This is why you shouldn’t count on Social Security: It was Meant as a Last Resort

MarketWatch ^ | 10/28/2017 | Alessandra Malito

[SeekAndFind]

Many Americans rely on Social Security benefits to see them through retirement, but how much should they really be depending on those checks?

Not very much, experts said.

Social Security is not being used as it was intended, said Ric Edelman, executive chairman and co-founder of Edelman Financial Services in Fairfax, Va. and author of “The Truth about Your Future.” When Congress and President Franklin D. Roosevelt created the system in 1933, the program was designed to be a safety net for Americans — for those who had no financial support. Now, “a great many Americans are relying heavily on Social Security to maintain their lifestyle in retirement.”

More than 66 million people received Social Security and/or Supplemental Security Income in August, more than 46 million of which were Americans 65 and older. Social Security makes up a majority of cash income for 61% of elderly beneficiaries, and a third rely on this benefit for 90% or more of their income, according to the Center on Budget and Policy Priorities, a governmental budget policies think tank based in Washington, D.C. The average monthly retirement benefit under the Old-Age and Survivors Insurance was $1,326, according to the Social Security Administration.

Retired workers received an average of $1,371 while spouses of retired workers received $714 and children of retired workers received $659. “Social Security is funding as last resort, and if it goes away there is no government program to serve as a fall back,” Edelman said. “This is the fall back.”

How did Americans get here?

Unfortunately, it’s a familiar story: many Americans just haven’t saved enough for retirement, either because of poor planning or an inability to put money away for their futures.

[DesertRhino]

By the way, this hard hitting article came from someone too young to vote for Obama in 2008. Shes a 2009 high school graduate and another of the young pretty bloggers getting pushed forward.

Zero economic expertise.

[editor-surveyor]

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>> “THE SOCIAL SECURITY TRUST FUND IS ESTIMATED TO BE EXHAUSTED BY EARLY 2030’s” <<

The kingdoms of men are guaranteed to become the Kingdoms of Yehova in the fall of 2024.

There plainly will be no governments left on Earth after the assault on Jerusalem, so who is going to write the checks?
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[ProtectOurFreedom]

It would be criminal if an investment house took 12.5% of your salary, invested it over 45-50 years, and then said you shouldn’t count on it it. Utterly insane.

The head of any fiduciary firm that did that would be in jail by nightfall. It would be even more criminal if you saved that for 45-50 years, retire, die the next day and the CEO of your investment house told your heirs -- "Sorry. I have to give all your dear departed's savings to the government. Best of luck."

The program was designed in the 1930s for a very different country. It has WAY outlived its usefulness. A voluntary phase-out program should be created so people can either get paid-out a lump sum after X years or people just starting their careers can elect whether to join the government program or a private program. Bush I tried this (I think) and the trial balloon deflated pretty quickly.

[editor-surveyor]

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It was his money!
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[American Quilter]

...many Americans just haven’t saved enough for retirement, either because of poor planning or an inability to put money away for their futures...

... because the government robs them blind while they're earning.

[SharpRightTurn]

“Phase the government out of it over 40 years. Within 20 years, we could have the government out of 30 to 50% of the old Social Security plan, and 50% of the public headed to retirement fully vested in their own non-government plans. We just need to get to work on it, NOW...”

That is exactly the approach we should take.

[Oshkalaboomboom]

It’s not the 46 million recipients it’s the 20 million that shouldn’t be receiving it that is killing the program.

[Chauncey Gardiner]

They need to scrap it and do like Newt Gingrich suggested - adopt the Chilean model. It’s basically a Roth IRA on steroids that can be passed to your heirs. Lots of new millionaires in Chile.

[DoughtyOne]

I would not relegate it to a deduction for the employee. That would be swallowed up quickly by the federal government, which already gives the taxpayer a pretty healthy deduction. (if you’re not itemizing)

Another-words, the government would just keep it, gratis.

If it were to be deposited into a savings account, that would be better.

I really want to caution folks about before tax deposits. They can come back to really bite you on the posterior later on.

While those types of deposits may be best in the long run, I’d sure like to see more study done on it.

Emergencies come up in life, and massively penalizing folks and charging them withdrawal taxes to boot, can really deplete your funds very quickly.

The government gets a great big slice of emergency withdrawals. It’s your money.

I also want to caution folks not to come up with great sounding ideas how the help current workers. Swapping systems isn’t going to be easy.

Current workers should have better retirements because of the changes, but it may not be immediately as fixable as some folks would think. We still need to fund the current mess. So current folks may not be thrilled up front, but should have it better when they retire.

[cherry]

govt worker?

[PGalt]

Comments BUMP!

[cherry]

a state pension....got it....

[kjam22]

A dollar in 1968 is worth $7.12 today. Inflation. There is a website that calculates it :)

[PrairieLady2]

The problem with nest eggs is that they tend to disappear into unknown pockets when the nest gets too big. Take 2008 for example. People’s eggs disappeared into somebody’s pockets. 401Ks got wiped out. My kids were extremely poor and they had a big brood of kids. Yet, they managed to put some in their 401K. 20,000 disappeared into someone’s pocket. All that was left was 5K. They did manage to rescue that. If they had acted sooner, they’d of rescued double that. But, nobody was arrested.

I lost money too, but not as much as they did.

[Vigilanteman]

Yep. If it was supposed to be a last resort, why do they skim it off the top of your paycheck, force your employer to match and still call it taxable income?

At least, I can deduct 401(K) or IRA contributions off my taxable income.

[DoughtyOne]

Thanks.

BTW, I want to see plans that allow folks to self-insure for many of the things they insure for now. If handled properly, with high deduction polices, it could seriously reduce costs of insurance, and an accelerated savings plan.

I would like to see dedicated funds, which would deliver on the order of 5% interest on savings. Then I’d also like to see sound businesses be able to borrow for a few interest points above that.

As part of an overhaul of these sorts of things, I would like to see credit card interest rates addressed.

There’s no earthly reason why we should be unable to get more than 0.5% interest on our savings, and yet the credit card companies allowed to charge us 17 to 29%.

[Jim from C-Town]

18? I had my first job at 12 and my first payroll job at 14.

[mrsmith]

It would be a deduction FROM their pay.
I thought that was clear.
The first step in getting people to want to end or change SS is to tell them what they’re paying.

[FreedomNotSafety]

Not this crap again. SS was from its inception a tax and spend transfer scheme designed to break voter to the generous teats of the Democratic Party. It remains so to this day. It has been quite successful and now even conservatives extoll the sacredness of the intergenerational commitment and prattle on about how it has been mismanaged and how it could properly funded just by eliminating waste and fraud.

You should not count on SS because to do so makes you a ward of the Democratic Liberal Socialist Party and its vassal the USA federal government.

[dfwgator]

The problem with nest eggs is that they tend to disappear into unknown pockets when the nest gets too big.







David: Oh, God. I guess this was my fault. That’s what I’m thinking. Maybe I just didn’t explain the nest egg well enough. If you had understood… you know, it’s a very sacred thing the nest egg, and if you’d understood the Nest Egg Principle, as we will now call it in the first of many lectures that you will have to get, because if we are to ever acquire another nest egg, we both have to understand what it means. The egg is a protector, like a god, and we sit under the nest egg… and we are protected by it. Without it? No protection! Want me to go on? It pours rain. Hey, the rain drops on the egg and falls off the side. Without the egg? Wet! It’s over. But you didn’t understand it and that’s why we’re where we are.

Linda: I understood the nest egg.

David: Oh, please. Do me a favor. Don’t use the word. You may not use that word. It’s off limits to you! Only those in this house who understand nest egg may use it! And don’t use any part of it, either. Don’t use “nest.” Don’t use “egg.” You’re out in the forest you can point, “The bird lives in a round stick.” And and and you have “things” over easy with toast!