Barriers to Retirement 2: Social Security Uncertainty

This continues my 6-part series examining why people may not be able to retire

Previously, I suggested that many people plan to retire with 5 sources of retirement income: 1) a pension, 2) Social Security, 3) home equity, 4) savings and 401Ks, and 5) investments.

Most Americans doubt that Social Security will deliver funds when they need it. I do not offer a political discussion on Social Security. I intend to explore the situations that may prevent people from counting on Social Security for their retirement.

3 Basic Problems

I share some problems with the basic structure that will cause a breakdown in the system. Links in my post will take you to much more detailed analysis and supporting data for my statements:

1. People Collect Social Security Longer: The median age at death in 1935 for males was about 65 and 68 for females. Currently, median age at death for males is 78 and for females 83. Most people try to retire between ages 62 to 70. In 1935 the majority of men only cashed maybe 13 Social Security checks before they died. Today, the majority will cash 80+ checks. The system will also pay a median of 144 more survivor benefits checks than originally anticipated. A large percentage of retirees will cash more Social Security checks than the number of paychecks they cased while working.
2. Reduced number contributing compared to receiving: The Social Security and Medicare Boards of Trustees recently published “Costs for both programs increase substantially through 2035 because (1) the number of beneficiaries rises rapidly as the baby-boom generation retires and (2) the lower birth rates that have persisted since the baby boom cause slower growth of both the labor force and GDP.”
3. More people with disabilities collect: Medical science allow people who would have died from certain disabilities to live. The number of beneficiaries from the Social Security Disability Income rose 84% since 1990. I personally applaud a country that provides for those who cannot care for themselves and recognize we can improve the system.

Unless our leaders address these issues Social Security will stop paying benefits in 2035.

Join me on Friday when I discuss how continuing mortgages jeopardize retirement