Social Security – What is it really?

I’ve read many opinions about Social Security.  Everyone agrees it’s a flawed system about to collapse.  Let me first explain very briefly what it is, and why so many are concerned.

What is it?  Social Security was created in 1935, and it’s job is to protect elderly and disabled people from poverty. 

How does it work?  Part of the paycheck of every worker in the US is taken from them before they even see it.  This money is given to retired people to help them pay their bills.  The young healthy workers’ money is given to the older population.  This system works great when there are many many young workers, and not so many retired people getting benefits.

Why is it messed up?  Any ten year old will realize that the system will break down when there are more retired people than young workers.  The “Baby Boomer” generation is huge, and as those people retire, more and more people are getting money out of the system, and fewer and fewer people are putting money into the system.

When will it crash?  Experts say that by 2036, the savings will be gone, and all retirees will not get as much money every month.

Will they do something about it?  In politics, it’s always hard to change a huge system until it really crashes.  Although people are complaining already that something needs to be done, it’s likely that the nation won’t really focus on a change until the cliff is right in front of us.

What will they do about it?  That’s the million dollar question.  Some want to “tweak” the current system to make it more sustainable.  Others want to throw the entire thing out the window and do something completely different to help people. 

What is the bottom line?  If you are going to retire in a few years, count on Social Security.  Go to the AARP website to calculate how much you’ll receive.  However, if you are planning for retirement many years from now like me (full benefits from the program wouldn’t apply to me for 40 years), then don’t count on Social Security to be there for you.  Hopefully something will take it’s place, but there is no guarantee.  If you want money saved for retirement, don’t count on the government to do it for you.