Pages

Tuesday 5 December 2017

Alarming Social Security Stats That Reveal a Troubling Future

Retirement can be scary. But these days, there’s an even scary prospect: the inability to retire. As you might have heard, there’s a bit of a retirement crisis on hand in the United States. Although millions of people have been able to rely on the Social Security system over the past several decades, it’s in trouble. On top of that, people just aren’t earning enough money to pay their bills and save for their golden years.
Add it all up, and we’re looking at a bleak, scary future — one in which people might go from the ranks of the employed to poverty.
It’s a problem that has a lot of moving parts. Employment and the availability of good, well-paying jobs are only one part  — as is Social Security and saving for retirement. With the ranks of the retired set to swell to the largest proportions in history, we’re facing the perfect storm. And nobody, especially politicians, seems willing to wade in and try to right the ship.
For now, though, we’ll focus on Social Security. It’s a system that was meant to keep seniors from slipping into poverty after their working years, and it’s in trouble. Just how much trouble? Run through this list, and try not to wet the proverbial bed.

1. The well could be dry in 17 years

  • Scary stat: The Social Security trust fund could run out of money by 2034.
While we sit around talking about it, the Social Security system inches ever closer to insolvency. That means there won’t be any money left. And those expecting to get the money back that they put in? Well, you can probably lower your expectations. You might end up getting less or nothing at all unless measures are taken.
But even those who are getting checks are falling behind.

2. Payment increases aren’t keeping up 

  • Scary stat: The biggest cost of living adjustment in years was a measly 2.2%.
If you’re depending on Social Security to get you through retirement, you’re painfully aware that life isn’t getting cheaper. Despite that fact, your checks aren’t getting any bigger. There are adjustments to bump up the size of recipients’ checks. The next projected increase could be 2.2%. To put things in perspective, that should amount to an average of $28 per person.
How can the system survive? By at least maintaining a neutral cash flow. But there’s bad news on that front.

3. In 5 years, the system could be paying out more than it takes in 

  • Scary stat: Projections say the system will be paying out more than it takes in within a handful of years.
To run an organization with any kind of success, you need to be turning a profit — or at least breaking even. The Social Security system is about to run into the red, meaning its payouts will total more than its intakes. This, obviously, is unsustainable, and there’s no real plan to deal with the problem in the near term.
What’s scarier than negative cash flows? Hackers.

4. Hackers are after your data 

  • Scary stat: Hackers have stolen millions of Social Security numbers this year alone.
Hackers are everywhere these days. They typically are looking for some kind of financial payout or to cause some damage, and they can do both by getting their hands on Social Security numbers. Be aware your information might have been stolen, and it might cause you financial issues in the future. In just one breach in 2017, hackers stole 5.5 million numbers across 10 states. Keep an eye on your accounts.
Many people increase their payouts by waiting longer to file for benefits. Soon, however, it’ll pay less to do so.

5. It pays to wait. But soon, it’ll pay less 

  • Scary stat: 40% of Americans will file for benefits before full retirement age.
The longer you wait to file for Social Security benefits, the bigger your check will be. But a lot of people are signing up early, at age 62, for various reasons. This does put strain on the system in places, but the incentives to sign up later keep things in check — to a degree. The problem, though, is cost of living adjustments aren’t frequent or large enough, meaning some people might actually lose by delaying enrollment.
We mentioned hackers. But what about scammers?

6. Scams are everywhere 

  • Scary stat: Scammers steal millions of dollars from Social Security recipients every year.
If there’s money in it, there’s someone trying to scam people. There are many scams related to Social Security out there, from fake IRS calls to direct-mail scams promising you additional payouts. If you’re relying solely on the system to pay your bills, losing that money can be disastrous. Know the common scams, and protect yourself.
And if you think Social Security will be enough to get you through retirement, think again.

7. Social Security alone won’t get you through retirement … 

  • Scary stat: About 25% of Americans over 65 receive 90% of their income from Social Security.
We’ll dig into this more on coming pages. But what you need to know is it’s extremely difficult to get by only on what the government is giving you. But it isn’t stopping people from trying — by design or through circumstance. The national average per check, according to the AARP’s data, is a little more than $1,300 per month.
Despite the fact that Social Security won’t cut it to cover expenses, more and more people are jumping on board.

8. … But we’re relying on it more and more 

  • Scary stat: Without Social Security, 40% more seniors would be living in poverty.
We just said living only off of Social Security income is a bad idea — impossible, in some cases. But that doesn’t mean people don’t do it. And surprisingly enough, it seems more and more people are doing it. No, it’s probably not part of some grand design — which points to deeper systemic problems with the economy. But Social Security is as important as ever, despite what you might hear from politicians.
Do you know what would help? Willingness to solve the problem. But there is little in Washington, D.C.

9. Politicians don’t want to fix the problem 

  • Scary stat: Recent polls suggest a majority of Americans support cutting benefits for recipients.
There’s a reason Social Security is called the “third rail” of politics. You don’t want to touch it. Making changes is unpopular, and people don’t want to pay more taxes to fund the system or see a cut in benefits. So any policymaker bold enough to try something is screwed either way. That means we don’t have much in hopes of a short-term fix for a system in trouble because nobody’s willing to be the martyr.
What’s the solution? You’re not going to like it.

10. More taxes are likely part of the solution 

  • Scary stat: 6.2% of your paycheck goes to Social Security, but that might soon need to increase.
Again, there are two ways to make sure the system stays funded: cutting benefits or raising taxes. It’s becoming clear that additional tax revenues are probably going to be on the table sooner or later — the debate revolves around how much and what gets taxed. Although we don’t know what’s going to happen, most of us can probably assume a tax increase is on the way, in some shape or form, to keep the system afloat.
More bad news: The ranks of the retired are set to swell dramatically.

11. The number of enrollees isn’t slowing down 

  • Scary stat: The number of people over 65 in the U.S. will double between 2012 and 2050.
Projections from the Census Bureau make it pretty clear: America’s getting old. While the percentage of Americans over 65 is set to double, the number of people over 85 will triple by 2050. That means a lot more payouts. We’re getting older as a nation — and more expensive.
We mentioned you can’t live off of Social Security alone after retirement. There are a lot of people who don’t have much of a choice unfortunately.

12. A lot of people depend solely on Social Security after retiring 

  • Scary stat: Around one-third of retirees rely solely on Social Security as their only source of income.
We’ve said it before: Social Security isn’t going to be enough to live on. But despite that fact, people are relying on it more than ever. According to data from the Social Security Administration, roughly one-third of all retirees get by strictly on their Social Security checks. That might be the scariest stat on this whole list.
And for many people, retiring is akin to buying a one-way ticket to poverty.

13. Retirement might send you into poverty 

  • Scary stat: Retirees are more likely to live in poverty than any other segment of the population.
When people retire, they’re supposed to go off and live out their golden years in happiness. But more and more, retirees are instead slipping into poverty. Without their working income, many seniors simply can’t make ends meet. And if they’re retiring due to a medical issue? There’s not much they can do about it.
Even those who aren’t retired are feeling the sting of the retirement crisis.

14. The retirement crisis is spilling onto caregivers 

  • Scary stat: There are more than 40 million caregivers in the U.S., and a big percentage of them aren’t saving for retirement.
Caregivers are people who give up working to take care of their elderly or disabled friends or family members. Basically, these people give up their careers (and earnings) to care for others. And a lot of them are older than 50. The problem? These people need to be saving for their own retirements, and they aren’t.
Finally, there’s one expense that increases dramatically with age. And it can swallow your whole Social Security check before you know it.

15. Health care costs alone will eat through your entire check 

Scary stat: The average medical costs for a retiree add up to hundreds of thousands of dollars.
As you get old, your body needs more attention. That means more doctor visits, more dentist visits, and more expensive insurance plans. All told, medical expenses can eat up most of your budget. If you don’t have anything set aside to help cover those costs, Social Security simply isn’t going to cut it. For example, a healthy 65-year-old couple can expect to spend more than $250,000 over the course of their retirement on health costs.

No comments:

Post a Comment