Is Social Security Doomed?
BOSTON (CBS) - I don't think so. But there is big trouble brewing and of course, it makes great headlines to say Social Security is going broke.
Social Security will be there in the future, and it will be there for you today if you need it. It will look different in the future and will evolve into what's needed for American workers and their families.
You may have to contribute more and/or retire later to be eligible for full benefits and you may be taxed on all of your benefits, but there will still be benefits.
Over 59 million individuals received Social Security benefits last year. Of that number, 42 million were retirees.
Social Security was never meant to be the sole source of retirement income for retirees. The average retiree is receiving almost $1,300 a month. Hard to survive on an annual income of $15,000.
The baby boomers, 76 million of them, have already begun to tap into the system. And as with everything else this group has done, it will have a huge impact on the Social Security system as more and more Boomers retire.
Social Security is a pay-as-you-go system with most of the taxes being paid today going to fund current benefits. Excess funds are credited to the Social Security trust fund.
Benefit payments are projected to exceed taxes in 2020, and the trust fund will be exhausted in 2033. Now that does not mean that Social Security will not have any money it means that Social Security will only be able to pay about 75% of benefits owed, using dollars that are coming in from workers paying into the system. Now, this is if nothing is done about the situation.
We do need to fix the problem! And soon! There are ways to fix the problem. Increase retirement age beyond age 67 to 70. Increase the maximum amount paid into Social Security. Raise the percentage paid in, which is now 6.2%.