Can Boomers Depend on Social Security? - The Dollar Stretcher
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Can Boomers Depend on Social Security?

As a baby boomer who has been involved in personal finance for 30 years I try to follow what's going on with Social Security. And I have to say that I'm not that happy with what I'm seeing. Just finished reading a report from Reuters that set off the butterflies in my stomach. Here's the first few paragraphs:

CHICAGO (Reuters) - The trustees of Social Security will release their annual report on the program's health sometime in the next few weeks, and the news will not be good.

The 2012 briefing is expected to show further deterioration in Social Security's financial outlook, due to the higher-than-expected 2.9 percent cost-of-living adjustment awarded this year and a decline in the taxable wage base available to the program. The report is the official gauge of the program's health - signed by three Cabinet members, the Social Security commissioner and two independent Congressional appointees.

Social Security is not in imminent danger of running out of money, but it faces a financial crunch a bit further out - around 2035. That is when Social Security's Trust Fund is projected to be exhausted due to the drawdown of benefits by the baby boom generation. At that point, the program would have sufficient tax revenue to pay only about 76 percent of promised benefits.

The article does a brief Q&A with Steve Goss, the chief actuary of the Social Security Admin. In it Mr. Goss tries to encourage people to wait until age 70 to begin taking benefits because they'll get more each month. And, his analysis is correct as far as it goes. But there are two things that weren't mentioned in the Q&A.

First, you really should take a look at how long you're likely to collect those benefits. Most of us boomers have already buried one or two friends. We hope to be among those who live into our 90's. But, based on our family history and our own current health that might not be too likely. If none of your parents or grandparents lived past 65, you might want to start taking Social Security as soon as you're eligible. At least have a financial planner (or a financial website) put together a projection of how long you'd need to live to make up for the years that you delayed getting Social Security.

Secondly, what happens around 2035 (just 23 years from now)??  Yes, we have a promise of what benefits will be paid. And, yes, there are cost of living adjustments. But what happens if the money simply isn't there? In a few short years (hopefully prior to 2035) we're going to be facing a decision. Will we ask seniors to take less in Social Security or will we take more from younger workers (and taxpayers)?

It's not a stretch to think that one of the first suggestions will be that people who have accumulated some savings will be asked to take reduced SS benefits. That's particularly relevant for people who have lived frugally so they could save for retirement.

And, I'm old enough to recognize that sometimes people make promises that they're unable to keep. Being frugal I'm naturally cautious. In effect Social Security has promised to raise taxes on our children and grandchildren. I question whether our kids can meet those promises and still support their own families. So I can't help but wonder how SS will keep the promises that have been made.

Bottom line? I'm not suggesting that everyone take their Social Security benefits as soon as possible. Just saying that you should look at some numbers before you make a decision. Consider your life expectancy and the ability of Social Security to keep it's promises in the future. Hopefully the money will be there and you'll collect benefits for 30 or more years. But, you'd be less than prudent if you don't consider other alternatives

Keep on Stretching those Retirement Dollars!





Keep on top of Social Security | RetireAndRenew.com said:

Pingback from  Keep on top of Social Security | RetireAndRenew.com

April 13, 2012 12:35 PM

Lori Blatzheim said:

Great post Gary,

Thank you. All of us, no matter our age, should keep informed about Social Security.

I am encouraging readers of "Retire and Renew,"

www.retireandrenew.com, to read the piece.

This is a web site dedicated to the Senior experience and readers of this personal financial web site need to understand the issues.

I appreciate the interest that "Dollar Stretcher" is showing in the Boomer generation. I look forward to future posts dealing with Senior life.


April 13, 2012 12:55 PM

allenwsmithphd said:

Every dollar of the $2.6 trillion in Social Security surplus revenue, that was generated by the 1983 payroll tax increase, was "borrowed" or "stolen" by the government as it came in and spent on wars and other government programs. The only thing in the trust fund is non-marketable government IOUs.  For the past two years the government has had to borrow money from the outside world just to pay full Social Security benefits.  The amount that will need to be borrowed in the future will become larger and larger.  That is why so many politicians want to cut Social Security benefits.

I have spent more than a decade trying to expose the awful truth about Social Security.  The government and major senior organizations are deliberately misleading the public to believe that the trust fund contains real assets when it does not contain anything of real value. To download a Free copy of my book, "The Looting of Social Security," please visit my website at www.thebiglie.net.

Allen W. Smith Ph.D.

Professor of Economics, Emeritus

Eastern Illinois University

April 14, 2012 10:34 PM

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About Gary

For more than 25 years, Gary Foreman has worked to manage money effectively. Prior to starting The Dollar Stretcher, he was a financial planner and purchasing manager. While helping clients manage their hard earned money as a financial planner, he applied commonsense, time-tested techniques during the turbulent 1980’s. The experience convinced him that you didn’t need to hit the lottery to accumulate significant wealth. Following that, Gary had an opportunity to learn more about how to get the best value for a dollar spent in the corporate world. As the Purchasing Manager for a computer manufacturer, he was responsible for supervising over $10 million in annual purchases. Gary began The Dollar Stretcher website <www.TheDollarStretcher.com> and newsletters in April 1996. Over 300,000 readers benefit from the time and money saving ideas presented in The Dollar Stretcher newsletters each week. His mission is to help people "Live Better for Less". He also provides private label newsletters for companies wishing to provide money saving information for their clients and/or prospects. Gary lives in Florida along with his wife of thirty years and their two children. Much of his time is spent working with the men's ministry of his church. One of their ongoing projects is the "Holy Smoke BBQ" which sells bbq on Friday nights with the profits going to support local foster kids and orphans. When he has a free moment you’ll find him restoring a Checker station wagon nicknamed “Two Ton” or cruising in a '65 Impala SS Convertible with doo-wops playing in the background.

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Gary is a former financial planner and purchasing manager who edits The Dollar Stretcher website <www.stretcher.com> and newsletters. You can follow Gary on Twitter.com/gary_foreman
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