Will the government take care of your financial future?
You be the judge…
On the new White House website, the Biden administration clearly lists its priorities. They include controlling Covid-19, tackling climate change, and advancing racial equity.
See anything in there about fixing Social Security? I sure don’t. This is surprising, considering that Social Security is running out of money.
This is a problem. According to the National Institute on Retirement Security, 40.2% of older Americans rely solely on Social Security for their income.
Today, we’ll take a closer look at this situation…
And then we’ll show you how to ensure you have enough money — regardless of what the government prioritizes.
The Math Doesn’t Work
I don’t mean to sound alarmist about this.
In general, Wayne and I are optimistic about America’s long-term prospects.
But it only takes some basic math to realize that Americans can’t rely on Social Security to help them pay the bills.
You see, Social Security doesn’t work the way most people think it does…
The government doesn’t take your Social Security contributions, invest them, and then give you access to those funds later in life. Instead, it takes the money you contribute today, and gives those funds to current retirees.
In other words, once you start collecting Social Security, you’ll be relying on a younger workforce to pay for your benefits.
There’s just one problem here…
The Baby Boomer Problem
The Boomers are the generation born from 1946 to 1964, just after World War II. Today, there are 76 million of them.
Over the next 19 years, most of them will retire, and about 76 million people will start drawing out huge sums from Social Security.
And when that happens, there will be more retirees than there are workers — and that will cause Social Security to run at a massive deficit.
In fact, this is happening already. According to a study from the Pew Research Center, as early as 2010, Social Security had negative cashflow of about $78 billion per year.
But then, because of Covid-19, the situation quickly deteriorated…
Social Security Chief Admits the Truth
Social Security has already been running at a loss.
That’s why the Social Security Administration (SSA) has had to rely on a special fund to pay a portion of retirees' benefits.
But this special fund won’t last forever. Even before Covid-19 struck, it was expected to be depleted by 2034.
But the economic downturn created by the pandemic is aggravating this funding crisis, and accelerating its demise.
Last April, Social Security Commissioner Andrew Saul admitted that the pandemic could affect the financial health of the funds. As he said, “The duration and severity of the pandemic will affect the estimates… and the financial status of the program…”
Then, in November, the SSA’s Office of the Chief Actuary released an update admitting the effects of the pandemic on the funds “will be significant.”
This is why, as The Motley Fool reported last month, “In the coming years, the program won't have enough incoming payroll tax revenue to keep up with its existing obligations.”
Bottom line? Unfortunately, you can’t expect the government to help take care of your financial future.
But now for some good news…
Tomorrow, Wayne will introduce you to a potential solution to this crisis…
A solution that can help you secure your financial future.
And the best part?
You won’t have to rely on Social Security…
You won’t have to rely on the stock market…
And perhaps surprisingly, you won’t even have to rely on the startup investments we typically cover at Crowdability.
So be sure to check your inbox tomorrow, February 18th, at 11 AM (Eastern).