Home > Economic Update > Happy Birthday=Social Security / 75 years! Can we save it???

Happy Birthday=Social Security / 75 years! Can we save it???

Are You Ready For A

Social Security System Overhaul?

I don’t know about you, but I’m beginning to wonder about belonging to the sandwich generation. Not only am I taking care of my kids, but also my aging parents. And we’re all seeing less and less of our paychecks thanks to an ever increasing deficit in the funds pool for Social Security, among other things. With so many baby boomers signing up for Social Security over the next few years, is there any wonder why so many people in my generation are starting to think that there won’t be any money left by the time we retire?

Are You Ready For A Social Security System Overhaul?

Even the Congressional Budget Office is worried. For the first time since its inception, Social Security will actually be taking in less than it’s going to pay out. Experts agree that the deficit would last through 2013 before rebounding slightly and then slipping into the depths of oblivion forever.

I guess we should be thankful that it’s the Obama Administration’s goal to revamp everything that’s ever been wrong with this country over the four years he’s in office ;) . So, it looks like it’s Social Security’s turn to get a face lift. In my mind, this might be a good thing if it hadn’t been for the government spending the cash on other things that caused the deficit in the first place. Of course, they never intended for this to happen, but it seems as though bailing out Wall Street, two of the Big Three, and paying for the executive bonus packages and employee retention bonus program for AIG, not to mention supporting a big expensive war that doesn’t appear to be on the verge of victory any time soon, has left them more than a little strapped for cash.

social security system

So, here are some of the ideas that Obama and company are throwing around to revamp Social Security.

1. Edging up the retirement age. Currently, you can begin drawing Social Security benefits as early as 66 years of age. In the current design, this age would be increased to 67 by 2027, but some don’t think that this idea is aggressive enough to make a dent. Experts want to move this time table up by adding 1 month every two years. This sounds like a reasonable plan, but this will still only address about 20% of the expected shortfall.

2. Reducing the amount of benefits you’ll be entitled to. This one bugs me because of the selective nature of this recommendation. The plan is designed to hit middle and higher income earners only, while sparing low income workers, such that the first group will end up receiving less benefits than everyone else. It feels very Robin Hoodish-you know: steal from the rich and give to the poor, except that many people who are labeled rich aren’t truly rich — they are mostly regular people like you and me.

3. Raising taxes. You should expect our government to rely upon the obvious fallback — taxation. Yes, the Feds want to take a larger portion of your wages in order to make up for a deficit they created. And here’s the sad part: this is probably the only way the existing deficit will get addressed, at least in the short term.

Tip: Instead of relying entirely on social security benefits to fund your retirement, take matters into your own hands and plan for your own retirement. Here are some of our articles on retirement planning:

The fact is, neither Obama nor any other sitting president will allow Social Security to go by the wayside…at least not on their watch. I’m not sure what the solution is to this problem, but we’re not going towards privatization here, at least not yet. The privatization of Social Security, as once proposed by the Junior Bush, is currently on the backburner.

While I like the idea of deferring my contributions into a 401(k) style account that I can manage and grow, I can’t see this one being an option under the current administration. Employing a program this radical can have far-reaching ramifications and it’s not one that the government is interested in worrying about at this time. So maybe a cost of taxation raise isn’t out of the question.

Categories: Economic Update
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