Social security administration

Will Social Security Be There For You?

By Larry Ferstenou

Based on You CAN Retire Young

You can count on Social Security being around for many more decades; but don’t expect it to be the same as it is today. Rather than running annual surpluses as the program has done since 1983, there will be deficits; rather than getting back far more than they paid in like today’s seniors, future retirees will get back only a fraction of what they’ve paid in.

The Social Security Administration Trustees project that once expenses exceed income, which will occur in about 14 years, and the trust funds are exhausted (and those funds are comprised entirely of IOUs from the federal government), there will only be enough income through FICA taxes, in addition to the taxes paid on benefits received by Social Security recipients, to pay 73 percent of program costs; that is projected to slowly decrease to 67 percent or less.

In other words, unless changes are forthcoming, most baby boomers and younger generations can optimistically anticipate receiving less than three-fourths—and possibly two-thirds or even less—of the monthly benefit amount shown on the Social Security Statement they receive each year from the SSA. That will be better than nothing, but Social Security isn’t a retirement program upon which any of us should stake our future financial independence.

Consider the FICA taxes you have paid, and will continue to pay, as your contribution to today’s elderly—which may include your parents and/or grandparents—many of whom would be living poorly without it (and many who are living well with it). But do not plan on your children or grandchildren doing the same for you. There will be too many of us and too few of them for us to receive the same level of benefits today’s retirees receive. Planning to retire on Social Security alone will mean either living in poverty or working into your 70s or 80s, maybe longer. If you don’t want to work forever, the onus is on you to do something about it. Start planning today so that working the rest of your life can become an option rather than a necessity.

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Larry Ferstenou retired over ten years ago at age 42 and is the author of You CAN Retire Young: How to Retire in Your 40s or 50s Without Being Rich (American Book Business Press, 2002). More information can be found at www.youcanretireyoung.com. Copyright © Larry A. Ferstenou, 2002–2003.