More than 152 million working Americans pay Social Security taxes, reports the Social Security Administration, and some 45 million are receiving monthly benefit checks averaging just $876 (in 2002), so making the most of outside investments is essential.
Source: Social Security Administration.
Social Security helps retirees, of course, but also the disabled and families if a spouse or parent dies. People at or close to retirement can count on receiving Social Security benefits as promised. But when the Baby Boomer generation starts retiring in force, the number of Social Security recipients will double within 30 years, while the ratio of workers to retirees will drop sharply during the same three decades. With that ratio, the current pay-as-you-go system is unsustainable.
Social Security can pay 100 percent benefits until 2042, reports the Social Security Administration. However, the news that without changes, the Social Security Trust Fund will be exhausted by then is no longer startling, it is simply true. Benefits will have to be reduced or means-tested, or full-retirement age extended, or the entire system privatized long before then. It's inevitable.
How that will affect individual investors depends on the person's age, situation, and what changes are made to the program (and when). To find out what benefits are projected to be at retirement, people can request their Social Security Statement (available online at http://www.socialsecurity.gov, by calling 1-800-772-1213, or visiting a Social Security office).
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