One of the prevailing themes that come up in election years is the question of whether or not Social Security will cease to exist in the next twenty or so years. The way that politicians act, you’d think this was only an election-year problem, rather than something set to affect an entire generation of Americans. Unfortunately, since the system is so complicated, its easy to confuse the issue of social security and make it into an issue from which many different sides can draw conclusions that further their own ends. What results is a difficult to understand topic that takes far longer than one short article to really cover.
As the system is currently set up, the most significant problem facing social security isn’t fraud in the system or political dissension in Congress, but rather sustainability. Few would question the merits of the program, which provides retirement funds for the disabled and elderly Americans, but you can’t help but notice how very top-heavy the system is right now. As the baby boomer generation has begun en masse to retire from the workforce, more and more FICA dollars are being withdrawn from the tax rolls. In fact, It is estimated that right now, it takes six American workers to support one retiree through payroll tax. In the next few decades, as the rest of that generation leaves the workforce entirely, it is estimated that as few as three workers will have to support one retiree. Obviously, that means that there’s about to be a bump in that particular tax rate, or at least don’t be surprised if that is a dominant issue come the 2016 presidential election. The candidate with the best plan for Social Security might just be the one who takes the election.
The problem with reform is that there are thousands of special interests out there lobbying throughout the United States who would twist Social Security in a way that benefits their own special interest, but may not be good for the country. There’s always some under-the-table dealing, back room politics to deal with, and I think we’ve all seen just how thoroughly special interest groups can twist and reinterpret facts in order to further their own cause.
Of course, on the small scale, there isn’t much you can do about it. Pay the tax as it stands and vote for representatives who support your own personal values with regards to how the system works, and that’s about all you can do short of active participation and running for office yourself.
Now, that’s not to say that you have to automatically go with the hand you’ve been dealt. That’s what independent retirement savings are for. Don’t count on Social security, because even though we’d like to believe that it will always be there for us, someday there’s going to come along a politician with the right words to say who will change the system for good, though whether it happens for good or ill will remain to be seen. Think of whatever you are set to receive through social security as the money you enjoy your retirement on. Instead, depend on your 401-k and other retirement investments, and max them out every year if you can. Remember, the more you save yourself, the less you’ll have to worry about whether social security will be able to save you in the future. After all, the way things are going, you may be lucky to find your social security check able to cover your medications. Will social security be around, though? Not as we know it today, and certainly not in the way in which it was supposed to exist.