As Americans are living longer, it stands to reason we are paying more for our largest national safety net, Social Security. In 1950 there were 2300 people Americans living over the age of 100, in 2010 that number had grown to 80,000, and by the year 2050 (35 years from now) that number is projected to grow to 600,000 people living at age 100+ !
The major cause of concern is that the number of payers into the system per beneficiary of the system is, and has been for some time, going down. That means the Payors will have to pay more, or the Beneficiaries are going to get less. In 1960 there were 4.9 payees for every Beneficiary, but by 2010 that number had shrunk to 2.8 payees per Beneficiary. The projections look to level out at just under 1.9 per Beneficiary for the foreseeable future. (US Census Bureau 2/12)
This means that there is less revenue coming into the system to pay for this benefit, and Social Security has begun to run a deficit! In 2010 Social Security paid out $48.9 Billion Dollars more in benefits than it received in payroll taxes! As the U.S. population ages more and more, this annual deficit is projected to grow to $344 Billion Dollars for the year 2035. It doesn’t take a math scholar to be overwhelmed by these numbers! They, on the very face of them, are unsustainable.
Please consider this article a clarion call to YOU! Don’t shrug your shoulders, acknowledge it, and turn the page! Those of you who turn 30 years old this year will be facing a future with either painful taxes in your prime earning years, drastically reduced benefits when you turn 65, or both! Take action to mitigate this eventuality. Start saving as soon as you can and keep putting that money away until you need it when you retire. For those of us over 30 the same can be said, even more urgently! Obviously, the more you can put away the better, but anything is better than nothing! Don’t say, “I can’t afford to put away enough to make a difference.” Would you rather have nothing and be trying to get on the meager payments that the system will deliver when you retire, or have a couple thousand dollars in the bank as well? You would be surprised at how $20 dollars a week, automatically deducted and invested, can add up to a sizable nest egg down the road! Take responsibility for your own future and don’t surrender your future to the winds blowing about the political landscape. Take this warning as a commonsense fact we cannot escape. If you fail to act on it, you will regret having done so!
If you would like to discuss any of these facts, or consider what a savings plan would look like for you, please contact me at ctrowbridge@farmersagent.com , 650-FARMERS (327-6377).
