It’s hard to imagine if the money we pay into Social Security today will be around when we all retire in twenty years. The government fund started before a population explosion in the United States. It had good intentions and would allow workers to use the funds when they reach a certain age.
The minimum age for retirement has increased from 56 to 64 and now it’s about to change again due to longer life expectancies. Most people are not depending on the government system because of it’s troubles in the past. For example, Social Security nearly went broke in the 1980s, and now financial experts are warning that it will go broke again by the year 2014.
As you may know, people receiving Social Security checks are eligible to receive a raise every year, known as a COLA (cost of living adjustment). For 2010, there is no COLA, since year-over-year expenses were flat, and that has created a problem for those that are trying to retire. However, people receiving Social Security traditionally have higher medical expenses than younger people.
Medical care and services increased in price by 3.8% for the year through November. There might not be much we can do with regard to inflation, but you will have greater control of income and expenses through financial planning. Should Social Security be in good shape to make payments to our children and grandchildren, that would be great.
However, unless modifications are made to improve Social Security, most people aren’t counting on it. Young people should be encouraged to save before they retire. The financial times are changing.
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