Social security is something that we pay into our entire working life. We do this with the understanding that when we get older, we can stop working and keep getting paid.
As we have all heard for years now, that might not happen. But is social security in danger? Here we list some of the myths about social security and break down if there is any truth in them.
Social Security Is Just a Giant Trust Fund
While the Social Security Administration does refer to the program as two trust funds, it doesn’t operate as a typical trust fund would.
The two trusts are for disability and pensions – but your money isn’t stocked away and placed aside for you. The investments that are made aren’t personally yours.
Social security works more like an account ledger where money is credited to social security based off of tax receipts. No actual money is exchanged and put into a trust fund.
By the Time I Retire, Social Security Will Be All Used Up
The program will face a shortfall by 2034 if things don’t change. However, the money won’t be all used up. The program will have to start paying out fewer benefits than most people have expected to receive.
It’s because of this only 16 percent of people feel like they will be comfortable in their retirement.
That’s where financial planning comes in; talking with someone who can sit down figure out your finances and set up a retirement plan can help put your mind at ease.
This becomes more and more important as the social security fund continues to dwindle.
The Social Security Problems Can’t Be Fixed
There are a few ideas being considered that could fix the issues that social security is facing now. One of them is raising the cap that people pay to $132,900. The other is raising the tax rate from what it is now.
For example, raising the tax rate would cost workers around 50 cents a week, and would help to replenish the fund.
As you can imagine, anytime a plan includes people paying more there is a lot of lag time in getting it passed. Understandably, no one wants to see the money that they take home diminish.
Is Social Security in Danger?
Like any big issue, you can’t easily answer the question of, “Is social security in danger?” But there are things that can be done to secure the funds for the people who will need them, either due to disability or retirement.
There are people who are trying to change how we pay into the social security fund. On the other hand, you can take it into your own hands and sit down with a financial adviser and plan your own future.
If you would like to tackle the future on your own, schedule a call with us. We’d love to help you feel secure about your retirement.