Approximately 40% of Americans over the age of 65 receive more than 90% of their income from Social Security. For 26% of those over 65, Social Security is their only income.
Most people under 40 seem to realize that Social Security will not be much help to them when they retire because the terrible financial condition of the federal government will lead to huge benefit cuts or, more likely, great inflation of the money supply so the dollar will be worth much less.
Social Security’s Trustees have estimated that the program will run out of money and not be able to pay full benefits in 2033.
In 1945, 10 years after Social Security was established, there were more than 40 workers contributing for each retiree receiving benefits. The worker-to-retiree ratio is less than 3.5 today and is projected to be only two workers for each retiree by 2030.
In addition to regular Social Security pensions, the federal government has whopping liabilities for disability payments, Medicare, Medicaid, military and civil service pensions, our rapidly-growing military budget, interest on the national debt, welfare and food stamps, and thousands of other programs, large and small.
The Associated Press reported recently that people retiring in 2012 were the first workers who on average would receive less in Social Security benefits than they had paid in. The report said that this was “an historic shift that will only get worse for future retirees.” The average worker retiring in 1960 got back seven times more in benefits than in taxes paid.
Because Social Security taxes are progressive, higher-income workers started getting less than they had paid in the 1990’s while some very low-income people will still get more for at least a few years. The Urban Institute said a married couple with average incomes who retired last year paid in $598,000 in Social Security taxes. The study said they will get back 556,000 if the husband lives to 82 and the wife to 85.
The Congress will simply print more and more money to keep from cutting Social Security payments, but the effect will be the same.
Anyone who hopes to receive any type of check from the federal government (Social Security or otherwise) a few years from now in dollars that have not been terribly inflated should start demanding that the federal government become much more financially conservative.