Social Security Insolvent by 2034
Social Security Insolvent by 2034? According to experts, this is the hard cold truth. By 2034, not only will the fund be insolvent, but benefits will have to be reduced. This is a scary thought for people like me who are scheduled to retire around this time.
What Happened to the Money I Paid Into Social Security?
This is the big question that most people want to know the answer to. Where is the money that we all have already paid into the social security fund? The money that we’re paying into social security is currently being used to pay existing retirees.
Basically, the system is flawed. In the upcoming years there will be a boat load of people (primarily the baby boomers) retiring. These individuals are putting a strain on the social security system because not enough people are working to pay into the Fund to replenish what is being depleted. In other words, there is more money going out than coming in.
It is expected that by the time we get to the year 2035, the Social Security Fund will be insolvent and will only have 77% of what is needed to pay Senior Citizens.
Social Security Insolvent? What Can The Government Do to Help?
The government has already started to up the age when people can begin to receive their benefits from 65 to 67. But for most people, the magic number is 62. That is the age when most individuals believe that they will be able to start collecting the benefit. This is true. However, when you start collecting at this age, you actually take a 30% reduction.
Aside from upping the age in which one can receive their benefit. The government can increase the FICA tax, which could prevent social security insolvency. Another thing the government can do is cut benefits for individuals currently receiving monthly social security benefits. And while this is not ideal, it’s a viable solution.
The Reason Social Security Is Going Bankrupt
Because people are having less children and living longer, this is putting a strain on the social security fund. The overall population is aging and there is no plan available to deal with these new demographics in this country.
What Can You Do To Protect Yourself?
Basically you have a few options. 1) You can work longer and 2) You can save more money now. This is the only way to truly have enough money to retire. Find something that you love to do. Stay healthy and keep working. Or find a good side hustle like blogging or selling something online and make the money that you need to retire.