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Will Social Security be there for you?

After years of hearing about the impending insolvency of Social Security, even those approaching retirement age are worrying. What's the truth?

By Smart Spending Editor Sep 10, 2013 7:17PM

This post is from Tom Sightings of partner site U.S. News & World Report.

MSN Money PartnerI am old enough to start Social Security, but have not applied for benefits yet. I've decided to wait a few more years to let those benefits grow, giving me more support when I get older.

Image: Skeptical woman (© Image Source/age fotostock)Aside from the question of whether or not this is a smart move, I am struck by the cynicism I encounter when talking to people about Social Security. A lot of my contemporaries say they started receiving their benefit as soon as they could, at age 62, figuring they'd better grab it while it's still available.

Younger people in their 50s are even more anxious. As one friend told me, "I'm only 53. I have no idea when or if I will ever get any Social Security. People my age will take it ASAP if it's still there, since we've been threatened that we'll lose it."

These worries are not without justification. According to the 2013 report by the Social Security and Medicare Boards of Trustees, Social Security is already running a deficit. And largely because the number of beneficiaries will grow at a faster rate than the number of workers paying in, the Social Security trust fund will be depleted by 2033.

Most of us, throughout our careers, watched a sizable deduction come off our paychecks every two weeks. In return, we assumed Social Security would be there for us when we finally retired. We were never promised that Social Security would finance a luxurious lifestyle, but we did believe it would at least be there as a base income if things went wrong for us, or as a nice supplement to our retirement income if things went well.

Just how vulnerable is Social Security? What are the chances that a 60 year old, or a 50 year old, will see their Social Security benefits? What are the chances that our sons and daughters will get any Social Security?

Financial experts remind us that Social Security works like a low-cost, inflation-protected annuity -- just the kind of investment retirees need to provide them with a stream of income. And actually, because the program is run by the government, it is reasonably safe. Why? Because as long as the elderly continue to vote, Congress will be reluctant to renege on payouts, at least for those already eligible to receive benefits.

Yet, others have pointed out that Social Security payments are already being shaved back. The retirement age has been increased from age 65 to 66, and to 67 for people born in 1960 or later. Medicare premiums are typically deducted from Social Security payments, resulting in less Social Security take-home pay. Also, Social Security payments are taxed for people above certain income levels, and the levels are not indexed to inflation. So, while ten years ago the median beneficiary did not pay any tax on Social Security, by 2033 the median beneficiary will be taxed on half their benefits.

Also, some economists are recommending a new way for Social Security to adjust benefits for inflation, resulting in -- you guessed it -- a method that produces lower estimates of inflation and thus smaller increases in future benefits.

Putting aside our varying opinions about what we feel should happen, what is most likely to happen to Social Security?

Social Security benefits will be there for future retirees, as long as the elderly continue to vote. Remember when President George W. Bush tried to sell a plan in 2005 to replace Social Security with a voluntary retirement scheme? The idea never got out of the starting gate. It seems pretty clear that Social Security will be around, in something close to its present form, at least for anyone age 50 or over.

However, there are plenty of economists and government officials who want to chip away at Social Security payments, especially when money starts flowing out as baby boomers retire. Officials will do it quietly, hoping that retirees won't notice too much, but they will trim where they can. And they'll likely make more dramatic cuts for future beneficiaries, because as time goes on the financial pressure will increase and younger people don't vote as much.

Social Security will be with us for the foreseeable future, maybe even for workers now in their 20s and 30s. But over time the benefits will slowly become a smaller part of the retirement picture. Social Security will probably be there as bare-bones support for retirees with little or no other income, and as a less-significant supplement for people who have other retirement resources.

More from U.S. News & World Report:

Sep 11, 2013 9:08AM
Here's another thought on the way to fix Social Security and Medicare ... MAKE OUR GOVERNMENT (President, VP, Senators, Representatives, etc.) LIVE WITH THE SAME BENEFITS AS THE REST OF US!!!  "Service" to their country should include a little sacrifice without the immediate lifetime benefits.  Those benefits don't exist for our real SERVICE MEMBERS, and shouldn't for those inside the beltway!
Sep 11, 2013 12:42AM
The government has borrowed against it which is why the fund is depleted... what does Congress care, they get a guaranteed pension for life even if they serve one term... and like the bastards they are, they keep changing the amounts. I plan on collecting in three years before the spend all our money on another war which looks like they are planning to do.
Sep 11, 2013 5:12AM

I'm already getting mine...paid into SS for 40 years...

Started drawing it as soon as I could at 62...

If the government  and politicians would stop taking OUR money and replacing it with a IOU note..

it would last longer...Have lost ALL Trust in government..THEY LIE.! Starting with oblamo on down..

Sep 11, 2013 8:06AM
I cannot believe this is a issue. We give so much money away and there should be no fear that social security will go bust. First of all if someone did not contribute stop payments. How many are collecting and living abroad? How many came here applied and moved back? I seen this and no one can say it is not happening. As for cost of living increases I cannot believe a board of people probably making 6 figures decides if we get a raise or not. I find my groceries and fuel and insurance and everything else going up but they say it is not. We give foreign leaders millions upon millions and cannot take care of our own people. We paid into this system that has been raided over and over again. I want to see this become part of the campaign stands. Tell me what you will do and I may vote for you. If it does not happen then don't run the next election. This is sickening. We take from people that put into the system and give to people who contributed nothing. Come on seniors get out and fire everyone. Time is now for a raise...
Sep 10, 2013 10:14PM
First of all, Social Security isn't Insolvent. It has almost 3 Trillion in funding in spite of Obama's foolish payroll tax holiday the last couple of years. There is literally only one FIX for Social Security. Put the darn money BACK and get rid of the Bogus IOUs. Once interest rates normalize and they put the freaking money back, everything will be fine. All this fear-mongering is too have folks stop contributing in a effort make it insolvent. And we know all too well who's doing that. The Folks that already have everything. Now they want to take away your Social Security. How dare they.
Sep 11, 2013 9:15AM
There are so many ways to fix S.S.  Remove all those who are not citizens and have no earnings record, remove the cap so that everyone pays the same percentage and raise the deduction 1/4 of one percent every other year for 10 years.  Remove those on SSI who do not actually qualify.
Sep 11, 2013 9:51AM

The government "borrowed" the money. Borrow means to pay back. When you don't pay it back it's called Grand Larceny and they should be prosecuted, but they are safe in their little home called Congress. The people SHOULD speak out and get rid of the whole bunch.

Sep 10, 2013 11:24PM
How many more idiotic articles on Social Security is MSN going to put out?  These "writers" should be making minimum wage.
Sep 10, 2013 11:01PM
social security just needs to be tweeked. It's Medicare and Medicaid that really worry me!
Sep 11, 2013 7:30AM
as if...ending social security would also mean they would have to stop taking it from EVERYONES know that is not going to happen!
Sep 11, 2013 10:04AM
The rich are fine and so are the poor with everything given to them for free.  The middle class will continue to struggle and be screwed.  I'm out at 62- not one day later.  I paid into that system for 40 years.  Stop scareing people to work until they croak.
Sep 11, 2013 7:21AM

"Financial experts remind us that Social Security works like a low-cost, inflation-protected annuity" ... On the other side of the coin - an annuity will pay out if the payer stays in business.  Just how low-cost is paying in and receiving nothing? Isn't that the definition of divide by zero?  Not a good situation.


I'm sure it will be there in some form, but I'm saving as if it will not be there - be dam*ed if I'll leave myself exposed to the whims of politicians if I can help it.  Next time they want to borrow - have them subject themselves to open market health benefit plans like the rest of us sorry b*stards instead of their current platinum plan - that ought to save tax payers a chunk.

Sep 11, 2013 8:48AM

Here is an easy fix - remove the earnings cap so that everyone pays in at the same percentage.


"For 2012, the maximum amount of taxable earnings was $110,100. In 2013, the maximum amount of taxable earnings is $113,700."


"Employees — the Social Security tax rate is 6.2 percent on income under $113,700 through the end of 2013. The Medicare tax rate is 1.45 percent of all income;

Employers — the Social Security tax rate is 6.2 percent. The Medicare tax rate is 1.45 percent; and
Self-employed —the Social Security tax rate is 12.4 percent on income under $113,700 through the end of 2013. The Medicare tax rate is 2.9 percent."


Imagine how much more solvent the fund would be if we all paid into the fund based on our total earnings.  Those in congress and the senate would never remove the earnings cap though because they would have to pay a bit more since most (if not all) congressmen and senators earn in excess of the limit.



Sep 11, 2013 9:33AM
Everyday here some social security article, why never "will welfare be able to continue under financial woes" "will free school lunches still be available", "will support to other countries be able to be continued", what a joke.
Sep 11, 2013 9:54AM
I am not relying on SS to be there for me because I am 38 years old and will never see it.  I pay and pay and when I do reach 67 years old, I will be told I cannot retire with full benefits or any benefits, as there is no money.  I am heavily relying on my 401(k) to be able to retire.  I put maximum away in it and will be fine for retirement at the age of 67 until the government decides to start taxing that also.  I could probably retire sooner if I could stop paying SS and put more into my personal retirement plan.  The government is stealing from me and giving it away for votes.
Sep 11, 2013 9:10AM
When President Clinton took money from social security and the railroad retirement fund instead of making payments back to them instead of sending money to all these countries that hate us. He put it in his papers ( and you can look them up on line like I did because of an argument that Clinton made no means to pay it back)  that all surplus above the budgets from then on would go to social security and the railroad fund. WELL WHERE ARE THE SURPLUS's ? There have none after he balanced the budget. Even Clinton himself has not brought this fact out before Congress or anyone. That is all Congress has to do to fix social security is put the money back.
Sep 10, 2013 10:15PM

Still too many maybe's.   One thing is for sure, paychecks will be taxed until the day it is dissolved.   If you are 50, it will not be much and you know it will be means tested anyway.   Many reasons I feel this way but with the current median wage, job participation rate, income SS cap, disability rates; no one predicted this spend versus income of SS.   We should have known about the number of folks eligible, but sometimes real math is not applied.   Not to mention all the politics hands in the cookie jar.

Just a supplement anyway.

Sep 11, 2013 9:59AM

Stop all of the programs that hands out free money for not working......put them to work and make them earn the money.


Sep 11, 2013 11:48AM
how come ever time they mention  SS  THEY SEEM TO  FORGET to TELL YOU THAT THE  GOVERNMENT  HAD  BORROWED  MONEY  OUT  OF  SS  for  years  because there was a excess  coming in  from baby boomers  but  forgot  to   pay  it  back  there was plenty of  money  for  SS  but the government  spent it  ALL   without  ever asking  us  if they  could   borrow  from  our  retirement  and blaming it on the  boomers for  not saving  enough.  is there not a law  saying  you can  not  take  money  out  of  SS  until you ask  the  permission  not saying that we should of  saved  more  just  saying it is a problem  caused  BY OUR  GOVERNMENT
Sep 11, 2013 10:47AM

Let's be real the reason social security has a deficit is because the federal government borrowed that money and are unable to pay it back if social security called in those loans we  would cause a financial crisis. For years the government has used that money to shore up failing plans and pet projects of the idiots that we have elected.  The people in America does not understand the power they have. Why continue to elect people that does not have your best interest at heart. Whether they or Democrat or Republican you send their asses packing.

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