Most Americans assume that social security will still be available at retirement. But will it? We’ve been cautioned about the long-term solvency of social security for at least 40 years. Life expectancies continue to increase, and the number of seniors has never been greater. There will also be a lower percentage of workers in the future.

Less money going in and more money going out usually leads to bankruptcy. There’s still plenty of time for Congress to act. However, changes are necessary to keep the social security program solvent.

Social security was started in 1935 by President Roosevelt. The program at that time only supported retired workers. It now also includes Medicare, benefits for spouses and minor children, and disabled workers.

If you’ve ever looked at your paystub and wondered who the heck “FICA” is, it stands for the Federal Insurance Contributions Act. That’s your contribution to social security. You pay 6.2 percent of your income. Your employer matches your contribution. Those that are self-employed pay the entire 12.4 percent on their own.

Understand the future of social security:

1. The next decade will have the lowest number of workers compared to retirees of all time. At one time, there were 15 workers to each retiree. Now the ratio is 3 to 1. It will sink even lower. More money is removed from the program each year. Currently, the Social Security program is paying out more money than it’s taking in.
2. The current predictions aren’t pretty. It’s estimated that the Social Security trust fund will run dry in the 2034. Understand what that means. From 1983 until 2010, the Social security program was running a surplus. That excess money was placed in a trust fund. Normally, the social security payments are made to retirees using social security taxes from current workers.

• Social security is beginning to dip into that excess due to a short fall. More money is being paid in benefits than the government is collecting in social security taxes. It’s believed that the excess money will out in 2034.
• At that point, the current workers will only be able to cover 80% of the necessary payments.

3. The outcome is unclear. The current law doesn’t permit greater payments than the amount supported by social security taxes and the surplus. Congress could intervene and change the law. It’s also possible that social security taxes could be raised.

• Current proposals seek to raise the retirement age even higher, pay less in benefits, or increase taxes on the wealthy. Considering that we have 19 years, it’s questionable if Congress is in a big hurry to do anything. The issue is a political hot potato. It wouldn’t hurt to write a letter to your representative and senators.
• Another alternative is for Americans to have more children and increase the size of the workforce. More workers mean more payments into the system.

4. The long-term prospects are even worse. At this time, 15% of the population is over the age of 65. That number is expected to rise to 23% by 2080. The percentage of working-age people will drop by 6% over the same time.

It’s unlikely that social security will disappear. However, it’s possible that benefits may be cut down to smaller amounts. You can also expect to work longer.

This just highlights the fact that retirement planning is so important. With proper saving and investing habits, social security is just the icing on the cake. It will be wise to rely on yourself for most of your retirement funds.

Silvana Jimenez