In an announcement during a press conference on Aug 9th, Secretary Timothy Geithner said that Social Security benefit payments are expected to “exceed tax revenue for the first time this year, six years earlier than was projected last year.” He went on to say that “it is projected that tax and interest income will be sufficient to pay benefits through 2024, after which the Trust Fund will be drawn down until depleted in 2037, the same date of Trust Fund exhaustion projected last year. After 2037, it is expected that tax income will be sufficient to finance more than three quarters of scheduled benefits.”
The Boards of Trustees for Social Security and Medicare released their annual financial status reports on the two programs Thursday, August 5, and warned that while the outlook for Medicare has “improved substantially” because of program changes made in the Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act of 2010, the outlook for Social Security is “little changed” from last year, with the short term outlook “worsened by a deeper recession than was projected last year.”
Isn’t that nice…
In his comments at the August 5 press conference, Geithner said that despite the projection that Social Security can continue to pay full benefits for nearly 30 years, “the sooner action is taken the more options for reform will be available and the fairer reforms will be to our children and grandchildren. Now that we have taken meaningful steps to put Medicare on a sustainable path and moved quickly and aggressively to rescue our economy and put us a path to continued future growth, we must work to address the other intermediate- and long-term fiscal imbalances that the federal government faces as well.”
I feel so much better…
The question of Social Security surviving is the most debated issue in politics today (aside from the First Lady’s dress du jour). My questions is simple: how do you take money from Americans for decades, and then tell us that benefits have been exhausted, I won’t get paid when I retire even though I paid in for years and years, and I can’t get a refund of my contributions? If I ran my business this way, would I not go out of business too? Where is the fairness? Is this really the American way?
The aging of America Baby Boomers is the most pressing national issue of the century. Hallmark Cards sells about 85,000 100th birthday card each year. Social Security was originally intended as a supplemental retirement income source for the minority, but has become the primary income source for the majority. In 1945, the contributors to Social Security outweighed the recipients by 16 to 1. In the 2005 census (2010 not yet available) the ratio changed to 3.25 to one- and we wonder why the system is going broke. According to the same census, 65% of retirees use social security for 50% of their income, and 33% use Social Security for 90% of their income. It would take $10.4 trillion, or $100,000 per family to achieve sustainable solvency.
The answer? We must all take responsibility and save for our own retirement. Utilize your 401(k) or Tax Sheltered Annuity. Make your Traditional or Roth contributions for as much as the law allows. Invest wisely, and find the best advisor you can to walk along with you on your journey to retirement. If you even question this philosophy, just look at the alternatives…
