program won’t go broke.
Can members of previous decades of Congress and Administrations who kicked the can down the road be used for selling their body parts to raise funds for SS?
Ok so I read it. Set up your own trust fund? Ain’t gonna happen with most of us. It has to be MANDATORY just like SSI. So how do the brain dead millennials pay my SSI AND set up THEIR OWN accounts? How many of those are thinking about retirement? The only thing on their minds rhymes with wussy. That and paying for their next tattoo.
Do welfare and food stamps ever run short?
What happens? Fed.gov just issues more debt in our printed, fiat currency.
The Federal Reserve suppresses interest rates and/or engages in buying up that debt.
Problem solved, can kicked down the road.
Social security would be nowhere near bankrupt if congress paid back the billions upon billions of dollars they ‘borrowed’ from SS funds. Congress is on the hook to SS.
Maybe Social Security should not be allowed to spend more than it takes in. Try that!
Plus the cost of housing, feeding, educating, and providing medical care for ILLEGALS. And LEGAL defense as well.
Wait...
This cannot possibly be happening. AL Gore told me that SS was in a “Lock Box”, and did not need to be saved. The media told me that anyone daring to question that was a hater of OLD PEOPLE!.
What do I do now?
Probably the same thing that happens when any other ponzi scheme blows up....last people to pay in fet the shaft
It’s not a trust fund. It’s a Fedzilla run Ponzi scheme.
Soc Sec might run out of funds but you can bet welfare will continue to be funded.
My maternal and paternal grandparents had their share of tough times during the Depression. Even so, they managed to save and invest wisely. They weren’t living like the Trumps by any stretch of the imagination but still did very well for themselves. And with Soc Security as a supplement lived out their later years comfortably.
Government will print money to avoid reducing the benefits.
Think it has hit the fan over kids at the border, screw with Social Security and see what happens.
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