Will social security be there when I retire? Probably, but with caveats
One common refrain I’ve heard is that today’s young adults don’t (or can’t) expect Social Security (the combined Old-Age, Survivors, and Disability Insurance Trust Funds) to be there when we’re older. I understand that sentiment. There are very serious issues facing Social Security. Unless changes are made, we can’t keep paying out benefits the way we have been. (See this CNN Money series that explains the system).
But I don’t believe in the knee-jerk response that Social Security is dead! or that we are only going to get a few pennies when we reach our dotage. Government retirement / disability insurance is a valuable safety net for the disabled and seniors, even though I am still 40 years away from retirement age, I expect some form of Social Security payment to be there when I retire.
Safety net, not the whole kit and caboodle
Expecting some form of Social Security, however, doesn’t mean that I expect 100% of my benefits nor do I expect the government retirement insurance to be my only source of income in retirement. In fact, the Social Security Statement (an annual statement that is mailed about 3 months before your birthday) that I received last year tells it pretty much like it is:
…Social Security was never intended to be your only source of income when you retire. You also will need other savings, investments, pensions or retirement accounts to make sure you have enough money to live comfortably when you retire.
…the Social Security system is facing serious financial problems, and action is needed soon to make sure the system will be sound when today’s young workers are ready for retirement. In 2017 we will begin paying more in benefits than we collect in taxes. Without changes, by 2041 the Social Security Trust Fund will be exhausted and there will be enough money to pay only about 78 cents for each dollar of scheduled benefits.
These are sobering facts. Still, 3/4 payout of scheduled benefits (or even 1/2 payout) is a far cry from the dire prediction of absolutely zero benefits. Of course, many things can happen in the next 30 to 40 years, but I think it’s more likely that Congress will enact changes, such as means-testing for benefits, increasing eligibility age, lowering benefits, increasing the income that can be taxed under Social Security, etc. than allowing the entire system to go “bankrupt.”
What you can learn from your Social Security Statement
Looking through my Statement was quite interesting – it detailed the years I worked and my taxed earnings, the basis for which my future benefits will be calculated. According to my statement, I do not qualify for retirement benefits or Medicare benefits (although I have qualified for disability benefits) because I’ve only been working for a few years. You need 40 credits to get retirement benefits – a maximum of 4 credits per year. Every year, the income needed to get each credit changes – for example, in 2009 you would earn 1 credit for each $1,090 of income. That means if you’ve earned $4,360, you will have earned the full 4 credits.
Apparently, I only have 17 credits, but of course as I work more I expect to very quickly reach retirement payment eligibility. Now I understand why people who have stepped away from full-time work are penalized under the system – not only are Social Security benefits calculated from your total income, your own eligibility is determined by the number of years you’ve worked.
My bottom line on Social Security
Nobody knows what today’s 25-year-olds will get in terms of Social Security in 40 years, just like nobody knows if any one particular 25-year-old will live to retirement age. But I feel comfortable expecting something (both in terms of getting some Social Security, and living long enough for that to be a concern to me!). It’s too soon for me to incorporate estimated benefits into my planning, however. As I come closer to retirement I will take Social Security payments in account, but for right now I will continue to save as aggressively as I can for retirement.
Do you expect Social Security when you retire?
image source: socialsecurityretirementincome.com
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Social Security is not something I really count on–especially since during my time in the States, I was a California Public School teacher–we don't pay into Social Security, but a state run system. Now that I'm in France, I expect to bear full responsibility for planning my retirement. There's a retirement system in France as well, but I'll be a late starter in that system–and it faces many of the same challenges that the US social security system faces (although it IS currently meant to be a complete retirement system).
I try not to stress out about the unknown factor in government social security operations–instead, we work on keeping our living expenses low and putting our money aside in private accounts as well as my husband's French retirement fund. I feel keeping things 'diverse' is the wisest possible solution.
You don't have to work full-time to get the SS credits, it's based on income. That's why I already have my 40 credits at under 30. All my teenage years counted.
Besides, you're way too responsible to get this safety net. You (like me) are going to have way too much saved to qualify. Whatever the limit is, you're going to break it. Heck, I plan to make that a goal.
i don't expect anything but would be perfectly happy if it is still there
There better be something left because I'm putting so much in there. There will be hell to pay if I don't get something back. Seriously, those who just say that they are not counting on it being there needs a swift kick in their indifference. You people need to fight for what's rightfully yours and not let those who manage it steal it. Looking at the state of this country, sometimes I wonder if this country needs a bloody revolution. So much corruption.
"There better be something left because I'm putting so much in there." <— LOL. I'm sure I've only put in a fraction of what you have, and I feel the same way! But more than that I think Social Security, despite all its flaws, is a very important safety net that ensures our seniors don't slide into deeply impoverished circumstances, and just for that reason the system needs to continue. I feel like the prevailing sentiment that "I won't get anything from Social Security" makes it easy for young people to be disengaged from seeing the benefits of the system.
I’ll be thankful if there is when I retire but I don’t really see myself retiring by 65. I’d probably still be in a business or if not having my own personal projects (well if I am still healthy and physically reliable enough to wok on such projects). That is why it is important to save and be smart enough where we put our investments. I agree the social security is not there to act as our bread and butter, it’s there to give additional help to retirees have a still comfortable lifestyle.
First of all, this new generation can't retire at 65. Well, you can take early retirement, but the point is right now the limit is 67. I am guessing it will go up a bit to help pad the system.
But thank you for saying this. I get so sick of these people who just state unilaterally that they won't receive any benefits. Bull. Absolute bull.
Like you, I certainly don't want to depend on Social Security for our full retirement income. Which I suppose is a little ironic, since I'm on disability. But I'll (hopefully) be getting off that soon, if this job continues to go well.
After we polish off the credit card debt this summer, I want to increase our IRA contributions. Which is to say, increase my contributions and get Tim an IRA too. Still, we will probably always have to budget carefully to be able to afford to max out our IRAs each year. But it can be done; other goals will just require a little more work.
I'm not counting on it — but if SS does exist in one form or another by the time I retire (in about 35 years, yikes), I'll consider it a bonus. I plan to fund my retirement with my own money. Because if I don't and there's no SS 'safety net'? I'd be in big trouble!
I think most likely we will see one (or a combination) of the following changes put into place to get Social Security back on track: 1) Extending the minimum age that someone can start collecting Social Security benefits, 2) Increasing the maximum amount of income that one has to pay Social Security taxes on (currently the maximum is 107K), 3) Reduce the benefits, 4) not have as big of Cost of Living Adjustment
I've got about 35 years or so to go so its hard to predict, but I'm sure there will be something there. How much is open to debate. I think its a good idea to plan for nothing so you are prepared no matter what. That way anything SS throws your way is just icing on the cake.
I'd rather plan to not have social security and meet my goals – if I get SS, great, it's gravy. But if I end up not getting it, I won't be hurting either.
In trying to track down information for my mom several years ago at social security I was put on hold. The message stated current taxes are paying for current recipients, it’s not going into some fund for the future, but is being used right now. So when my mom said, “I paid into it, it’s my money”, I told her, “no you paid for your older people, we’re paying for you, so think before you get that Hoveround”. Even so, we hope our kids will have jobs in the future, and pay their taxes, so there will be something for us.
I don't expect any benefitswhen i retire. I'm not sure about the specific of the US but Australia's demographics are such that we have a dramatically aging population. The Baby Boomers didn't have enought kids to replace themselves. By my calculations here the tax burdon will have to double to cover medical (free health care in Australia) and the Pension for baby boomers, which isn't going to happen without crippling the ecconomy.
Personally I think Pensions are the biggest Ponzi Scheme going.