Planning to Retire? Don't Count On Social Security Alone

For many planning to retire in the next ten years, Social Security benefits make up a large chunk of the funds they expect to live on each month. As a result, those planning for retirement later down the road have been taught that the program will be there for them as well. If you are doing some retirement based financial planning, it is essential that you do not expect too much from that monthly check issued by the government.

Social Security was part of Roosevelt's New Deal laws in 1935. With the poverty rate of retirees above fifty percent at the time, the president felt as if he needed to do something to care for older Americans. The general idea was to use payroll taxes from current workers to offer a small monthly check to retirees. The program was eventually expanded from a voluntary trust fund to a required deduction that included survivor's benefits and Medicare programs. Today, the program pays out almost five billion dollars in benefits to Americans every single year.

For years, the United States government has told Americans that Social Security will take care of them as they get older. However, as the baby boomer generation begins to reach retirement age, politicians have estimated that the system simply won't be able to support the sheer number of retirees at current benefit amounts. While the exact numbers seem to vary from political camp to political camp, it is clear that Social Security has a problem. Some suggest that the issues are more extensive than others. While remedy after remedy is being proposed, nothing seems to be a solid solution to the problem.

Lots of politicians suggest Social Security will be around for even your grandchildren, but even if the system could support the amount you are supposed to receive in benefits, the chances are quite high that when you create your retirement budget, that kind of money just isn't going to be enough to sustain your current lifestyle or the one that you'd like to build for yourself as a retiree.

You can get some idea of the benefits you should expect to receive when you retire from the Social Security website. Use the benefits calculator, enter a bit of information, and it will return a dollar figure to help you in your planning. The simple truth is, though, that politicians could choose to change that number at any point in the future. As a result, if you are doing your financial planning now, your benefit amount might not be the same in twenty, ten, or even five years based on the kinds of changes Congress makes to the related laws. Most financial planners suggest that you leave Social Security benefits out of your retirement plans all together. While you might receive some benefits in the end, if you don't count on then, they will be like icing on the cake.