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Those words are repeated in video after video on Facebook by seniors (possibly actors) complaining they can’t pay their bills because Social Security is inadequate and does not keep up with rising costs. “We worked our whole lives and paid into SS and this is what we get?” they ask.
What is disturbing to me are the thousands of “likes” the videos receive and the hundreds of agreeing comments posted every time. In essence, agreement with the basic idea Social Security today is not what was promised. The fact is, it is exactly what was promised by FDR.
“We can never insure one hundred percent of the population against one hundred percent of the hazards and vicissitudes of life, but we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age.”
To make matters worse, misinformation and outright lies are rampant-perhaps intentionally.
Nobody stole SS funds, nobody misused the funds, Social Security would not be solvent if we eliminated the FICA wage cap, any illegal collecting of benefits is very minimal, and your benefits are not based on FICA taxes paid as some claim.
SS is insurance; way more than retirement income and provides benefits far beyond any funded by an individual’s taxes.
Demographics are the main cause of inadequate funding at current tax levels. The Trustees have been warning for over a decade changes are needed to maintain promised benefits.
Is this retirement in America? Do seniors reach age 65 assuming Social Security will carry them through? Relying solely or mainly on Social Security when retired is not doing everything right.
According to AARP estimates, Social Security provides these income replacement levels.
• Low earners: ~57% .
• Medium (~$69k): ~42–45%.
• Higher earners see lower rates ~35% at $111k.
It is sad many seniors reach the point of desperation in retirement, especially when it is the result of going through life with a lack of basic financial education and planning.
What is the solution? Essentially a fundamental change in lifestyles before and after retirement, but don’t count on that. Greater financial acumen and prudent behavior? It would help.
Simply increase Social Security benefits to achieve higher income replacement levels? That requires higher taxes, but even before debating that, we need to make the program sustainable as it is.
I see no way to improve retirement income without individuals taking more responsibility during their working lives, something obvious to HD readers.
The main benefit I’ve received from HD over the years is clear-eyed information about what’s to come. I’m 59 years old, but I’ve become conversant with Social Security claiming strategies (age 62 / 67 / 70) from Mr. Quinn and others. I generally can quantify how much my wife will pay for Medicare and supplemental insurance – and the amount of the IRMAA discount / premium that we’ll pay. And I give thought to which accounts I use to buy stock ETFs and bond funds to minimize taxes.
But it all takes time. And effort. And, to modestly compliment the HD community, some amount of intelligence and sophistication. No surprise that the gist of RDQ’s column above is that some folks don’t put the time / effort / skill into figuring out these things until it may be too late. Yes, people are surprised by the amount they’ll get from SSA. They shouldn’t be.
I agree, we all must take responsibility for our financial lives.
We realized that whatever we didn’t spend during our working years is what we would live off in retirement, supplemented by Social Security. So we chose a suitable lifestyle that would still be affordable, once retired. That is to say, “live below our means”. To paraphrase Buffett, its not a game which requires a high IQ, but rather emotional discipline.
To me that is the key, a lifestyle that considers one’s entire life, not just phases along the way. We lived off my base salary and during children’s college years a part time job out of necessity, but we saved all the bonuses I received in the last five or so years before retirement. Those investments now generate significant dividends and interest if we need it.