Monday, August 22, 2011

Don't Count On It

Back when I was a poor college student, I got into a debate with a classmate about the social security system. He believed that we should do away with social security, that it was a forced retirement savings program, and that individuals should be trusted to make their own arrangements for retirement.

To say that he and I were coming from two very different places would be an understatement.

He was a young, single student, who might have had a part-time job to earn some extra income, but he lived in the dorms and had no responsibility other than, perhaps, getting to his job on time, and getting to class.

I was a young, married student with an infant son. I worked part-time, and every penny I earned went to cover my daily living expenses. Every day was a financial struggle, and I couldn't imagine having enough money left at the end of the paycheck to put some aside for my retirement. If the government weren't taking out that money, I'd spend it - that much I knew. I was counting on the government to keep that money safe for me so that when I retired I'd have some income on which to support myself.

Fast forward many years, and I'm no longer young, but I am married with children. I've earned my college degree. I've worked many full-time, career-track jobs, and I still struggle to put money aside for retirement, but I no longer believe, as I did when I was twenty, that social security is the buffer we are told it is.

News articles, like this one I read today with the headline: Social Security Disability on the Verge of Insolvency, only reinforce what that young man was trying to make us all understand. We all pay into this social security account, and when we reach retirement age or in the event that we become unable to work, we are eligible to draw from that account.

That's the theory of how it works, but the reality is that our government is TRILLION$ of dollars in debt, and they've been dipping into the social security savings accounts for decades to pay the bills. We keep paying into it, and they keep spending it as fast as it comes in.

If it were just a simple matter of the government living paycheck-to-paycheck - with the assumption that the paycheck would always be the same amount and would never stop coming, then, perhaps, it would be okay, but that's not the case either, because the paycheck is neither very secure these days, nor is it going to continue being the same amount.

The fact is that our population is aging, and we're getting top heavy. Life expectancies are longer today than ever, and the largest portion of our population is the Baby Boomers, who are all reaching retirement age. What this means is that over the next ten years or so, most of the people living in the US will be retired and drawing from social security funds for an average of fifteen years each.

Compound that with the fact that the largest demographic of unemployed at the present time are the 18 to 25 year old group. Those are the people who will be supporting MY generation when we retire, but they are not currently paying anything into the system.

I think back on the day of that debate, and how naive I was at that time. My classmate had it right - that we should, as individuals, be responsible for our own retirement, and not leave it to the government. I don't know if he anticipated what has happened, but I do know that in twenty-something years, when I reach retirement age, there won't be any funds available to me, regardless of the fact that I've paid into them.

And I'll need to have made some other plan for when I can no longer work - because I'm not counting on the government being there to support me.


  1. While this is probably true to some extent, the real reason you are seeing this issue coming to light now is that it is the NEXT BIG EMERGENCY cooked up by the government to somehow take either more money from us or take away more of our freedoms or BOTH.

  2. Regardless of the reason, the fact is that the government is not going to take care of us, and we need to just start planning to take care of ourselves. We're still going to have to pay for the programs, but most of us won't be eligible for them.

  3. Plus, "They" keep changing the Rules... My first check was 1/3 of what I was "promised" because they changed the benefit rules 5 years before I retired.

  4. Whether or not we're in trouble (admittedly, I'm Canadian, but I worry about the issue from up here as well), I'm still not willing to depend on the government to take care of me down the road, so I'm trying to do what I can now. It's hard sometimes, but it feels very worth it to be self-reliant.

  5. I have had zero expectation of ever receiving social security benefits ever since I started earning a real paycheck. It's one of the reasons I want to live small and on as little money as possible: the less I earn, the less money is stolen away from me by government for projects I mostly cannot ethically support.

    I was going to say perhaps the obesity/diabetes/heart disease epidemic will save social security, as these many wage earners will commit suicide on the installment plan early enough not to collect any SS. But really I don't think anything will save it, given the way our economy and peak oil is going. Still, I'm loathe to say this too often or too loudly, because I figure if the government knows that too many people of my generation never expect to collect, well, they wouldn't be risking much of anything by completely stiffing us.

  6. Kate - I actually think that the diseases you mention will make the social security issues worse, because people who are chronically ill can be eligible to recieve disability benefits much earlier than those who must wait for retirement.

    I don't think the system can be saved, but neither do I think the government is going to give it up any time soon. I think that my generation (that's you ;) will continue paying into it until the last of the Baby Boomers pass through the ether, and then, maybe it will be dissolved, but I suspect we're still looking at another twenty years of trying to prop-up the broken system - assuming we remain a viable and cohesive nation that long.

    Like you, I'm trying to change my lifestyle so that we don't need much money. As you said, the less money we make, the less money "they" take.

  7. @ Darius - Deus Ex Machina mentioned something about that the other day. His mom worked for YEARS at this (soul-sucking) corporate job and had a really good income - a portion of which she dutifully paid into the system. Several years ago, she changed careers, and is now making a third of what she was earning. From what I understand of the new rules, as Deus Ex Machina explained, none of her previous income will be figured into her SS benefits when she retires.

    Which is funny, because as I get closer to retirement age, my goal is to have no debt, and, therefore, very little income, which means that if the rules really are changing, I won't be eligible for any SS benefits anyway, because I won't have had any income ;).

  8. @ notherethenwhere - I have the same plan ... self-sufficiency, as much as possible, but you're right, it's a wicked lot of hard work, but so worth it!

  9. My husband & I get social security and pension guess what??? we still work, it is not enough for health care costs, we pay cobra but still medicare will be nothing next year when my husband is eligible..No one I know on social security and a pension is not still working at some job or job(s) retirement to me is almost a myth..We both paid and paid into social security and pensions, fed. to boot and it is not enough for health care costs, most doctors won't take Medicare patients, so we found a primary care physician and got on his group, we pay cash when we see him or anyone in his group we get a huge discount and we don't go to see him often, but he is excellent, when we are Medicare eligible we will still be in his group and still probably working to boot, we don't make much but we have health care covered, which to me is saying a helluva lot, we have each other, our faith, a place to live and sustenance we cannot ask for more, this is not Heaven on earth, but the health care cisis to us is the hell they speak of in many churches, the greatest country in the world, but no health care for most of the people who live here, now no jobs for many of the citizens to boot.educated or not..shame on the government, shame! they should travel to many scandinavian countries to see how their citizens are treated, albeit most in this country would screan to high you know what over taxes, but aren't human beings supposed to be cherished by other human beings over the almight buck...No siree the social security will not go away, nor Medicare, etc..hmmmmm!!!!!!!!!

  10. It's similar here in Australia, too (but not quite the same).

    The biggest problem I have with our "superannuation" system is that the government can (and does!) change the rules whenever it suits. They can increase the retirement age, change the tax rate on benefits, change the rules around how much you can put in, etc. There's a whole industry now around understanding the current rules and the changes as they come through, and gaming the system to ensure you get maximum benefit.

    Given all that, I think of my "super" as a bonus that I will one day get, although I have no way to predict how much I'll get or when. Instead, we have to make our own retirement plans and not count on anything from the government.

    Slightly different system to you guys in the US, but the same ultimate conclusion :-).