In recent years, the topic of Social Security has gained some heat and concern throughout the country. The Social Security Act began in 1935 as a social insurance program that was designed to pay workers a continuing income after retirement. Unfortunately, social security was designed to replace only about 40% of retired worker’s income, and today many Americans rely on social security benefits to keep them afloat. According to The Social Security Administration (SSA), it’s estimated that about one-third of today’s beneficiaries depend on social security for more than 90 percent of their retirement income.
There are a few different factors that play into the future of social security — mainly changing demographics. The currently affected generation consists primarily of baby boomers that are entering retirement. Longer life spans and reduced birth rates following the boomer generation have contributed to a severe depletion of social security funds. Though this has been an issue for an extended amount of time, in recent years, the fall of social security has become much more predominant.
The future of social security is wildly uncertain right now. Issues with funding have caused a depletion in trust fund benefits leading to potentially long-term insolvency. In short, social security will ultimately spend more than it takes in. Experts predict that benefits for both social security trust funds combined (retirement and disability) will be reduced by approximately three- quarters until the reserves are eventually exhausted by 2035. Though this is the prediction, it does not mean the social security program comes to an end entirely.
For future generations, the uncertainty of social security is a cause for some concern. Generations that will be affected down the road are starting to take the necessary steps to secure a healthy retirement plan in the event of a social security downfall. Seeking an experienced financial advisor is a great way to get the right guidance for your retirement. Your advisor can assist you in building a substantial savings and investment strategy that will help lead you to a comfortable and stable retirement. In short, thinking that you can get by on social security alone is a surefire way to run into trouble in retirement.