Frank Van Nostrum presented a program on the Five Biggest Myths About Social Security.
Myth #1-SS is only a retirement program---not a pension or savings program. It is an insurance program, insuring American workers against work loss. 70% of the checks go to retirees. 12% goes to widows and orphans. It is the largest source of income for children under age 12.
One of three workers die or are disabled before they become retirement age. Is is equal to $200,000 in insurance policy for most retirees. $300,000 insurance policy for widows and children. Many kids are afforded college thru these monies.
Myth #2--SS won't be there when I need it. One of five Americans get SS checks. Boomers will get it as promised. Too many Americans depend on SS, it will not go away completely. But will change for our kids and grand kids, anyone under age 40.
Changes must be made to SS. Under age 40, they'll need t collect later, pay in longer, take less.
SS has changed drastically over the decades to meet our needs.
Myth #3-SS wouldn't have financial problems if Congress had kept it as a retirement program, the way it was originally intended. SS started in 1935, during the depression, as a way to keep seniors out of poverty. Today less than 10% of seniors are in poverty.
1956 Congress enacted disability insurance under SS.
1965 Congress enacted Medicare.
1973 Congress enacted long term disability under SS.
Each program had taxes enacted to cover it.
SS challenges are demographic. The boomers are the single largest population in the US ever. Currently there is a record increase in disability claims. Record number of retirees, 10,000 boomers are retiring each day. We've flooded the retirement program. We are the Baby Bust generation, with less than two children per family. Thirty years ago, five workers pad for one retiree in SS. By 2035, two workers will be paying in for one retiree. Less people will be paying into SS.
There is an increase in longevity; there's a challenge in how to pay for the boomers on the backs of the younger generation.
Myth #4 -- As a personal investment plan, SS is a raw deal. The truth is most people don't take enough risk. It's not about deals and investments. It's an insurance program, insuring you won't live in poverty. Existing seniors don't live in poverty, they have food on the table and have a place to sleep. The more you pay in, the longer you work, the more you take out. Everyone gets to retire sometime.
Myth#5-- I don't have to plan for my retirement, SS will take care of me.
SS is not enough to live on. It replaces 40% of income for the average worker. It's one leg of a three legged stool--pension, savings and SS comprise Retirement Income. 26% of seniors working cause they didn't save enough to retire.
You have to plan for retirement. You can retire online at www.socialsecurity.gov. Visit it's the #1 rated government website.
