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malendaz
in
Careers & Employment
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658 days ago
malendaz's Answer
Social Security encompasses a constellation of services provided by the US federal government, including Medicare, Medicaid and Supplemental Security Income (SSI). Americans have been counting on Social Security programs since the 1930s, but of late there is increasing uncertainty surrounding its future. Given the looming prospect of insolvency around 2040 and a history of political tinkering with the program, should you count on Social Security to help fund your retirement?
Social Security and Insolvency
Social Security is funded largely through payroll taxes on individuals. For a long time, that system worked well. However, due to the increasing number of retirees claiming Social Security benefits (many of whom are living longer than past generations of recipients did) and a dwindling number of working-age adults paying into the system, payouts have begun to exceed contributions. This raises the specter of insolvency. Projecting ahead, if the Social Security system kept paying out benefits at the current rate, it would reach a point of no return in 2040 or so. According to the Social Security Administration, if the system becomes insolvent, the poverty rate among retirees will double. That possibility alone should galvanize you to build your retirement plan around something other than Social Security.
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