Relax, Social Security Benefits Aren’t Going Anywhere

I’ve seen this before, and I want to share it with all of you. Many people are worried that social security won’t be around in the next few decades. If that’s the case, it won’t be because it runs out of money.

From a recent New York Times article: according to the last annual report from its trustees, Social Security will be able to pay full benefits through 2037. That’s only 27 years away, so for most, it will run out while you’re still around.

So what will happen after that?

According to the same report, if there are no changes made to the program, there will be enough to pay out 75% of benefits through 2083.

Now that sounds pretty good.

I’ve advocated not relying on Social Security, but I have also said this it will be around in some form for many years to come. I think that if we plan well aside from this, Social Security will be an added bonus that will allow us to live an even better life. If we save early and often and then find out later that we’ll have several thousand dollars coming in each month, isn’t that super awesome?

We pay 6.2% of our income to Social Security (which seems like a ton!), and while I’d love to be able to control my finances instead of relying on others to give me a low rate of return very far down the road, we do have a system in place and we have to live with it. So let’s make the most of it, take what we can get, and if the rules changes, we’ll be able to adapt and hopefully it will get a little bit easier to retire (early/in style).

Plan for the worst, hope for the best.

For some people, 75% isn’t enough and they will argue that if they paid into it, they should get 100% of their benefits. Agreed, that sucks, but the world isn’t perfect, but we have to take lemons and make lemonade.

I think that considering how worried people are, 75% sounds pretty good, and that’s if there are no changes made, which still remains to be seen.

Readers, does this information make you feel better? Worse?

13 Responses to Relax, Social Security Benefits Aren’t Going Anywhere

  1. Money Beagle says:

    Yeah, when I do various scenarios, I typically leave Social Security there, but unless something huge happens with the country or the world, I think it will be around in some fashion. To what degree is the $64,000 question!

  2. Little House says:

    Wow. Did you and Len decide to debate this topic today? I just read his stance on Social Security and he isn’t sounding so cheery. Actually, he’d prefer to do away with Soc. Security altogether. I really can’t say much for social security since I haven’t paid into it since 2001. I pay into a pension plan instead (through a school district). If I get a little bit of my money back that I did pay in,then great. If not, well I guess that’s just the way the cookie crumbles. Of course, I would like for Medicare to still be around. Medical expenses can really rack up when you’re older and beginning to fall apart!

    • Daniel says:

      @Little House, we did not, but I liked his article. I would love to stop paying into it as well, but I don’t have that choice. $114,000 is a lot of money, I’m not sure I would make that deal with the government. I would settle with them and take $50,000 upfront, if I were in his position.

  3. Evan says:

    Why should anyone be so accepting of a horrid ponzi scheme? Even if it is 75% of what they promised me for my adult life (only 28 here, but still) then the amount I should have to put in should also be less!

    Would you completely opt out if given the chance?

    • Daniel says:

      @Evan, It’s a broken system, no doubt. Why it’s still around, I’m not sure, but if we changed something, we’d have higher taxes to pay for the people who didn’t save themselves.

      If I could opt-out, I would most definitely do it. I trust myself to handle my money more than I trust the government to give me a low rate of return. I prefer to have my money, not be required to let the government borrow it with no real promise of return.

      Changes will be made, and there will be a shortfall somewhere. I just hope I’m not hurt too badly.

      Evan, what do you suggest we do? Complain amongst ourselves? It seems like we’ve been in the same situation for a few years now and not much is happening.

  4. Nicole says:

    What’s probably going to happen is that eventually the NRA (normal retirement age) will be pegged to life expectancy, but the ERA (early retirement age) will be kept at age 62. There will probably be other smaller changes going forward that will encourage people to keep working and paying in and possibly elimination or increases of tax caps.

    Policy makers really aren’t as worried about Social Security now as they are about skyrocketing Medicare costs. If you look at the CBO projection charts they’re terrifying. Social security barely registers as anything compared to Medicare.

  5. Nicole says:

    p.s. I would hope that for folks who are looking at personal finances now that Social Security will only play a minor role simply because we have so much in savings. Personally I am quite happy with the small forced annuity because I know plenty of people (relatives) who would not be saving otherwise, or would be essentially gambling with their retirement savings, and I’m happy that the government forced them to save so that I won’t have to provide the minimum subsistence later on. They can take their monthly Social Security checks with dignity because they earned them. Social Security has done wonders to diminish poverty among the elderly and near-elderly and for that I am very thankful, even if I’m not going to be getting much out of it myself (other than not having to provide so much for cousins and uncles etc.).

  6. Yep, good old media sensationalism saying there will be NO SS benefits for anybody! waaaah!

    75% is much better than 0%, and that’s considering the gov’t does nothing.

    Better than kick in the face!

    • Daniel says:

      @Financial Samurai, Agreed, this has totally been blown out of proportion. My only hope is that the government doesn’t fiddle in the way of taxing us more to make up for it! That money has to come from somewhere! Show me an opt-out option!

  7. I’d either love to stop contributing and just consider my last 10 years to be a lost cause or I darn well want a payout when I retire. 75% is way better than nothing, but I will still be holding a grudge…

  8. Jim says:

    they way i look at it 75% is not enough. if it were my money i would either invest it differently or ensure that i got the full 100%. so long story short i makes me upset.

  9. Doug Warshauer says:

    Thanks for getting this important information out there. People have been over-scared about Social Security going away. It’s clearly not going to zero. Nicole is probably right, the retirement age is going to increase, and, as was done in 1983 when Social Security was “fixed” then, the impact of that change will be staggered, so that people closer to retirement will have their retirement age pushed back further than people in their 20s and 30s. But my guess is that even people in their 20s and 30s will ultimately receive more than 85% of the benefit they are currently entitled to. (The 75% would apply if the tax were not increased at all, and chances are the solution will include a combination of raising the retirement age and increasing the revenue collected through Social Security taxes.)

  10. Wise One says:

    I’m 50 years old. I want SS to be there and to be strong. I am sick and tired of the politicians lying to us about the status. Democraps say there is no problem, just needs minor tweaking; Republicraps say it is bankrupt and cannot be fixed. Some or all of them are lying to the people about one of the most important things in our lives: our retirement income. They are using us a pawns to gain power. What these lowlife scum deserve cannot be written without being thrown in jail.

    I’d be willing to pay significantly higher payroll tax to ensure a steady retirement income. The stock market is just a gambling casino, totally corrupt, and should be shut down or regulated VERY HEAVILY. There is no “investing” in stocks – it’s just “betting” and “gambling” by the big fat cats.

    The Republicraps will be given another opportunity next week to get things going in the right direction. If they try to privatize SS we will remove them in 2012.

    Medicare is bankrupt I hear to the tune of many tens of trillions of dollars. I’d be willing to eliminate that program. Pay for your own health care.