Social Security Fact versus fiction

Part 1

Social Security concerns are a very real concern among Americans today. We know that the “trust fund” exists, what we are unsure of is will the money be available for us when we reach retirement age. Obviously, this will have direct impact on our standard of living during our golden years.

Understandably, the concern over money is of great importance; however, there are a few other things to take into consideration when it comes to Social Security.

Fact: Contrary to what we may believe, Social Security is not built-into the constitution. President Roosevelt and his advisers presented the concept of social security as part of a package of programs. The idea behind the program was to ensure that hard working individuals would have something to live on during their retirement years.

Fact: The money that you have contributed into the social security fund is not set aside exclusively for you. The success or failure of this program is directly correlated to what is known as worker to beneficiary ratio. For example, let us assume we have 100 workers and 25 beneficiary recipients, the worker to beneficiary ratio would be 4:1. Meaning for every one beneficiary recipient there are 4 workers contributing to the fund. As time moves on the number of workers to beneficiary recipients is steadily declining, coupled with the fact that our seniors are living longer, there is the very real possibility that the system in place now will not be able to maintain itself. It is projected that by 2075 worker to beneficiary recipient ratio will be an estimated 2:1; the results could prove to be devastating to many retirees.

Fact: Social Security taxes paid today are funding today’s beneficiary recipients. At the present time studies have shown there is a surplus of monies coming into the fund however, this surplus is not being saved for future use. In short, the surplus is not being utilized so it could grow, thereby reducing some of the present concerns.

The bottom line is the government has used this fund as an IOU warehouse of sorts. These IOU’s are a result of the government borrowing money in an attempt to lower the federal deficit. You need not be a financial genius to realize those IOU’s will be called due by the lender.