Will Social Security Be Around for Your Retirement?

As Baby Boomers move from careers to retirement, the Social Security trust fund is slated to begin paying out more in benefits than it receives. That makes it something of a ticking time bomb, particularly if nothing changes to further fund the trust and you’re not near retirement age. So will Social Security be there for you when the time comes to retire? A lot depends on your current age.

 

The Expiring Social Security Trust Fund

The Social Security Trustees issue a regular report predicting how long the trust will be around without further action by Congress. The most recent report suggests the trust will begin going bankrupt in 2033. In 2033 and thereafter, retirees may receive partial payments only, and new retirees might receive nothing at all. Current projections are that people retired in 2033 can expect to get about 75% of their benefits, though the figure steadily declines the longer the fund is left bankrupt.

 

What to Expect if You’re Near Retirement

If you’re nearing retirement age, you can count on Social Security for the foreseeable future. If you lead a long life, though, you could find your payments cut short as you near the end of your retirement. Working a few extra years so you can save a little more can help you make up for this discrepancy.

 

What to Expect if You’re Not Close to Retirement

If you’re early in your career, you should not assume that Social Security will be there for you when you want or need it. Gridlock in Congress, political disputes, and an exploding national deficit all conspire to make funding Social Security difficult. Although it is highly likely that political forces will eventually address the issues with Social Security, counting on this contingency is a gamble you cannot afford to lose.

 

How Much Social Security Will I Get?

Theoretically, and at least until the Social Security Trust is bankrupt, your Social Security payout is based on your monthly contribution. The more money you made over your lifetime, the more benefits you can expect to earn. Of course, your benefits won’t be on par with your income, and they may not even necessarily match your contributions. The average monthly benefit hovers around $1,300. The Social Security Administration offers an easy to use benefits calculator to assess how much you can expect to be paid.

 

Why It’s Unwise to Count on Social Security

You can control how much you spend, how much you save, and how much debt you accumulate. But you cannot control how much the government puts into the Social Security Trust, nor how it assesses the benefits you are owed. Consider Social Security a fortunate surprise and income supplement if you get it. Don’t count on it to help you make your way through retirement.

 

Instead, focus on squirreling away as much money as you can. Pay down your debts so that your money can grow as quickly as possible. Practice living on less than you earn now, so that scaling back in retirement feels like less of a sacrifice. If you’re still struggling to make ends meet, consider tapping into your home’s equity. A home equity line of credit typically boasts a lower interest rate than credit cards or personal loans. And if you’re over the age of 62, a reverse mortgage gives you tax-free money that you can avoid repaying for as long as you remain in your home.