Uncertain Future of Social Security

Social Security provides only a portion of what most people need to live comfortably in retirement. Social Security was never intended nor does it serve to fully finance one’s needs during retirement. In fact, the greater one’s income during his or her working years, the less he or she will receive proportionately in Social Security retirement benefits. The Social Security Administration advises that, for average American consumers, more than half of their retirement income must derive from personal savings and investments.

As of 2015, over 42 million Americans were the recipients of Social Security retirement benefits; reliance on Social Security has long been a reality for the average retiree. But change is coming. Under current economic assumptions, the cost to maintain the Social Security OASDI (Old Age, Survivors and Disability Income) program will increase drastically between now and 2030 because of the retirement of the baby boom generation. In fact, OASDI funds are projected to be depleted in 2034.

A Summary of the 2015 Annual Reports, Social Security and Medicare Board of Trustees (2015).

Without question, changes to the Social Security system will occur, though what those changes will be is yet unclear. They could include payroll tax increases, benefit reductions, private accounts, extending the age for benefit eligibility, or a combination of all of these things.

What is certain is that the current retirement model, which is based on financial security and entitlement provided by one’s employer and the government, is shifting. The model is now one that requires more self-responsibility and self-reliance.