A scary topic considering these facts from the Social Security Administration:
- Social Security trust fund reserves are expected to be exhausted in 2037.
- In 2018, about 63 million Americans will receive approximately one trillion dollars in Social Security benefits.
- 9 out of 10 individuals age 65 and older receive Social Security benefits.
- Among elderly Social Security beneficiaries, 23% of married couples and 43% of unmarried persons rely on Social Security for 90% or more of their income.
- An estimated 173 million workers are covered under Social Security
- In 1940, the life expectancy of a 65-year old was 14 years; today it is just over 20 years.
- By 2035, the number of Americans 65 and older will increase from 49 million today to over 79 million.
- There are currently 2.8 workers for each Social Security beneficiary. By 2035, there will be 2.2 covered workers for each beneficiary.
Social Security funding is being hurt by people living longer and birth rates dropping. With people collecting longer and less workers paying into the system, it’s easy to understand the funding problem.
Social Security benefits are without a doubt a very important. As you can see by the facts, many people rely on Social Security for a majority of their retirement income. If it where to go away, we would be in BIG trouble.
When you peel back the onion and read what the Social Security Administration is saying, it’s not so scary. And yes, it will be here for many years to come. For example, even if the Social Security trust fund is exhausted in 2035, annual taxes collected are estimated to support 75% of scheduled benefits.
The take away is we should expect to see changes. Either in the way of a later retirement age or increase in the amount taxed-currently at the higher income levels, 85% of social security is taxed. Like much of our advice, be aware of the issue and personally save more.