Will Social Security Last for Me?

Has Social Security Gone Bankrupt?

Is this working for you or against you? Will you be needing more payday loans in your golden years? (Photo: wikipedia.org)

Is this working for you or against you? Will you be needing more payday loans in your golden years? (Photo: wikipedia.org)

When the concept of Social Security (SS), or Old Age Survivors Disability Insurance, was developed, payday loans were nowhere near as popular as they are today. In fact, they were looked down on as a type of “predatory” form of lending money. Social Security became a way for the elderly and disabled to be assured of an income from the government even though they were unable to hold down a “regular” job. Funding for this program came from taxes on wages from people who were able to hold down a job. This was fine when there were less people needing it, but today, it has become another story.

Social security is funded by the younger generation who pays into the fund through the SS tax, and when the “baby boomers” were all gainfully employed and supporting the older generation, there were no worries that the SS program would become bankrupt. But now that so many of that generation are retiring, my generation must fund their retirement through taxes on our wages—leaving us to wonder—how will we be able to fund our own retirement? Has the fund gone bankrupt? Or will it in the future?

A Pyramid Scheme—But Legal

A pyramid scheme allows the people who first “got in” to reap the benefits, i.e. more money, from those who “bought in” later. Those who come in later must work twice as hard to make the same amount of money and reap the same benefits, if they are lucky. Anyone who has joined a MLM company can testify to how difficult this can be. When emergencies arise, it can be difficult to handle your emergency without some assistance from a payday loan.

Critics of the SS system have also likened it to the illegal pyramid/ponzi schemes, due to the fact that the younger generations (i.e. those who come in later) are funding the older generations (i.e. those who got in earlier). The small difference is that this system is legal and government-run. Other legal retirement programs being currently perpetuated that are similar to the SS system, but are managed by other companies and industries. These programs will be discussed in a future article.

The Current System

Because there is now a larger retired population than at any other time in history, it would make sense that there are less people to fund the current social security needs. It should also make sense that there will be less and less money to provide for future generations or retirees. In fact, you can be pretty sure that your SS checks will be at least one third of your working income before retirement. As inflation hits, will this really help you to maintain your standard of living?

No one really can be certain what will happen in the future. However, propositions are being made to tax the upper income earners more than they have been in the past, so that there is more money for future retirees. Will this work? Or will this extra tax be avoided in the form of tax shelters? Who knows?

Better Options

If you want to exist on more than just social security and payday loans, you need to plan and save for your retirement. But how? Many financial advisors would have you believe there are only certain financial products that are the best choices for your retirement savings. However, retirement savings are as individual as you are, and need to be customized for your specific needs. Only you can know your specific needs. Take control of your financial future! (And look for the next article in this retirement series.)

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