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Preparing for the Social Security benefits crash

Social Security benefits

Social Security benefitsMany moons ago, about 75 years to be exact, President Franklin D. Roosevelt created the Social Security benefits retirement system, a government program intended to function as an economic safety net for elderly and disabled persons struggling to make ends meet. These days, opinions about Social Security tend to fall into two widely varying camps.

1. People who believe it is the best of the New Deal programs that serves a critical societal need.

2. Those who think it is the worst of Roosevelt’s socialist agenda

So which is it? Doesn’t matter. That argument won’t be settled here, but you should at least be aware of how it works and what the future may hold in store, because there’s a good chance it will not be around in its present incarnation when you are ready to retire.

In the first place, where does it come from? The Social Security benefits retirement fund is financed by (what else?) a 12.4% payroll tax, split evenly between employee and employer. For the past 25 years it has been taking in more than it pays out, resulting in a $2.5 trillion reserve fund invested in government bonds. The recent recession and accompanying high unemployment rate has resulted in less money coming in and, with 53 million Americans currently receiving payments, the system is drawing on the reserve to continue making full Social Security benefits payments.

The Congressional Budget Office estimates this practice can continue for about 33 more years before the system becomes bankrupt. Regardless of the career place you find yourself occupying, the real question to ask is whether or not you trust the politicians in Washington to look out for you or would you rather trust in yourself?

We sincerely hope you choose the latter and keep reading Heroic Investing to learn how to build your portfolio into a robust creature that doesn’t need government benevolence in any shape, manner, or form.

The Heroic Investing Team

HeroicInvesting.com

Flickr / Aric.Riley

 

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