With the turn of 2013, and the immediate passing of the fiscal cliff worries, the focus has shifted to the U.S. deficit and whether or not Social Security is headed for the chopping block. As it stands, the unfounded liability in Social Security is between 80-160 trillion dollars! The discrepancy in the numbers is because 80 trillion is based on a life expectancy of 75 years, whereas Americans who are born today are anticipated to live at least 80 years. Thus, the unfounded liability ranges from 80-160 trillion. At any rate, either number is incomprehensible! With a nation that is already in debt, and searching to find a way to either cut expenditures, raise taxes or both. Social Security is certainly getting some negative attention.
Will Budget Debates change Washington’s Social Security’s Commitment To Senior Citizens
The Congressional Budget Office concurs that Social Security, Medicare, Medicaid are our biggest financial problems and account for 46% of our non interest spending over the last decade. This is up from 27% in 1975. The biggest problem is not the retirees, or the amount of people living longer, the issue is the programs themselves. They are not sustainable over time. When Social Security was originally designed, very few people were living to the age of 65. As the life expectancy has increased, the people redeeming social security has gone up as well.
I Thought Social Security Had A Surplus?
At one time social security had a surplus set aside in the U.S. Treasury as a “rainy day” fund. This surplus was supposed to be collecting interest for times like this when Social Security is collecting less than they are paying out. The problem is, the government has “borrowed” from Social Security’s surplus fund and has shunted it to other expenditures. Thus, Social Security doesn’t have that money at their disposal when they need it the most. It’s like having a run on the bank.
Many people over the decades have depended on social security as a reliable source of retirement income. Unfortunately, the face of Social Security is changing, and generations to come may need to become more creative when planning for retirement. If you are nearing retirement this fact is probably rather frightening. You will need to save more, and invest your savings wisely to be adequately prepared and financially sound during your retirement. For more information on how to plan for retirement talk to a redhawk advisor near you today.