Last week i received on the mail my annual social security statement detailing how many years i have contributed, how much Social Security taxes i have contributed, earnings that i may receive … and lot more other details. Out of curiosity i checked the Social security website and these are some details i read from the site.
The current Social Security system works like this:
When you work, you pay taxes into Social Security. The tax money is used to pay benefits to:
- People who already have retired
- People who are disabled
- Survivors of workers who have died
- Dependents of beneficiaries
The money you pay in taxes is not held in a personal account for you to use when you get benefits. Your taxes are being used right now to pay people who now are getting benefits. Any unused money goes to the Social Security trust funds, not a personal account with your name on it.
This is not news but again according to the social security unless action is taken to strengthen Social Security, in just 13 years we will begin paying more in benefits than we collect in taxes. Without changes, by 2042 the Social Security trust funds will be exhausted.
It’s evident even from Social Security administration that – it may not be there for some of you reading this and most of your children and grandchildren!
How to prepare for retirement without social security
Get out of debt:- from my experience it’s almost impossible to save when you are in debt because the lenders will come knocking for their dues. Getting out of debt is not only a healthy financial plan but it also prepares you to start saving.
Save for emergencies: Because life happens with an emergency fund built, you will avoid going back to borrow money to cover for unexpected.
Invest your savings -understand the power of compound interest
Take advantage of all pre tax retirement benefits.
- Roth IRA for you and your spouse
- Company 401k or other plan that matches your contributions
Are you getting ready to retire without any social security benefits, or do you think it will still be there?
Related readings
This is a great post. I am forever trying to talk people out of relying on this disaster of a government program. Sure there are some that truly need this benefit, but there is something disheartening about the government taking your money in the name of your “retirement” , only to find that they have used that money for “other” programs which has led to the current bankrupt state of social insecurity.
Secure your own retirement by planning for it, is what I always say. 😀
Thanks for the comments Brad!
We hope our generation will realize that we cannot sit and wish that SS will be there when we retire.
I’m an embarrassed, “I’m entitled” senior, who for far too long has ignored the other side of my brain, which is screaming “who’s obligated” if you’re entitled. Government’s assault on middle class America created a weapon of monetary destruction (WMD) with the singing of social security reform legislation in 1983, that took social security funding from a pay as you go taxing structure ($1 in – $1 out), to a pay in advance taxing scheme ($5 in – $4 out -save extra $ for now retiring 78 million boomers). 25 plus years later, and the SS taxing scheme has turned a 2.5 trillion dollar (that extra tax $ has grown) potential asset into a 2.5 trillion dollar liability, that will have to be paid again plus interest. That’s financial water boarding, and my 15 grand children are entitled to something better than an “I’m entitled” grandpa, hiding behind the skirt of a Tokyo Rose PR campaign put forward by AARP. Working middle class Americans are the horse we all ride to our prosperity, and treating them like rented mules, will result in a society that, well acts like rented mules! To this end, a soon to be launched “community based” solution to the issues surrounding social security has been put forward, and If you have a problem being referred to as “I’m entitled”, or if you have an “I’m entitled” member of your family, then discover a way to shed that image at: http://www.americaretoday.com