Funny thing about human nature; we will believe many things with no proof or substantiated evidence. After all, it’s just a matter of time before Big Foot strolls through someone’s house, extends his hand..or paw…and introduces himself, right? It’s just part of the human design: we are capable of believing most anything. Unfortunately, it’s the rumors about important issues that can cause problems. This week, we take a look at a few of the big untruths about Social Security.
Granted, the complexities are nothing short of overwhelming. Many financial experts will throw their hands in the air and say, “I gave up trying to figure that out years ago.” Once you get the myths out of the way, the truth comes shining through.
Social Security is Broke
The vast majority (upwards of two-thirds) of Americans say they’re worried the Social Security system is broke or will be by the time they retire. In fact, a recent AARP survey showed less than 35 percent of adults say they’re confident in the future of the Social Security system. Now, the reality is, there is trouble and if the potential problems are addressed and resolved in the coming years, there will be a crisis, but it’s nowhere near in our immediate future. In fact, there are a number of solutions being considered that will head off future shortages.
The Government “Borrowed” Fund Assets
Surplus payroll taxes that aren’t being used for current benefits are used to purchase special-issue, interest-paying Treasury bonds. So in a word, yes. The government has borrowed the funds; however, the reserve – close to $3 trillion – is backed by the full faith and credit of the federal government, just as they are for other Treasury bondholders. It’s nearing time for the Treasury to pay back these bonds and this will indeed put pressure on the federal budget, according to Social Security’s board of trustees. Even without any changes, Social Security can continue paying full benefits through 2033. After that, the revenue from payroll taxes will still cover about 75 percent of promised benefits.
Who Needs Social Security Anyway?
Many people believe (and often, they’re right) that they can better invest their money to cover their future. Social Security is designed to be the one guaranteed part of your retirement income that can’t be outlived or lost in the stock market. It’s a secure base of income throughout your working life and retirement. The reality is, even the best laid plans sometimes fall apart and with so much of our future being gambled on stocks anyway, this is one way to better protect those uncertainties. In fact, Social Security provides the majority of income for at least half of Americans over age 65; it is 90 percent or more of income for 43 percent of singles and 22 percent of married couples.
You’re investing in a retirement fund already and ideally, we all get out what we’ve put in, but these days, there’s overwhelming market turmoil that’s causing a lot of sleepless nights. If it falls apart, though, it’s good to know that one aspect of our future isn’t being gambled on the whims of day traders.
Want to learn more about Social Security or are interested in filing but not sure how? It’s not a gamble to call us; our experienced estate planning lawyers can help you meet your financial goals.