How to Prepare for the End of Social Security
by Kimberly Palmer
With the recent government announcement that the Social Security trust fund is set to run out in 2037, four years earlier than previous estimates, many young workers are asking themselves: Why am I paying into a system that might not be there for me when I retire?
"It seems unfair," says Kouri Marshall, chairman of the board of governors for the Youth Entitlement Summit, which advocates more youth participation in public policy. "We have a Social Security system that was built upon us having a certain number of people employed in this country."
Indeed, the entire premise of the Social Security system is that Americans will continue to innovate and the economy will grow so that the current generation of workers will be able to fund current retirees' benefits. But because of shifting demographics and the added stress of the recession, when the baby boomers begin to retire in 2016, the benefits being paid out will start to exceed the amount being taken in. After the trust fund is depleted in 2037, beneficiaries will be able to receive only what current workers are paying in, which will be about three quarters of the scheduled benefits, unless changes are made.
"It's very much a Ponzi scheme where the next generation will get stuck holding the bag," says Laurence Kotlikoff, author of The Coming Generational Storm and a longtime advocate of reform. "We have a huge generational imbalance."
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Sources: US News & PoosNews.com
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